EXHIBIT 4.1
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TOWN SPORTS INTERNATIONAL, INC.,
AS ISSUER
THE GUARANTORS PARTY HERETO,
AS GUARANTORS
9 5/8% SENIOR NOTES DUE 2011
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INDENTURE
DATED AS OF APRIL 16, 2003
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THE BANK OF NEW YORK,
AS TRUSTEE
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CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
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310(a)(1)...................................................................... 7.10
(a)(2)...................................................................... 7.10
(a)(3)...................................................................... N.A.
(a)(4)...................................................................... N.A.
(a)(5)...................................................................... 7.10
(b)......................................................................... 7.3, 7.8, 7.10
(c)......................................................................... N.A.
311(a)......................................................................... 7.11
(b)......................................................................... 7.11
(c)......................................................................... N.A.
312(a)......................................................................... 2.5
(b)......................................................................... 12.3
(c)......................................................................... 12.3
313(a)......................................................................... 7.6
(b)(1)...................................................................... N.A.
(b)(2)...................................................................... 7.6
(c)......................................................................... 7.6, 12.2
314(a)......................................................................... 4.3, 4.4
(b)......................................................................... N.A.
(c)(1)...................................................................... 12.4
(c)(2)...................................................................... 12.4
(c)(3)...................................................................... 12.4
(d)......................................................................... N.A.
(e)......................................................................... 12.5
(f)......................................................................... N.A.
315(a)......................................................................... 7.2
(b)......................................................................... 7.5, 12.2
(c)......................................................................... 7.1
(d)......................................................................... 7.1
(e)......................................................................... 6.12
316(a)(last sentence).......................................................... 2.9
(a)(1)(A)................................................................... 6.5
(a)(1)(B)................................................................... 6.4
(a)(2)...................................................................... N.A.
(b)......................................................................... 6.7
(c)......................................................................... N.A.
317(a)(1)...................................................................... 6.8
(a)(2)...................................................................... 6.10
(b)......................................................................... 2.4
318(a)......................................................................... 12.1
(b)......................................................................... N.A.
(c)......................................................................... 12.1
N.A. MEANS NOT APPLICABLE.
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* This Cross-Reference Table shall not, for any purpose, be deemed a part of
the Indenture.
TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions............................................................................ 1
Section 1.2. Other Definitions...................................................................... 25
Section 1.3. Incorporation by Reference of Trust Indenture Act...................................... 25
Section 1.4. Rules of Construction.................................................................. 26
Section 1.5. Acts of Holders........................................................................ 26
ARTICLE II.
THE NOTES
Section 2.1. Form and Dating........................................................................ 27
Section 2.2. Execution and Authentication........................................................... 28
Section 2.3. Registrar and Paying Agent............................................................. 29
Section 2.4. Paying Agents to Hold Money in Trust................................................... 29
Section 2.5. Holder Lists........................................................................... 30
Section 2.6. Transfer and Exchange.................................................................. 30
Section 2.7. Replacement Notes...................................................................... 39
Section 2.8. Outstanding Notes...................................................................... 40
Section 2.9. Treasury Notes......................................................................... 40
Section 2.10. Temporary Notes........................................................................ 40
Section 2.11. Cancellation........................................................................... 41
Section 2.12. Defaulted Interest..................................................................... 41
Section 2.13. Persons Deemed Owners.................................................................. 41
Section 2.14. CUSIP Numbers.......................................................................... 42
ARTICLE III.
REDEMPTION AND REPURCHASE
Section 3.1. Notices to Trustee..................................................................... 42
Section 3.2. Selection of Notes..................................................................... 42
Section 3.3. Notice of Optional Redemption.......................................................... 43
Section 3.4. Effect of Notice of Redemption......................................................... 44
Section 3.5. Deposit of Redemption Price or Purchase Price.......................................... 44
Section 3.6. Notes Redeemed or Repurchased in Part.................................................. 45
Section 3.7. Optional Redemption.................................................................... 45
Section 3.8. Optional Redemption upon Equity Offerings.............................................. 45
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Section 3.9. Repurchase upon Change of Control Offer................................................ 45
Section 3.10. Repurchase upon Application of Excess Proceeds......................................... 47
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Principal and Interest...................................................... 49
Section 4.2. Maintenance of Office or Agency........................................................ 49
Section 4.3. Reports to Holders..................................................................... 50
Section 4.4. Compliance Certificate................................................................. 51
Section 4.5. Taxes.................................................................................. 52
Section 4.6. Stay, Extension and Usury Laws......................................................... 52
Section 4.7. Limitation on Restricted Payments...................................................... 52
Section 4.8. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries........... 55
Section 4.9. Limitation on Incurrence of Additional Indebtedness.................................... 56
Section 4.10. Limitation on Asset Sales.............................................................. 57
Section 4.11. Limitations on Transactions with Affiliates............................................ 59
Section 4.12. Limitation on Liens.................................................................... 60
Section 4.13. Continued Existence.................................................................... 62
Section 4.14. Insurance Matters...................................................................... 62
Section 4.15. Offer to Repurchase upon Change of Control............................................. 62
Section 4.16. Additional Subsidiary Guarantees....................................................... 63
Section 4.17. Payments for Consent................................................................... 64
Section 4.18. Limitation on Preferred Stock of Restricted Subsidiaries............................... 64
Section 4.19. Limitation on Designation of Unrestricted Subsidiaries................................. 64
ARTICLE V.
SUCCESSORS
Section 5.1. Merger, Consolidation and Sale of Assets............................................... 65
Section 5.2. Successor Corporation Substituted...................................................... 67
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default...................................................................... 68
Section 6.2. Acceleration........................................................................... 69
Section 6.3. Other Remedies......................................................................... 70
Section 6.4. Waiver of Existing Defaults............................................................ 71
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Section 6.5. Control by Majority.................................................................... 71
Section 6.6. Limitation on Suits.................................................................... 71
Section 6.7. Rights of Holders of Notes to Receive Payment.......................................... 72
Section 6.8. Collection Suit by Trustee............................................................. 72
Section 6.9. Notice................................................................................. 72
Section 6.10. Trustee May File Proofs of Claim....................................................... 72
Section 6.11. Priorities............................................................................. 73
Section 6.12. Undertaking for Costs.................................................................. 73
ARTICLE VII.
TRUSTEE
Section 7.1. Duties of Trustee...................................................................... 74
Section 7.2. Rights of Trustee...................................................................... 75
Section 7.3. Individual Rights of Trustee........................................................... 76
Section 7.4. Trustee's Disclaimer................................................................... 76
Section 7.5. Notice of Defaults..................................................................... 76
Section 7.6. Reports by Trustee to Holder of the Notes.............................................. 77
Section 7.7. Compensation, Reimbursement and Indemnity.............................................. 77
Section 7.8. Replacement of Trustee................................................................. 78
Section 7.9. Successor Trustee by Merger, Etc....................................................... 79
Section 7.10. Eligibility; Disqualification.......................................................... 80
Section 7.11. Preferential Collection of Claims Against Company...................................... 80
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance............................... 80
Section 8.2. Legal Defeasance and Discharge......................................................... 80
Section 8.3. Covenant Defeasance.................................................................... 81
Section 8.4. Conditions to Legal or Covenant Defeasance............................................. 81
Section 8.5. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.................................... 83
Section 8.6. Repayment to the Company............................................................... 84
Section 8.7. Reinstatement.......................................................................... 84
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.................................................... 85
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Section 9.2. With Consent of Holders of Notes....................................................... 85
Section 9.3. Compliance with Trust Indenture Act.................................................... 87
Section 9.4. Revocation and Effect of Consents...................................................... 87
Section 9.5. Notation on or Exchange of Notes....................................................... 87
Section 9.6. Trustee to Sign Amendment, Etc......................................................... 88
ARTICLE X.
GUARANTEE
Section 10.1. Unconditional Guarantee................................................................ 88
Section 10.2. Severability........................................................................... 89
Section 10.3. Limitation of Guarantor's Liability.................................................... 89
Section 10.4. Release of Guarantor................................................................... 89
Section 10.5. Contribution........................................................................... 90
Section 10.6. Waiver of Subrogation.................................................................. 90
Section 10.7. Execution of Guarantee................................................................. 91
Section 10.8. Waiver of Stay, Extension or Usury Laws................................................ 91
ARTICLE XI.
SATISFACTION AND DISCHARGE
Section 11.1. Satisfaction and Discharge............................................................. 92
Section 11.2. Application of Trust................................................................... 93
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls........................................................... 93
Section 12.2. Notices................................................................................ 93
Section 12.3. Communication by Holders of Notes with Other Holders of Notes.......................... 95
Section 12.4. Certificate and Opinion as to Conditions Precedent..................................... 95
Section 12.5. Statements Required in Certificate or Opinion.......................................... 95
Section 12.6. Rules by Trustee and Agents............................................................ 96
Section 12.7. No Personal Liability of Directors, Officers, Employees and Stockholders............... 96
Section 12.8. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial........................ 96
Section 12.9. No Adverse Interpretation of Other Agreements.......................................... 97
Section 12.10. Successors............................................................................. 97
Section 12.11. Severability........................................................................... 97
Section 12.12. Counterpart Originals.................................................................. 97
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Section 12.13. Table of Contents, Headings, Etc....................................................... 97
Section 12.14. Qualification of Indenture............................................................. 97
Schedule A Guarantors
EXHIBITS
Exhibit A Form of Series A Note
Exhibit B Form of Series B Note
Exhibit C Form of Guarantee
Exhibit D(1) Form of Regulation S Certification
Exhibit D(2) Form of Certificate to Be Delivered upon Exchange or Registration of Transfer
of Notes
Exhibit E Form of Certificate to Be Delivered in Connection with Transfers to Non-QIB
Accredited Investors
Exhibit F Form of Certificate to Be Delivered in Connection with Transfers Pursuant to
Regulation S
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INDENTURE
INDENTURE dated as of April 16, 2003 among Town Sports
International, Inc., a New York corporation (the "Company"), the Guarantors (as
defined herein) listed on Schedule A hereto, and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders (as defined below)
of the Company's 9 5/8% Senior Notes due 2011:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary or such acquisition, merger or consolidation.
"Additional Interest" means all additional interest then owing
pursuant to Section 4 of the Registration Rights Agreement.
"Additional Notes" means 9 5/8% Senior Notes due 2011 issued
after the Issue Date pursuant to Article II and in compliance with Section 4.9.
"Affiliate" means, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative of the foregoing.
"Affiliate Transaction" has the meaning set forth in Section
4.11.
"Agent" means any Registrar, Paying Agent or co-registrar.
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"Asset Acquisition" means (1) an Investment by the Company or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged with or into the Company
or any Restricted Subsidiary, or (2) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Restricted Subsidiary of:
(1) any Capital Stock of any Restricted Subsidiary; or (2) any other property or
assets of the Company or any Restricted Subsidiary other than in the ordinary
course of business; provided, however, that Asset Sales shall not include: (a) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $2.5
million; (b) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Company as permitted under Article V;
(c) disposals or replacements of obsolete equipment in the ordinary course of
business; (d) the sale, lease, conveyance, disposition or other transfer by the
Company or any Restricted Subsidiary of assets or property to the Company or one
or more Restricted Subsidiaries; and (e) any Restricted Payment permitted by
Section 4.7 or any Permitted Investment.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"BRS Group" means Bruckmann, Rosser, Sherrill & Co., Inc. and
its Affiliates.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banking institutions (including, without
limitation, the Federal Reserve System) or the Corporate Trust Office of the
Trustee are authorized or required by law to close in New York City.
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"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means:
(1) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person; and
(2) with respect to any Person that is not a corporation,
any and all partnership, membership or other equity interests of such
Person.
"Cash Equivalents" means:
(1) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued
by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof;
(2) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or
Moody's;
(3) commercial paper maturing no more than one year from
the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by
any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined capital
and surplus of not less than $250.0 million;
(5) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause
(1) above entered into with any bank meeting the qualifications
specified in clause (4) above; and
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(6) investments in money market funds that invest
substantially all their assets in securities of the types described in
clauses (1) through (5) above.
"Certificated Notes" means, collectively, the U.S.
Certificated Notes and the Offshore Certificated Notes.
"Change of Control" means the occurrence of one or more of the
following events:
(1) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or group
of related Persons for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not
otherwise in compliance with the provisions of this Indenture), other
than to a Permitted Holder;
(2) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of
the Company (whether or not otherwise in compliance with the provisions
of this Indenture);
(3) any Person or Group, other than a Permitted Holder,
shall become the owner, directly or indirectly, beneficially or of
record, of shares representing more than 50% of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of
the Company; or
(4) the replacement of a majority of the Board of
Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of
such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Company
then still in office who either were members of such Board of Directors
at the beginning of such period or whose election as a member of any
such Board of Directors was previously so approved.
"Change of Control Offer" has the meaning set forth in Section
4.15.
"Change of Control Payment Date" has the meaning set forth in
Section 3.9.
"Clearstream" shall mean Clearstream Banking, Societe Anonyme,
Luxembourg.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-
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voting) of, such Person's common stock, whether outstanding on the Issue Date or
issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Company" means Town Sports International, Inc., a New York
corporation, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter means such successor
Person.
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of:
(1) Consolidated Net Income; and
(2) to the extent Consolidated Net Income has been
reduced thereby,
(a) all income taxes of the Company and its
Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or
taxes attributable to sales or dispositions outside the
ordinary course of business);
(b) Consolidated Interest Expense; and
(c) Consolidated Non-cash Charges less any
non-cash items increasing Consolidated Net Income for such
period,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of
Consolidated EBITDA during the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of the transaction giving rise to the
need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction
Date") to Consolidated Fixed Charges for the Four Quarter Period. In addition to
and without limitation of the foregoing, for purposes of this definition,
"Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma (including any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Securities Act) basis for the period of such calculation to:
(1) the incurrence or repayment of any Indebtedness of
the Company or any of its Restricted Subsidiaries (and the application
of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and
the application of the proceeds thereof), other than the incurrence or
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repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities,
occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may
be (and the application of the proceeds thereof), occurred on the first
day of the Four Quarter Period; and
(2) any asset sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Company or one of its
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA attributable to the assets that are the subject of
the Asset Acquisition or asset sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such asset sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If
the Company or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if the Company or any such Restricted Subsidiary had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio":
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and that will continue to
be so determined thereafter shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect
during the Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.
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"Consolidated Fixed Charges" means, with respect to the
Company for any period, the sum, without duplication, of:
(1) Consolidated Interest Expense; plus
(2) the product of
(a) the amount of all dividend payments on any
series of Preferred Stock of the Company (other than dividends
paid or to be paid in such period in Qualified Capital Stock)
paid or required to be paid during such period, and
(b) a fraction, the numerator of which is one
and the denominator of which is one minus the then current
effective consolidated federal, state and local income tax
rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, for any period, the sum
of, without duplication:
(1) the aggregate of the interest expense of the Company
and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without
limitation,
(a) any amortization of debt discount;
(b) the net costs under Interest Swap Obligations;
(c) all capitalized interest; and
(d) the interest portion of any deferred payment
obligation; and
(2) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company,
for any period, the aggregate net income (or loss) of the Company and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom:
(1) after-tax gains or losses from Asset Sales (without
regard to the $2.5 million limitation set forth in the definition
thereof) or abandonments or reserves relating thereto;
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(2) after-tax items classified as extraordinary or
nonrecurring gains or losses;
(3) the net income (or loss) of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes
a Restricted Subsidiary or is merged or consolidated with the Company
or with any Restricted Subsidiary;
(4) the net income (but not loss) of any Restricted
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is
restricted by a contract, operation of law or otherwise;
(5) the net income of any Person, other than the Company
or a Restricted Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or to a Restricted Subsidiary by such
Person;
(6) income or loss attributable to discontinued
operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued); and
(7) in the case of a successor to the Company by
consolidation or merger or as a transferee of the Company's assets, any
net income of the successor corporation prior to such consolidation,
merger or transfer of assets.
"Consolidated Non-cash Charges" means, for any period, the
aggregate depreciation, amortization and other non-cash expenses of the Company
(including, without limitation, charges related to the impairment of
intangibles) and its Restricted Subsidiaries reducing Consolidated Net Income of
the Company for such period, determined on a consolidated basis in accordance
with GAAP (including deferred rent but excluding any such charge which requires
an accrual of or a reserve for cash charges for any future period).
"Corporate Trust Office of the Trustee" means the principal
office of the Trustee at which at any time its corporate trust business shall be
administered, which office at the date hereto is located at 101 Barclay Street,
Floor 8 West, New York, New York 10286, Attention: Corporate Trust Trustee
Department, or such other address as the Trustee may designate from time to time
by notice to the Holders and the Company, or the principal corporate trust
office of any successor Trustee (or such other address as such successor Trustee
may designate from time to time by notice to the Holders and the Company).
"Covenant Defeasance" has the meaning set forth in Section
8.3.
"Credit Agreement" means the Credit Agreement dated as of
April 16, 2003, by and among the Company, the lenders from time to time party
thereto in their capacities as lenders thereunder and Deutsche Bank Trust
Company Americas, as agent, together with the
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related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary of the Company against
fluctuations in currency values.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Depositary" means, with respect to the Notes issuable in
whole or in part in global form, the Person specified in Section 2.6 as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designation" has the meaning set forth in Section 4.19.
"Designation Amount" has the meaning set forth in Section
4.19.
"Disqualified Capital Stock" means that portion of any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary
incorporated or otherwise organized or existing under the laws of the United
States or any state thereof.
"Equity Offering" means a public or private offering of
Qualified Capital Stock of the Company that generates gross proceeds to the
Company of at least $15.0 million.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
- 10 -
"Exchange Offer" means the offer that shall be made by the
Company pursuant to the Registration Rights Agreement to exchange Series A Notes
for Series B Notes.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Board of Directors of the Company.
"Farallon" means Farallon Partners, L.L.C. and its Affiliates.
"Final Memorandum" shall mean the Company's final offering
memorandum dated April 10, 2003, whereby the Company offered $255.0 million
Series A Notes.
"Foreign Restricted Subsidiary" means any Restricted
Subsidiary that is not a Domestic Restricted Subsidiary.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date. All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of this Indenture shall be
made without giving effect to (i) the deduction or amortization of any premiums,
fees and expenses incurred in connection with any financings or any other
permitted incurrence of Indebtedness and (ii) depreciation, amortization or
other expenses recorded as a result of the application of purchase accounting in
accordance with Accounting Principles Board Opinion Nos. 16 and 17 and FASB Nos.
141 and 142.
"Guarantee" has the meaning set forth in Section 10.1.
"Guarantor" means: (i) each of the Guarantors listed on
Schedule A hereto; and (ii) each of the Company's Restricted Subsidiaries that
in the future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of this Indenture as a Guarantor;
provided that any Person constituting a Guarantor as described above shall cease
to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of this Indenture.
"Holder" means a Person in whose name a Note is registered.
- 11 -
"incur" has the meaning set forth in Section 4.9.
"Indebtedness" means with respect to any Person, without
duplication:
(1) all Obligations of such Person for borrowed money;
(2) all Obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all Obligations of such Person issued or assumed as
the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement
(but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business);
(5) all Obligations for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit
transaction;
(6) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (1) through (5) above
and clause (8) below;
(7) all Obligations of any other Person of the type
referred to in clauses (1) through (6) which are secured by any Lien on
any property or asset of such Person, the amount of such Obligation
being deemed to be the lesser of the fair market value of such property
or asset and the amount of the Obligation so secured;
(8) all Obligations under currency agreements and
interest swap agreements of such Person; and
(9) all Disqualified Capital Stock issued by such Person
with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase
price.
For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock that does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the Company. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance on such date of all unconditional Obliga-
- 12 -
tions as described above, and the maximum liability upon the occurrence of the
contingency giving rise to the Obligation, on any contingent Obligations at such
date; provided, however, that the amount outstanding at any time of any
Indebtedness incurred with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Independent Financial Advisor" means a firm: (1) that does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in the Company; and (2) that, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Purchasers" means Deutsche Bank Securities Inc. and
BNP Paribas Securities Corp.
"Institutional Accredited Investors" means institutional
accredited investors as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person. "Investment" shall exclude extensions of trade
credit by the Company and its Restricted Subsidiaries on commercially reasonable
terms in accordance with normal trade practices of the Company or such
Restricted Subsidiary, as the case may be. If the Company or any Restricted
Subsidiary sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary such that, after giving effect to any such sale
or disposition, it ceases to be a Subsidiary of the Company, the Company shall
be deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such Restricted Subsidiary
not sold or disposed of.
- 13 -
"Issue Date" means April 16, 2003.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Management Agreement" means that certain Professional
Services Agreement dated as of December 10, 1996, by and between BRS Group and
the Company.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of:
(1) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions);
(2) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements;
(3) repayment of Indebtedness that is secured by the
assets sold in the relevant Asset Sale or other Indebtedness that is
required to be repaid in connection with such Asset Sale; and
(4) appropriate amounts to be provided by the Company or
any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as
the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Notes" means the Series A Notes and the Series B Notes, if
any, that are issued under this Indenture, as amended or supplemented from time
to time.
- 14 -
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means (a) with respect to any Person that is a
corporation, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, the Controller, the Secretary or any Vice-President of such Person
and (b) with respect to any other Person, the individuals selected by such
Person to perform functions similar to those of the officers listed in clause
(a).
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the Chief
Executive Officer, the Chief Financial Officer, the Treasurer or the principal
accounting officer of the Company, that meets the requirements of Sections 12.4
and 12.5.
"Offshore Certificated Notes" means permanent Certificated
Notes in registered form in substantially the form set forth in Exhibit A,
issued pursuant to Section 2.6 in exchange for interests in the Rule 144A Global
Note or the Regulation S Global Note.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee that meets the requirements of Sections
12.4 and 12.5. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Holder" means any of BRS Group, Farallon and their
respective Affiliates.
"Permitted Indebtedness" means, without duplication, each of
the following:
(1) Indebtedness under the Notes issued under this
Indenture in an aggregate principal amount not to exceed $255.0 million
and the Guarantees;
(2) Indebtedness incurred pursuant to the Credit
Agreement in an aggregate principal amount at any time outstanding not
to exceed $50.0 million to the extent incurred under this clause (2),
less the amount of all required principal payments actually made by the
Company in respect of the loans thereunder that were incurred under
this clause (2) in accordance with the provisions set forth under
Section 4.10 (which, in the case of revolving loans, are accompanied by
a corresponding permanent commitment reduction);
(3) other Indebtedness (including Capitalized Lease
Obligations) of the Company and its Restricted Subsidiaries outstanding
on the Issue Date;
- 15 -
(4) Purchase Money Indebtedness and Capitalized Lease
Obligations of the Company and its Restricted Subsidiaries in an
aggregate amount for all Indebtedness incurred pursuant to this clause
(4) not to exceed $20.0 million outstanding at any one time;
(5) Interest Swap Obligations covering Indebtedness of
the Company or any of its Restricted Subsidiaries; provided, however,
that such Interest Swap Obligations are entered into to protect the
Company and its Restricted Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with this Indenture to the
extent the notional principal amount of such Interest Swap Obligation
does not exceed, at the time of incurrence thereof, the principal
amount of the Indebtedness to which such Interest Swap Obligation
relates;
(6) Indebtedness under Currency Agreements; provided that
in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company and
its Restricted Subsidiaries outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(7) Indebtedness of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary for so long as such
Indebtedness is held by the Company, a Restricted Subsidiary or the
holders of a Lien permitted under this Indenture, in each case subject
to no Lien held by a Person other than the Company, a Restricted
Subsidiary or the holders of a Lien permitted under this Indenture;
provided that if as of any date any Person other than the Company, a
Restricted Subsidiary or the holders of a Lien permitted under this
Indenture owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer
of such Indebtedness pursuant to this clause (7);
(8) Indebtedness of the Company to a Restricted
Subsidiary for so long as such Indebtedness is held by a Restricted
Subsidiary or the holders of a Lien permitted under this Indenture, in
each case subject to no Lien other than a Lien permitted under this
Indenture; provided that (a) any Indebtedness of the Company to any
Restricted Subsidiary that is not a Guarantor is unsecured and
subordinated, pursuant to a written agreement, to the Company's
obligations under this Indenture and the Notes and (b) if as of any
date any Person other than a Restricted Subsidiary or the holders of a
Lien permitted under this Indenture owns or holds any such Indebtedness
or any Person holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company under this clause (8);
- 16 -
(9) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within four Business
Days of incurrence;
(10) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the
ordinary course of business;
(11) Refinancing Indebtedness;
(12) Indebtedness represented by guarantees by the Company
or its Restricted Subsidiaries of Indebtedness otherwise permitted to
be incurred under this Indenture; provided that, in the case of a
guarantee by a Restricted Subsidiary, such Restricted Subsidiary
complies with Section 4.16 to the extent applicable;
(13) Indebtedness of the Company or any of its Restricted
Subsidiaries in respect of bid, payment and performance bonds, bankers'
acceptances, workers' compensation claims, surety or appeal bonds,
payment obligations in connection with self-insurance or similar
obligations, and bank overdrafts (and letters of credit in respect
thereof) in the ordinary course of business;
(14) Indebtedness of the Company or any Restricted
Subsidiary consisting of guarantees, indemnities or obligations in
respect of purchase price adjustments in connection with the
acquisition or disposition of assets; and
(15) additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount not to exceed
$10.0 million at any one time outstanding (which amount may, but need
not, be incurred in whole or in part under the Credit Agreement).
For purposes of determining any particular amount of
Indebtedness under Section 4.9, guarantees, Liens or letter of credit
obligations supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included. For purposes of determining
compliance with Section 4.9 in the event that an item of Indebtedness meets the
criteria of more than one of the categories of Permitted Indebtedness described
in clauses (1) through (15) above or is permitted to be incurred pursuant to the
Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the
Company shall, in its sole discretion, classify (or later reclassify) such item
of Indebtedness in any manner that complies with Section 4.9. Accrual of
interest, accretion or amortization of original issue discount, the
- 17 -
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, the payment of dividends on Disqualified Capital Stock in
the form of additional shares of the same class of Disqualified Capital Stock
and change in the amount outstanding due solely to the result of fluctuations in
the exchange rates of currencies will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Capital Stock for purposes of
Section 4.9.
"Permitted Investments" means:
(1) Investments by the Company or any Restricted
Subsidiary in any Person that is or will become immediately after such
Investment a Restricted Subsidiary or that will merge or consolidate
into the Company or a Restricted Subsidiary;
(2) Investments in the Company by any Restricted
Subsidiary; provided that any Indebtedness incurred by the Company
evidencing such Investment by a Restricted Subsidiary that is not a
Guarantor is unsecured and subordinated, pursuant to a written
agreement, to the Company's obligations under the Notes and this
Indenture;
(3) Investments in cash and Cash Equivalents;
(4) loans and advances to directors, employees and
officers of the Company and its Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess of
$5.0 million at any one time outstanding;
(5) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or a Restricted
Subsidiary's businesses and otherwise in compliance with this
Indenture;
(6) other Investments, including Investments in
Unrestricted Subsidiaries, not to exceed $10.0 million at any one time
outstanding;
(7) Investments in securities of trade creditors or
members received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors
or members or in good faith settlement of delinquent obligations of
such trade creditors or members;
(8) Investments represented by guarantees that are
otherwise permitted under this Indenture;
(9) Investments the payment for which is Qualified
Capital Stock of the Company;
- 18 -
(10) Investments made by the Company or its Restricted
Subsidiaries as a result of consideration received in connection with
an Asset Sale made in compliance with Section 4.10; and
(11) the acquisition by the Company of obligations of one
or more officers, directors or employees of the Company or any of its
Subsidiaries in connection with such officers', directors' or
employees' acquisition of shares of capital stock of the Company so
long as no cash is paid by the Company or any of its Subsidiaries to
such officers, directors or employees in connection with the
acquisition of any such obligations.
"Permitted Liens" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges
or claims either
(a) not delinquent or
(b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves
as may be required pursuant to GAAP;
(2) statutory and contractual Liens of landlords and
Liens of carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, including
any Lien securing letters of credit issued in the ordinary course of
business consistent with past practice in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of
Default;
(5) easements, rights-of-way, zoning restrictions and
other similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or of any of its Restricted Subsidiaries;
- 19 -
(6) any interest or title of a lessor under any
Capitalized Lease Obligation; provided that such Liens do not extend to
any property or asset which is not leased property subject to such
Capitalized Lease Obligation;
(7) purchase money Liens to finance property or assets of
the Company or any Restricted Subsidiary acquired after the Issue Date;
provided, however, that
(a) the related purchase money Indebtedness
shall not exceed the cost of such property or assets and shall
not be secured by property or assets of the Company or any
Restricted Subsidiary other than the property and assets so
acquired and
(b) the Lien securing such Indebtedness shall be
created within 90 days of such acquisition;
(8) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(9) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(10) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and setoff;
(11) Liens securing Interest Swap Obligations which
Interest Swap Obligations relate to Indebtedness that is otherwise
permitted under this Indenture;
(12) Liens securing Indebtedness under Currency
Agreements;
(13) Liens securing Acquired Indebtedness incurred in
accordance with Section 4.9; provided that
(a) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of
such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary and
- 20 -
(b) such Liens do not extend to or cover any
property or assets of the Company or of any of its Restricted
Subsidiaries other than the property or assets that secured
the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted
Subsidiary and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a
Restricted Subsidiary;
(14) Liens on assets of a Restricted Subsidiary that is
not a Guarantor to secure Indebtedness and other obligations of such
Restricted Subsidiary that are otherwise permitted under this
Indenture;
(15) leases, subleases, licenses and sublicenses granted
to others that do not materially interfere with the ordinary course of
business of the Company and its Restricted Subsidiaries;
(16) banker's Liens, rights of setoff and similar Liens
with respect to cash and Cash Equivalents on deposit in one or more
bank accounts in the ordinary course of business;
(17) Liens arising from filing Uniform Commercial Code
financing statements regarding leases;
(18) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; and
(19) additional Liens not to exceed $10.0 million at any
one time.
"Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.
"PORTAL Market" means the Portal Market operated by the
National Association of Securities Dealers, Inc. or any successor thereto.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"Purchase Date" means, with respect to any Note to be
repurchased, the date fixed for such repurchase by or pursuant to this
Indenture.
- 21 -
"Purchase Money Indebtedness" means Indebtedness of the
Company or its Restricted Subsidiaries incurred for the purpose of financing all
or any part of the purchase price or the cost of installation, construction or
improvement of any property.
"Purchase Price" means the amount payable for the repurchase
of any Note on a Purchase Date, exclusive of accrued and unpaid interest and
Additional Interest (if any) thereon to the Purchase Date, unless otherwise
specifically provided.
"QIB" means a qualified institutional buyer as defined in Rule
144A under the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redemption Date" means, with respect to any Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means the amount payable for the redemption
of any Note on a Redemption Date, exclusive of' accrued and unpaid interest and
Additional Interest (if any) thereon to the Redemption Date, unless otherwise
specifically provided.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with Section 4.9 (other than pursuant to clause (2), (4), (5), (6),
(7), (8), (9), (10), (12), (13), (14) or (15) of the definition of "Permitted
Indebtedness"), in each case that does not:
(1) result in an increase in the aggregate principal
amount of Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid under
the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Company or any Restricted
Subsidiary in connection with such Refinancing); or
(2) create Indebtedness with: (a) a Weighted Average Life
to Maturity that is less than the Weighted Average Life to Maturity of
the Indebtedness being Refinanced; or (b) a final maturity earlier than
the final maturity of the Indebtedness being Refinanced; provided that
(x) if such Indebtedness being Refinanced is Indebtedness solely of the
Company or a Guarantor, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company or a Guarantor and (y) if such
Indebtedness being
- 22 -
Refinanced is subordinate or junior to the Notes, then such Refinancing
Indebtedness shall be subordinate to the Notes at least to the same
extent and in the same manner as the Indebtedness being Refinanced.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date among the Company, the Guarantors and the
Initial Purchasers.
"Regulation S" means Regulation S as promulgated under the
Securities Act.
"Replacement Assets" means assets of a kind used or usable in
the business of the Company and its Restricted Subsidiaries as conducted on the
date of the relevant Asset Sale.
"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated by the Board of Directors of the Company, by a
Board Resolution of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to and in compliance with Section 4.19. Any such Designation
may be revoked by a Board Resolution of the Company delivered to the Trustee,
subject to the provisions of Section 4.19.
"Revocation" has the meaning set forth under Section 4.19.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"S&P" means Standard & Poor's Ratings Service.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
by such Restricted Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
Property.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto.
- 23 -
"Series A Notes" means the Company's 9 5/8% Senior Notes due
2011.
"Series B Notes" means notes issued by the Company hereunder
containing terms identical to the Series A Notes (except (i) that interest
thereon shall accrue from the last date on which interest was paid on the Series
A Notes or, if no such interest has been paid, from the date of original
issuance, (ii) that the legend or legends relating to transferability and other
related matters set forth on the Series A Notes, including the text referred to
in footnote 2 of Exhibit A hereto, shall be removed or appropriately altered and
(iii) as otherwise set forth herein), to be offered to Holders of Series A Notes
in exchange for Series B Notes pursuant to the Exchange Offer or any exchange
offer specified in any registration rights agreement relating to the Additional
Notes or to be offered in connection with any issuance of Additional Notes
pursuant to a registration statement filed pursuant to the Securities Act.
"Significant Subsidiary" will have the meaning set forth in
Rule 1.02(w) of Regulation S-X under the Securities Act.
"Subordinated Indebtedness" means Indebtedness of the Company
or any Guarantor that is by its express terms subordinated or junior in right of
payment to the Notes or the Guarantee of such Guarantor, as the case may be.
"Subsidiary", with respect to any Person, means:
(1) any corporation of which the outstanding Capital
Stock having at least a majority of the votes entitled to be cast in
the election of directors under ordinary circumstances shall at the
time be owned, directly or indirectly, by such Person; or
(2) any other Person of which at least a majority of the
voting interest under ordinary circumstances is at the time, directly
or indirectly, owned by such Person.
"Surviving Entity" has the meaning set forth in Section 5.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA; provided that in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Transfer Restricted Security" means a Note that is a
restricted security as defined in Rule 144(a)(3) under the Securities Act.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter means the successor serving hereunder.
- 24 -
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 4.19. Any such
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of Section 4.19.
"U.S. Certificated Notes" means permanent U.S. Certificated
Notes in registered form in substantially the form set forth in Exhibit A that
are offered and sold to Institutional Accredited Investors.
"U.S. Government Obligations" shall mean securities which are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank or trust company as custodian
with respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligations held by such
custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of interest on or principal of the U.S.
Government Obligations evidenced by such depository receipt.
"U.S. Person" means any U.S. Person as defined in Regulation
S.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (1) the then
outstanding aggregate principal amount of such Indebtedness into (2) the sum of
the total of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of which all the outstanding voting securities (other than in the
case of a foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by the Company or another Wholly Owned Restricted
Subsidiary.
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Section 1.2. Other Definitions.
Term Defined in Section
- ---- ------------------
"Adjusted Net Assets".............................. 10.5
"Affiliate Transaction"............................ 4.11
"Agent Members".................................... 2.6
"Certificated Notes"............................... 2.1
"Covenant Defeasance".............................. 8.3
"Event of Default"................................. 6.1
"Foreign Person"................................... 2.6
"Global Notes"..................................... 2.1
"Legal Defeasance"................................. 8.2
"Net Proceeds Offer"............................... 4.10
"Net Proceeds Offers Amount"....................... 4.10
"Net Proceeds Offers Trigger Date"................. 4.10
"Paying Agent"..................................... 2.3
"Permanent Regulation S Global Note"............... 2.1
"Private Placement Legend"......................... 2.6
"Registrar"........................................ 2.3
"Regulation S Global Note"......................... 2.1
"Restricted Payment"............................... 4.7
"Rule 144A Global Note"............................ 2.1
"Surviving Entity"................................. 5.1
"Temporary Regulation S Global Note"............... 2.1
Section 1.3. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
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All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) provisions apply to successive events and
transactions; and
(f) references to sections of or rules under the
Securities Act, the Exchange Act and the TIA shall be deemed to include
substitute, replacement and successor sections or rules adopted by the
Commission from time to time.
Section 1.5. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her the
execution thereof. Where such execution is by an officer of a corporation or a
- 27 -
member of a partnership, on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof of his or her
authority.
(c) The ownership of Notes shall be proved by the
register maintained by the Registrar.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
ARTICLE II.
THE NOTES
Section 2.1. Form and Dating.
The Series A Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit A
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage in addition to those set forth in Exhibit A hereto.
The Series B Notes shall be substantially in the form of Exhibit B hereto. The
notation on each Note relating to the Guarantees shall be substantially in the
form set forth on Exhibit C hereto. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes and Guarantees
shall constitute, and are hereby expressly made, a part of this Indenture and
the Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of a single permanent global Note in registered
form, substantially in the form set forth in Exhibit A (the "Rule 144A Global
Note"), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth in Section 2.6(h). The aggregate principal
amount of the Rule 144A Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of a single temporary global
Note in registered form, substantially in the form set forth in Exhibit A (the
"Temporary Regulation S Global Note"), de-
- 28 -
posited with the Trustee, as custodian for the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided and shall bear
the legend set forth in Section 2.6(h). At any time following 40 days after the
later of the commencement of the offering of the Notes and the Issue Date, upon
receipt by the Trustee and the Company of a duly executed certificate
substantially in the form of Exhibit D(1) hereto, a single permanent Global Note
in registered form substantially in the form set forth in Exhibit A (the
"Permanent Regulation S Global Note," and together with the Temporary Regulation
S Global Note, the "Regulation S Global Note") duly executed by the Company and
authenticated by the Trustee as hereinafter provided shall be deposited with the
Trustee, as custodian for the Depositary, and the Registrar shall reflect on its
books and records the date and a decrease in the principal amount of the
Regulation S Global Note in an amount equal to the principal amount of the
beneficial interest in the Regulation S Global Note transferred.
The Rule 144A Global Note and the Regulation S Global Note are
sometimes referred to herein as the "Global Notes."
Section 2.2. Execution and Authentication.
Two Officers of the Company shall sign the Notes for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office or position at the
time a Note is authenticated, the Note shall nevertheless be valid. Each
Guarantor shall execute a Guarantee in the manner set forth in Section 10.7.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee, upon a written order of the Company signed by two
Officers of the Company, together with the other documents required by Sections
12.4 and 12.5, shall authenticate (i) Series A Notes for original issue on the
Issue Date in the aggregate principal amount not to exceed $255.0 million and
(ii) subject to Section 4.9, Additional Notes. The Trustee, upon written order
of the Company signed by two Officers of the Company, together with the other
documents required by Sections 12.4 and 12.5, shall authenticate Series B Notes;
provided that such Series B Notes shall be issuable only upon the valid
surrender for cancellation of Series A Notes of a like aggregate principal
amount in accordance with the Exchange Offer or an exchange offer specified in
any registration rights agreement relating to the Additional Notes or to be
offered in connection with any issuance of Additional Notes pursuant to a
registration statement filed pursuant to the Securities Act. Such written order
of the Company shall specify the amount of Notes to be authenticated and the
date on which the original issue of Notes is to be authenticated. Any Additional
Notes shall be part of the same
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issue as the Notes being issued on the Issue Date and will vote on all matters
as one class with the Notes being issued on the Issue Date, including, without
limitation, waivers, amendments, redemptions, Change of Control Offers and Net
Proceeds Offers. For the purposes of this Indenture, except for Section 4.9,
references to the Notes include Additional Notes, if any.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. Unless otherwise provided in the appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or with any Affiliate of the Company.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may
be presented or surrendered for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. At the option of the Company, payment of interest and
Additional Interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to
principal, Redemption Price and Purchase Price of, and interest and Additional
Interest (if any) on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Trustee or the Paying
Agent. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Paying Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
may act as Paying Agent or Registrar. The Depositary shall, by acceptance of a
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book-entry system maintained by the Depositary
(or its agent), and that ownership of a beneficial interest in the Note shall be
required to be reflected in a book entry.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes, until such time as the Trustee has resigned or a successor has
been appointed.
Section 2.4. Paying Agents to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such the Paying Agent shall hold in trust for
the benefit of Holders or the Trus-
- 30 -
tee all money held by the Paying Agent for the payment of principal and of any
premium, if any, interest and Additional Interest, if any, on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and account
for any money disbursed. Upon payment over to the Trustee, the Paying Agent (if
other than the Company) shall have no further liability for the money. If the
Company acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company or the Guarantors shall furnish or
cause the Registrar to furnish to the Trustee at least five Business Days before
each interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes, and the Company
shall otherwise comply with TIA Section 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange Generally: Book Entry
Provisions. Upon surrender for registration of transfer of any Note to the
Registrar, and satisfaction of the requirements for such transfer set forth in
this Section 2.6, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
Notes may be exchanged for other Notes of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Notes to be exchanged at any such office or agency maintained by the Company
pursuant to Section 4.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Registrar, and the Notes shall be duly executed by the Holder thereof or his
attorney duly authorized in writing. Except as otherwise provided in this
Indenture, and in addition to the requirements set forth in the legend referred
to in Section 2.6(h)(i) below, in connection with any transfer of Transfer
Restricted Securities
- 31 -
any request for transfer shall be accompanied by a certification to the Trustee
relating to the manner of such transfer substantially in the form of Exhibit
D(2) hereto.
(b) Book-Entry Provisions for the Global Notes. The Rule
144A Global Note and Regulation S Global Note initially shall (i) be registered
in the name of the Depositary or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for the Depositary and (iii) bear legends
as set forth in Section 2.6(h).
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Rule
144A Global Note or Regulation S Global Note, as the case may be, held on their
behalf by the Depositary, or the Trustee as its custodian, or under the Rule
144A Global Note or Regulation S Global Note, as the case may be, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of Rule 144A Global Note or
Regulation S Global Note, as the case may be, for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Note.
Transfers of the Rule 144A Global Note and the Regulation S
Global Note shall be limited to transfers of such Rule 144A Global Note or
Regulation S Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Beneficial interests in the Rule 144A
Global Note and the Regulation S Global Note may be transferred in accordance
with the applicable rules and procedures of the Depositary and the provisions of
this Section 2.6. The registration of transfer and exchange of beneficial
interests in the Global Note, which does not involve the issuance of a
Certificated Note, shall be effected through the Depositary, in accordance with
this Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor. The Trustee shall have no responsibility
or liability for any act or omission of the Depositary.
At any time at the request of the beneficial holder of an
interest in the Rule 144A Global Note or Permanent Regulation S Global Note to
obtain a Certificated Note, such beneficial holder shall be entitled to obtain a
Certificated Note upon written request to the Trustee and the Note Custodian in
accordance with the standing instructions and procedures existing between the
Note Custodian and Depositary for the issuance thereof. Upon receipt of any such
request, the Trustee, or the Note Custodian at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Note Custodian, the aggregate principal amount of
the Rule 144A Global Note or Permanent Regulation S Global Note, as appropriate,
to be reduced by the principal amount of the Certificated Note issued upon such
request to such beneficial holder and, following such reduction, the Company
will execute and the Trustee will authenticate and de-
- 32 -
liver to such beneficial holder (or its nominee) a Certificated Note or
Certificated Notes in the appropriate aggregate principal amount in the name of
such beneficial holder (or its nominee) and bearing such restrictive legends as
may be required by this Indenture.
(c) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the registration
of any proposed transfer of a Transfer Restricted Security to any Institutional
Accredited Investor that is not a QIB (other than any Person that is not a U.S.
Person as defined under Regulation S, a "Foreign Person"):
(i) the Registrar shall register the transfer of any
Note, whether or not such Note bears the Private Placement Legend, if
(x) (A) the requested transfer is at least two years after the later of
the Issue Date of the Notes and (B) the proposed transferee has
certified to the Registrar that the requested transfer is at least two
years after last date on which such Note was held by an Affiliate of
the Company, or (y) the proposed transferee has delivered to the
Registrar (A) a certificate substantially in the form of Exhibit E
hereto and (B) such certifications, legal opinions and other
information as the Trustee and the Company may reasonably request to
confirm that such transaction is in compliance with the Securities Act;
and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in the Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by clause (i) and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Global
Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Certificated Notes of like tenor and amount.
(d) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a Transfer
Restricted Security to a QIB (other than Foreign Persons):
(i) if the Note to be transferred consists of
Certificated Notes or an interest in the Regulation S Global Note, the
Registrar shall register the transfer if such transfer is being made by
a proposed transferor who has checked the box provided for on a
certificate substantially in the form of Exhibit D(2) stating, or has
otherwise advised the Company and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who is a QIB within the meaning of Rule 144A and is aware
that the sale to it is being made in reliance on Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and
the Note to be transferred consists of Certificated Notes or an
interest in the Regulation S Global Note, upon receipt by the Registrar
of the documents referred to in clause (i) and in-
- 33 -
structions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Rule
144A Global Note in an amount equal to the principal amount of the
Certificated Notes or the interest in the Regulation S Global Note, as
the case may be, to be transferred, and the Trustee shall cancel the
Certificated Notes or decrease the amount of the Regulation S Global
Note so transferred.
(e) Transfers of Interests in the Temporary Regulation S
Global Note. The following provisions shall apply with respect to the
registration of any proposed transfer of interests in the Temporary Regulation S
Global Note:
(i) the Registrar shall register the transfer of an
interest in the Temporary Regulation S Global Note if (x) the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit F hereto stating, among other things, that the
proposed transferee is a Foreign Person or (y) the proposed transferee
is a QIB and the proposed transferor has checked the box provided for
on a certificate substantially in the form of Exhibit D(2) stating, or
has otherwise advised the Company and the Registrar in writing, that
the sale has been made in compliance with the provisions of Rule 144A
to a transferee who is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A; and
(ii) if the proposed transferee is an Agent Member, upon
receipt by the Registrar of the documents referred to in clause (i)(y)
above and instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
Rule 144A Global Note in an amount equal to the principal amount of the
Temporary Regulation S Global Note to be transferred, and the Trustee,
as Note Custodian, shall decrease the amount of the Temporary
Regulation S Global Note.
(f) Transfers to Foreign Persons. The following
provisions shall apply with respect to any transfer of a Transfer Restricted
Security to a Foreign Person:
(i) the Registrar shall register any proposed transfer of
a Note to a Foreign Person upon receipt of a certificate substantially
in the form of Exhibit F hereto from the proposed transferor and such
certifications, legal opinions and other information as the Trustee or
the Company may reasonably request; and
(ii) (a) if the proposed transferor is an Agent Member
holding a beneficial interest in the Rule 144A Global Note or the Note
to be transferred consists of Certificated Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Rule
144A Global Note in an amount equal to the
- 34 -
principal amount of the beneficial interest in the Rule 144A Global
Note or cancel the Certificated Notes, as the case may be, to be
transferred, and (b) if the proposed transferee is an Agent Member,
upon receipt by the Registrar of instructions given in accordance with
the Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Regulation S Global Note in an amount equal to
the principal amount of the Certificated Notes to be transferred, and
the Trustee shall decrease the amount of the Rule 144A Global Note.
(g) The Depositary. The Depositary shall be a clearing
agency registered under the Exchange Act. The Company initially appoints The
Depository Trust Company to act as Depositary with respect to the Global Note.
Initially, the Rule 144A Global Note and the Regulation S Global Note shall be
issued to the Depositary, registered in the name of Cede & Co., as the nominee
of the Depositary, and deposited with the Note Custodian for Cede & Co.
Notes in Certificated form issued in exchange for all or a
part of a Global Note pursuant to this Section 2.6 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Certificated Notes in Certificated form to the persons in whose
names such Notes in Certificated form are so registered.
Certificated Notes shall be transferred to all beneficial
owners in exchange for their beneficial interests in the Rule 144A Global Note
or the Permanent Regulation S Global Note, as the case may be, if at any time:
(i) the Depositary for the Notes notifies the Company
that the Depositary is unwilling or unable to continue as Depositary
for the Rule 144A Global Note or the Permanent Regulation S Global
Note, as the case may be, and a successor Depositary is not appointed
by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Certificated
Notes under this Indenture,
and the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2, authenticate and deliver
Certificated Notes in an aggregate principal amount equal to the principal
amount of the Rule 144A Global Note or the Permanent Regulation S Global Note,
as the case may be, in exchange for such Global Notes.
- 35 -
(h) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and Certificated Notes
(and all Notes issued in exchange therefor or substitution thereof) shall (x) be
subject to the restrictions on transfer set forth in this Section 2.6 (including
those set forth in the legend below) unless such restrictions on transfer shall
be waived by written consent of the Company, and the Holder of each Transfer
Restricted Security, by such Holder's acceptance thereof, agrees to be bound by
all such restrictions on transfer and (y) bear the legend set forth below (the
"Private Placement Legend"):
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3),
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"),
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO TOWN SPORTS INTERNATIONAL, INC. OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
(OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE FOR THIS NOTE), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED
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UPON AN OPINION OF COUNSEL IF TOWN SPORTS INTERNATIONAL, INC.
SO REQUESTS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND TOWN SPORTS
INTERNATIONAL, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Note) pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(a) in the case of any Transfer Restricted Security that
is a Certificated Note, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Certificated Note
that does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(b) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.6(b); provided,
however, that with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Note for a
Certificated Note that does not bear the legend set forth in (i) above,
which request is made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the Registrar that such request is being
made pursuant to Rule 144 (such certifications to be substantially in
the form of Exhibit D(2) hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.2, the Trustee shall
authenticate Series B Notes in exchange for Series A Notes
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accepted for exchange in the Exchange Offer, which Series B Notes shall not bear
the legend set forth in (i) above, and the Registrar shall rescind any
restriction on the transfer of such Series A Notes, in each case unless the
Company has notified the Registrar in writing that the Holder of such Series A
Notes is either (A) a broker-dealer, (B) a Person participating in the
distribution of the Series A Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
(iv) Each Global Note, whether or not a Transfer
Restricted Security, shall also bear the following legend on the fact thereof:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY
OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
(v) Any Global Note may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Note Custodian, the Depositary or by the National Association of Securities
Dealers, Inc. in order for the Notes to be tradable on the PORTAL Market or
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tradable on Euroclear or Clearstream or as may be required for the Notes to be
tradable on any other market developed for trading of securities pursuant to
Rule 144A or Regulation S under the Securities Act or required to comply with
any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange or automated quotation system upon which
the Notes may be listed or traded or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Notes are subject.
(i) Cancellation and/or Adjustment of Global Notes. At
such time as all beneficial interests in Global Notes have been exchanged for
Certificated Notes, redeemed, repurchased or canceled, all Global Notes shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for Certificated Notes, redeemed, repurchased or
canceled, the principal amount of Notes represented by such Global Notes shall
be reduced accordingly and an endorsement shall be made on such Global Note by
the Trustee or the Note Custodian, at the direction of the Trustee, to reflect
such reduction. In the event of any transfer of any beneficial interest between
the Rule 144A Global Note and the Regulation S Global Note in accordance with
the standing procedures and instructions between the Depositary and the Note
Custodian and the transfer restrictions set forth herein, the aggregate
principal amount of each of the Rule 144A Global Note and the Regulation S
Global Note shall be appropriately increased or decreased, as the case may be,
and an endorsement shall be made on each of the Rule 144A Global Note and the
Regulation S Global Note by the Trustee or the Note Custodian, at the direction
of the Trustee, to reflect such reduction or increase.
(j) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Certificated Notes
and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer, fee or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.6
and 9.5).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Certificated Notes and Global Notes issued upon
any registration of transfer or exchange of Certificated Notes or Global Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as
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the Certificated Notes or Global Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required:
(a) to issue, to register the transfer of or to exchange
Notes during a period beginning at the opening of business 15 days
before the day of any selection of Notes for redemption under Section
3.2 and ending at the close of business on the day of selection; or
(b) to register the transfer of or to exchange any Note
so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part; or
(c) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest payment date.
(vi) Prior to due presentment of the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of all payments with respect to such Notes, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Certificated Notes and
Global Notes in accordance with the provisions of Section 2.2.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or either
the Company or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an authentication order in accordance with Section 2.2, shall
authenticate a replacement Note if the Trustee's requirements for replacement of
Notes are met. If required by the Trustee or the Company, an indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Trustee and the Company each may charge such Holder for their
expenses in replacing such Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
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Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes that have
been authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Note effected by the Trustee or the Note Custodian in accordance with the
provisions hereof, and those described in this Section as not outstanding.
Except as set forth in Section 2.9, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.7, it shall cease
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser for value.
If the principal amount of any Note is considered paid under
Section 4.1, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, the Guarantors or by any Affiliate thereof shall be considered
as though not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver of
consent, only Notes that a Responsible Officer of the Trustee knows are so owned
shall be so disregarded. The Company agrees to notify the Trustee of the
existence of any such treasury Notes or Notes owned by the Company, any
Guarantor or an Affiliate thereof.
Section 2.10. Temporary Notes.
Until Certificated Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an authentication order in
accordance with Section 2.2, shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of Certificated Notes, but may have such
variations as the Company considers appropriate for temporary Notes and as shall
be reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Certificated Notes in exchange
for temporary Notes.
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Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or Paying Agent, and
no one else shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall dispose of all canceled
Notes in accordance with the Trustee's usual procedures. The Trustee shall
maintain a record of all canceled Notes. All cancelled Notes shall be delivered
to the Company. Subject to Section 2.7 the Company may not issue new Notes to
replace Notes that have been paid or that have been delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
the Company shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons who
are Holders on a subsequent special record date, in each case at the rate
provided in the Notes and in Section 4.1. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date; provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.13. Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer and subject to Section 2.12, the Company, the Trustee, any Paying
Agent, any co-registrar and any Registrar may deem and treat the person in whose
name any Note shall be registered upon the register of Notes kept by the
Registrar as the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of the ownership or other writing
thereon made by anyone other than the Company, any co-registrar or any
Registrar) for the purpose of receiving all payments with respect to such Note
and for all other purposes, and none of the Company, the Trustee, any Paying
Agent, any co-registrar or any Registrar shall be affected by any notice to the
contrary.
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Section 2.14. CUSIP Numbers.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
notify the Trustee of any change to the CUSIP numbers.
ARTICLE III.
REDEMPTION AND REPURCHASE
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the
provisions of Section 3.7 or 3.8, it shall furnish to the Trustee, at least 30
days but not more than 60 days before the Redemption Date (unless a shorter
notice period shall be satisfactory to the Trustee), an Officers' Certificate
setting forth the Section of this Indenture pursuant to which the redemption
shall occur, the Redemption Date, the principal amount of Notes to be redeemed
and the Redemption Price.
If the Registrar is not the Trustee, the Company shall,
concurrently with each notice of redemption or repurchase, cause the Registrar
to deliver to the Trustee a certificate (upon which the Trustee may rely)
setting forth the principal amounts of Notes held by each Holder.
Section 3.2. Selection of Notes.
Except as set forth below, if less than all of the Notes are
to be redeemed, the Trustee shall select the Notes or portions thereof to be
redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which such Notes are listed or, if such Notes
are not then listed on a national securities exchange, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate. In the
event of partial redemption by lot, the particular Notes or portions thereof to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the Redemption Date (unless a shorter period
shall be satisfactory to the Trustee) by the Trustee from the outstanding Notes
not previously called for redemption.
If less than all of the Notes tendered are to be repurchased
pursuant to the provisions of Section 3.8, the Trustee shall select the Notes
only on a pro rata basis or on as nearly a pro rata basis as is practicable
(subject to DTC procedures), unless such method is otherwise prohibited.
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The Trustee shall promptly notify the Company in writing of
the Notes or portions thereof selected for redemption or repurchase and, in the
case of any Note selected for partial redemption or repurchase, the principal
amount thereof to be redeemed or repurchased. Notes and portions thereof
selected shall be in amounts of $1,000 or integral multiples of $1,000, except
that if all of the Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. No Notes of a principal amount of $1,000 or less shall be redeemed in
part.
Section 3.3. Notice of Optional Redemption.
In the event Notes are to be redeemed pursuant to Section 3.7
or 3.8, at least 30 days but not more than 60 days before the Redemption Date,
the Company shall send, by first-class mail, a notice of redemption to each
Holder whose Notes are to be redeemed in whole or in part, with a copy to the
Trustee.
The notice shall identify the Notes or portions thereof to be
redeemed (including the CUSIP number, if any) and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion will be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price, Additional
Interest, if any, and, unless the Redemption Date is after a record
date and or before the succeeding interest payment date, accrued
interest thereon to the Redemption Date;
(f) that, unless the Company defaults in making the
redemption payment, interest and any Additional Interest on Notes
called for redemption will cease to accrue on and after the Redemption
Date, and the only remaining right of the Holders of such Notes is to
receive payment of the Redemption Price, any Additional Interest and,
unless the Redemption Date is after a record date and on or before the
succeeding interest payment date, accrued interest thereon to the
Redemption Date upon surrender to the Paying Agent of the Notes
redeemed;
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(g) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portions thereof) to be
redeemed, as well as the aggregate principal amount of the Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption;
(h) the section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and
(i) 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 Notes and that reliance may be placed only on the other
identification numbers printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided that the Company
shall deliver to the Trustee, at least 30 days prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes or portions thereof
called for redemption become due and payable on the Redemption Date at the
Redemption Price. Upon surrender to any Paying Agent, such Notes or portions
thereof shall be paid at the Redemption Price, plus Additional Interest, if any,
and accrued interest to the Redemption Date; provided, however, that
installments of interest which are due and payable on or prior to the Redemption
Date shall be payable to the Holders of such Notes, registered as such, at the
close of business on the relevant record date for the payment of such
installment of interest.
Section 3.5. Deposit of Redemption Price or Purchase
Price.
On or before 10:00 a.m. Eastern Time on each Redemption Date
or Purchase Date, the Company shall irrevocably deposit with the Trustee or with
the Paying Agent money sufficient to pay the aggregate amount due on all Notes
to be redeemed or repurchased on that date, including without limitation any
accrued and unpaid interest and Additional Interest, if any, to the Redemption
Date or Purchase Date. Upon written request by the Company, the Trustee or the
Paying Agent shall promptly return to the Company any money not required for
that purpose.
Unless the Company defaults in making such payment, interest
and any Additional Interest on the Notes to be redeemed or repurchased will
cease to accrue on the applicable Redemption Date or Purchase Date, whether or
not such Notes are presented for payment. If any Note called for redemption
shall not be so paid upon surrender because of the failure of the Company to
comply with the preceding paragraph, interest will be paid on the
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unpaid principal, from the applicable Redemption Date or Purchase Date until
such principal is paid, and on any interest not paid on such unpaid principal,
in each case at the rate provided in the Notes and in Section 4.1.
Section 3.6. Notes Redeemed or Repurchased in Part.
Upon surrender of a Note that is redeemed or repurchased in
part, the Company shall issue and the Trustee shall authenticate for the Holder
at the expense of the Company a new Note equal in principal amount to portion of
the Note surrendered that is not to be redeemed or repurchased.
Section 3.7. Optional Redemption.
The Company may redeem any or all of the Notes at any time on
or after April 15, 2007 at the Redemption Prices set forth in paragraph 5 of the
Notes (an "Optional Redemption"). Any redemption pursuant to this Section 3.7
shall be made pursuant to the provisions of Sections 3.1 through 3.6.
Section 3.8. Optional Redemption upon Equity Offerings.
In the event the Company completes one or more Equity
Offerings on or before April 15, 2006, the Company may, at its option, use the
net cash proceeds from any such Equity Offering to redeem up to 35% of the
original principal amount of the Notes at a Redemption Price equal to 109.625%
of the principal amount thereof, together with accrued and unpaid interest and
Additional Interest thereon, if any, to the date of redemption; provided,
however, that at least 65% of the original principal amount of the Notes
initially issued under this Indenture will remain outstanding immediately after
any such redemption; and provided, further, that the Company shall make such
redemption not more than 120 days after the consummation of any such Equity
Offering. Any redemption pursuant to this Section 3.8 shall be made pursuant to
the provisions of Sections 3.1 through 3.6.
Section 3.9. Repurchase upon Change of Control Offer.
In the event that, pursuant to Section 4.15, the Company shall
be required to commence a Change of Control Offer, it shall follow the
procedures specified below.
Within 30 days following the date upon which the Change of
Control occurred, the Company must send, by first-class mail, a notice to each
Holder, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Change of Control Offer. The Change of Control shall be made to all Holders. The
notice, which shall govern the terms of the Change of Control Offer, shall
state:
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(a) the transaction or transactions that constitute the
Change of Control, providing information, to the extent publicly
available, regarding the Person or Persons acquiring control, and
stating that the Change of Control Offer is being made pursuant to this
Section 3.9 and Section 4.15 and that, to the extent lawful, all Notes
tendered will be accepted for payment;
(b) the Purchase Price, the last day of the Change of
Control Offer Period and the Purchase Date, which must be no earlier
than 30 days nor later than 45 days from the date such notice is
mailed, other than as may be required by law (the "Change of Control
Payment Date");
(c) that any Note not properly tendered or otherwise not
accepted for repurchase will continue to accrue interest and Additional
Interest, if any;
(d) that, unless the Company defaults in the payment of
the amount due on the Change of Control Payment Date, all Notes or
portions thereof accepted for repurchase pursuant to the Change of
Control Offer shall cease to accrue interest and Additional Interest,
if any, after the Change of Control Payment Date;
(e) that Holders electing to have any Notes purchased
pursuant to the Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, or transfer by book-entry
transfer, to the Company, a Depositary, if appointed by the Company, or
a Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day prior to the Change of
Control Payment Date;
(f) that Holders will be entitled to withdraw their
election if the Company, the Depositary or the Paying Agent, as the
case may be, receives, not later than the Change of Control Offer
Payment Date, a telegram, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered
for repurchase, and a statement that such Holder is withdrawing his
election to have the Notes redeemed in whole or in part; and
(g) that Holders whose Notes are being repurchased only
in part will be issued new Notes equal in principal amount to the
portion of the Notes tendered (or transferred by book-entry transfer)
that is not to be repurchased, which portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
On or before the Change of Control Payment Date, the Company
shall to the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Purchase Price, together with accrued and
unpaid interest and Additional Interest, if any, thereon to the Change of
Control Payment Date in respect of all Notes or portions thereof so
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tendered and accepted for repurchase and (iii) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
repurchased by the Company. The Paying Agent shall promptly (but in any case not
later than five days after the Change of Control Payment Date) mail to each
Holder of Notes so repurchased the amount due in connection with such Notes, and
the Company shall promptly issue a new Note, and the Trustee, upon written
request from the Company in the form of an Officers' Certificate shall
authenticate and mail or deliver (or cause to transfer by book entry) to each
relevant Holder a new Note, in a principal amount equal to any unpurchased
portion of the Notes surrendered to the Holder thereof; provided that each such
new Note shall be in a principal amount of $l,000 or and integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
If the Change of Control Payment Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest and Additional Interest, if any, in each case to the
Change of Control Payment Date, shall be paid to the Person in whose name a Note
is registered at the close of business on such record date, and no additional
interest shall be payable to Holders pursuant to the Change of Control Offer.
Section 3.10. Repurchase upon Application of Excess
Proceeds.
In the event that, pursuant to Section 4.10, the Company shall
be required to commence a Net Proceeds Offer, it shall follow the procedures
specified below.
The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Net Proceeds
Offer. The Net Proceeds Offer shall be made to all Holders. Each Net Proceeds
Offer will be mailed to the record Holders as shown on the register of Holders
within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the
Trustee, and shall comply with the procedures set forth in this Indenture. Upon
receiving notice of the Net Proceeds Offer, Holders may elect to tender their
Notes in whole or in part in integral multiples of $1,000 in exchange for cash.
A Net Proceeds Offer shall remain open for a period of 20 Business Days or such
longer period as may be required by law. The notice, which shall govern the
terms of the Net Proceeds Offer, shall state:
(a) that the Net Proceeds Offer is being made pursuant to
this Section 3.10 and Section 4.10;
(b) the Net Proceeds Offer Amount, the Purchase Price and
the Purchase Date;
(c) that any Note not properly tendered or otherwise not
accepted for repurchase shall continue to accrue interest and Additional
Interest, if any;
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(d) that, unless the Company defaults in the payment of
the amount due on the Purchase Date, all Notes or portions thereof accepted for
repurchase pursuant to the Net Proceeds Offer shall cease to accrue interest and
Additional Interest, if any, after the Purchase Date;
(e) that Holders electing to have any Notes repurchased
pursuant to any Net Proceeds Offer shall be required to tender the Notes, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Purchase Date;
(f) that Holders will be entitled to withdraw their
election if the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the Purchase Date, a telegram, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes delivered for repurchase and a statement that such Holder is withdrawing
his election to have such Notes repurchased in whole or in part;
(g) that, to the extent Holders properly tender Notes and
holders of Indebtedness of the Company and the Guarantors that ranks pari passu
in right of payment with the Notes or the Guarantees properly tender such
Indebtedness in an amount exceeding the Net Proceeds Offer Amount, the tendered
Notes and such other pari passu Indebtedness will be purchased on a pro rata
basis based on the aggregate principal amounts of Notes and such other pari
passu Indebtedness tendered (and the Trustee shall select the tendered Notes of
tendering Holders on a pro rata basis based on the amount of Notes tendered);
and
(h) that Holders whose Notes are being repurchased only
in part will be issued new Notes equal in principal amount to the portion of the
Notes tendered (or transferred by book-entry transfer) that is not to be
repurchased, which portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
On or before the Purchase Date, the Company shall to the
extent lawful, (i) accept for payment, on a pro rata basis in accordance with
this Indenture to the extent necessary, the Net Proceeds Offer Amount of (A)
Notes or portions thereof properly tendered pursuant to the Net Proceeds Offer
and (B) properly tendered other Indebtedness of the Company and the Guarantors
that ranks pari passu in right of payment with the Notes or the Guarantees, or
if less than the Net Proceeds Offer Amount has been tendered, all Notes and such
other pari passu Indebtedness properly tendered, (ii) deposit with the Paying
Agent an amount equal to the Purchase Price, plus accrued and unpaid interest
and Additional Interest, if any, thereon to the Purchase Date in respect of all
Notes or portions thereof so tendered and accepted for repurchase and (iii)
deliver or cause to be delivered to the Trustee the Notes so accepted together
with an Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being repurchased by the Company. The Paying Agent shall
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promptly (but in any case not later than five days after the Purchase Date) mail
to each Holder of Notes so repurchased the amount due in connection with such
Notes, and the Company shall promptly issue a new Note, and the Trustee, upon
written request from the Company in the form of an Officers' Certificate shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion to the Holder thereof; provided that
each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Net
Proceeds Offer on or as soon as practicable after the Purchase Date.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest and Additional Interest, if any, in each case to the Purchase Date,
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders to the Net Proceeds Offer.
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Principal and Interest.
The Company shall pay or cause to be paid the principal,
Redemption Price and Purchase Price of, and interest on the Notes on the dates,
in the amounts and in the manner provided herein and in the Notes. Principal,
Redemption Price, Purchase Price and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay the aggregate amount
then due. The Company shall pay all Additional Interest, if any, on the dates,
in the amounts and in the manner set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal,
Redemption Price and Purchase Price at the same rate per annum on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the
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Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligations to maintain an office or agency in the
Borough of Manhattan, the City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.3. The Trustee may resign such agency at any time by giving written
notice to the Company no later than 30 days prior to the effective date of such
resignation.
Section 4.3. Reports to Holders.
Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish the
Holders, with a copy to the Trustee:
(i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on
Forms 10-Q and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the
financial statements or in the footnotes thereto and in "Management's
Discussion and Analysis of Financial Condition and Result of
Operations," the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of
the Company, if any) and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants;
and
(ii) the information that would be required to be included
in all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such
reports, in each case within the time periods specified in the
Commission's rules and regulations.
- 51 -
In addition, following the consummation of the Exchange Offer,
whether or not required by the rules and regulations of the Commission, the
Company will file a copy of all such information and reports with the Commission
for public availability within the time periods specified in the Commission's
rules and regulations (unless the Commission will not accept such a filing) and
make such information available to securities analysts and prospective investors
upon request. In addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.4. Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture in all material
respects, and further stating, as to each such Officer signing such certificate,
that to the best of his or her knowledge the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture in
all material respects and is not in Default in the performance or observance of
any of the terms, provisions and conditions of this Indenture (and, if a Default
or an Event of Default shall have occurred, describing all such Defaults or
Events of Default) of which he or she may have knowledge, and that to the best
of his or her knowledge no event has occurred and remains in existence by reason
of which, payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event.
So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3 shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article IV or Article V or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith (and in any event within five
Business Days) upon any Officer of the Company becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default.
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Section 4.5. Taxes.
The Company shall pay or discharge, and shall cause each of
its Subsidiaries to pay or discharge, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants it shall not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
such law has not been enacted.
Section 4.7. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any
distribution (other than dividends or distributions payable in the
Qualified Capital Stock of the Company) on or in respect of shares of
the Company's Capital Stock to holders of such Capital Stock;
(2) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any warrants, rights or
options to purchase or acquire shares of any class of such Capital
Stock;
(3) make any principal payment on, purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value,
prior to (a) any scheduled maturity, (b) any scheduled or mandatory
repayment or (c) any scheduled sinking fund payment, any Indebtedness
of the Company that is subordinate or junior in right of payment to the
Notes; or
(4) make any Investment (other than Permitted
Investments) (each of the foregoing actions set forth in clauses (1),
(2), (3) and (4) being referred to as a "Restricted Payment");
if at the time of such Restricted Payment or immediately after giving effect
thereto,
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(i) a Default or an Event of Default shall have occurred
and be continuing;
(ii) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.9; or
(iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the
Issue Date (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of the Company)
shall exceed the sum of, without duplication:
(a) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of the Company earned
subsequent to the end of the fiscal quarter immediately prior
to the Issue Date and on or prior to the end of the most
recently ended fiscal quarter for which internal financial
statements are available as of the date the Restricted Payment
occurs (treating such period as a single accounting period);
plus
(b) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a
Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date and on or prior to the date the
Restricted Payment occurs of Qualified Capital Stock of the
Company; plus
(c) without duplication of any amounts included
in clause (iii)(b) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock subsequent to the
Issue Date and on or prior to the date the Restricted Payment
occurs; plus
(d) without duplication, an amount equal to the
sum of:
(x) the net reduction in Investments in
Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of
assets by any Unrestricted Subsidiary to the Company
or any Restricted Subsidiary or the receipt of
proceeds by the Company or any Restricted Subsidiary
from the sale or other disposition of any portion of
the Capital Stock of any Unrestricted Subsidiary, in
each case occurring subsequent to the Issue Date, and
(y) the consolidated net Investments on the
date of Revocation made by the Company or any of its
Restricted Subsidiaries in any Subsidiary of the
Company that has been designated an Unre-
- 54 -
stricted Subsidiary after the Issue Date upon its
redesignation as a Restricted Subsidiary in
accordance with Section 4.19.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit:
(1) the payment of any dividend or redemption payment
within 60 days after the date of declaration of such dividend or the
mailing of such irrevocable redemption notice if the dividend or
redemption payment, as the case may be, would have been permitted on
the date of declaration or the date of mailing of such notice;
(2) if no Default or Event of Default shall have occurred
and be continuing, the acquisition of any shares of Capital Stock of
the Company, either
(a) solely in exchange for shares of Qualified
Capital Stock of the Company or
(b) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a
Restricted Subsidiary of the Company) of shares of Qualified
Capital Stock of the Company;
(3) if no Default or Event of Default shall have occurred
and be continuing, the acquisition of any Indebtedness of the Company
that is subordinate or junior in right of payment to the Notes either
(a) solely in exchange for shares of Qualified
Capital Stock of the Company or
(b) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a
Restricted Subsidiary of the Company) of
(x) shares of Qualified Capital Stock
of the Company or
(y) Refinancing Indebtedness;
(4) if no Default or Event of Default shall have occurred
and be continuing, repurchases by the Company of Capital Stock of the
Company or options or warrants to purchase Capital Stock of the
Company, stock appreciation rights or any similar equity interest in
the Company from consultants, directors, officers and employees of the
Company or any of its Subsidiaries or their authorized representatives
upon the death, disability, retirement or termination of employment of
such consultants, directors, officers or employees in an aggregate
amount not to exceed $750,000 in any calendar
- 55 -
year plus the amount of any proceeds received under key-man life
insurance policies that are used to make such payments;
(5) if no Default shall have occurred and be continuing,
the purchase, redemption, defeasance or other acquisition or retirement
of Indebtedness of the Company that is subordinate or junior in right
of payment to the Notes in connection with an asset sale net proceeds
amount offer or change of control offer after complying with Sections
4.10 and 4.15; and
(6) if no Default or Event of Default shall have occurred
and be continuing, Restricted Payments in an aggregate amount not to
exceed $10.0 million.
In determining the aggregate amount of Restricted Payments
made subsequent to the Issue Date in accordance with clause (iii) of the second
preceding paragraph, amounts expended pursuant to clauses (1), (2)(b), 3(b)(x),
(4) and (6) of the immediately preceding paragraph shall be included in such
calculation.
Section 4.8. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on or
in respect of its Capital Stock;
(2) make loans or advances or pay any Indebtedness or
other obligation owed to the Company or any other Restricted
Subsidiary; or
(3) transfer any of its property or assets to the Company
or any other Restricted Subsidiary,
in each case, except for such encumbrances or restrictions existing under or by
reason of:
(a) applicable law;
(b) this Indenture, the Notes and the Guarantees;
(c) customary non-assignment provisions of any contract
or any lease governing a leasehold interest of any Restricted
Subsidiary;
(d) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person,
- 56 -
other than the Person or the properties or assets of the Person so
acquired (including, but not limited to, such Person's direct and
indirect Subsidiaries);
(e) agreements existing on the Issue Date (other than the
Credit Agreement) to the extent and in the manner such agreements are
in effect on the Issue Date;
(f) the Credit Agreement or an agreement governing any
other Indebted-ness of the Company or any Restricted Subsidiary
permitted to be incurred under this Indenture; provided that, with
respect to any agreement governing such other Indebtedness, the
provisions relating to such encumbrance or restriction are no less
favorable to the Company in any material respect than the provisions
contained in the Credit Agreement as in effect on the Issue Date;
(g) restrictions on the transfer of assets subject to any
Lien permitted under this Indenture imposed by the holder of such Lien;
(h) restrictions imposed by any agreement to sell assets
or Capital Stock permitted under this Indenture to any Person pending
the closing of such sale;
(i) customary provisions in joint venture agreements and
other similar agreements in each case relating solely to the respective
joint venture or similar entity or to the equity interest therein;
(j) customary provisions imposed by agreements governing
Indebtedness of a Foreign Restricted Subsidiary permitted to be
incurred under this Indenture to the extent that such encumbrance or
restriction relates solely to the respective Foreign Restricted
Subsidiary; and
(k) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clauses (b) and (d) through (g) above;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to
the Company in any material respect as determined by the Board of
Directors of the Company in its reasonable and good faith judgment than
the provisions relating to such encumbrance or restriction contained in
agreements referred to in such clauses (b) and (d) through (g) above.
Section 4.9. Limitation on Incurrence of Additional
Indebtedness.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness); provided, how-
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ever, that if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, the Company or any of its Restricted Subsidiaries that is, or,
upon such incurrence becomes, a Guarantor may incur Indebtedness (including,
without limitation, Acquired Indebtedness) and any Restricted Subsidiary that is
not or will not, upon such incurrence, become a Guarantor may incur Acquired
Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.00 to 1.00.
(b) Notwithstanding the preceding paragraph above, the
Company and the Guarantors will not incur any Indebtedness if such Indebtedness
is by its terms subordinate or junior in right of payment to any other
Indebtedness of the Company and the Guarantors, unless such Indebtedness is also
by its terms made subordinate or junior in right of payment to the Notes to the
same extent and in the same manner as such Indebtedness is subordinated to other
Indebtedness of the Company and the Guarantors.
Section 4.10. Limitation on Asset Sales.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Company or the applicable Restricted Subsidiary,
as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or
otherwise disposed of (as determined in good faith by the Board of
Directors of the Company);
(2) at least 75% of the consideration received by the
Company or its Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents and shall
be received at the time of such disposition; provided, however, that
the amount of (a) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet or the notes thereto)
of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes) that are assumed by
the transferee in such Asset Sale and from which the Company or such
Restricted Subsidiary is released and (b) any notes, securities or
other obligations received by the Company or by any such Restricted
Subsidiary from such transferee that are immediately converted by the
Company or by such Restricted Subsidiary into cash or Cash Equivalents
shall be deemed to be cash for purposes of this provision; and
(3) upon the consummation of an Asset Sale, the Company
shall apply, or cause such Restricted Subsidiary to apply, the Net Cash
Proceeds relating to such Asset Sale within 360 days of receipt thereof
either:
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(a) to pay (i) Indebtedness under the Credit
Agreement (and, in the case of any such Indebtedness under any
revolving credit facility, effect a corresponding permanent
reduction in the availability under such revolving credit
facility) or other Indebtedness ranking pari passu with the
Notes or Guarantees and (ii) in the case of an Asset Sale by a
Restricted Subsidiary that is not a Guarantor, Indebtedness of
such Restricted Subsidiary; provided, however, that if the
Company repays such other pari passu Indebtedness it must make
an equal and ratable Offer to all holders of Notes as provided
in the following paragraph,
(b) to make an Investment in properties and
assets that replace the properties and assets that were the
subject of such Asset Sale or in properties and assets that
will be used in the business of the Company and its Restricted
Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets"), and/or
(c) a combination of prepayment and investment
permitted by the foregoing clauses (3)(a) and (3)(b).
(B) On the 361st day after an Asset Sale or such earlier
date, if any, as the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (3)(a), (3)(b) and (3)(c) of paragraph (A) above
(each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash
Proceeds that have not been applied on or before such Net Proceeds Offer Trigger
Date as permitted in clauses (3)(a), (3)(b) and (3)(c) of paragraph (A) above
(each a "Net Proceeds Offer Amount") shall be applied by the Company or such
Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
a date not less than 45 nor more than 60 days following the applicable Net
Proceeds Offer Trigger Date, the maximum principal amount of Notes and other
Indebtedness of the Company and the Guarantors that ranks pari passu in right of
payment with the Notes or the Guarantees, as the case may be (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Net Proceeds Offer Amount (an "Offer"). Any Notes and other
Indebtedness to be purchased pursuant to an Offer shall be purchased pro rata
based on the aggregate principal amount of Notes and such other Indebtedness
outstanding and all Notes shall be purchased at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase. The Net Proceeds Offer shall be made in
compliance with the applicable procedures set forth in Article III and shall
include all instructions and materials necessary to enable Holders to tender
their Notes.
(C) The Company may defer the Net Proceeds Offer until
there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess
of $10.0 million resulting from one or more Asset Sales (at which time, the
entire unutilized Net Proceeds Offer
- 59 -
Amount, and not just the amount in excess of $10.0 million, shall be applied as
required pursuant to this Section 4.10).
(D) In the event of the transfer of substantially all
(but not all) of the property and assets of the Company and its Restricted
Subsidiaries as an entirety to a Person in a transaction permitted under Section
5.1, the successor corporation shall be deemed to have sold the properties and
assets of the Company and its Restricted Subsidiaries not so transferred for
purposes of this Section 4.10, and shall comply with the provisions of this
Section 4.10 with respect to such deemed sale as if it were an Asset Sale. In
addition, the fair market value of such properties and assets of the Company or
its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 4.10.
(E) Notwithstanding paragraphs (A) through (D) of this
Section 4.10, the Company and its Restricted Subsidiaries will be permitted to
consummate an Asset Sale without complying with such paragraphs to the extent:
(ii) at least 75% of the consideration for such Asset Sale
constitutes Replacement Assets; and
(iii) such Asset Sale is for fair market value;
provided that any consideration not constituting Replacement Assets received by
the Company or any of its Restricted Subsidiaries in connection with any Asset
Sale permitted to be consummated under this paragraph shall constitute Net Cash
Proceeds subject to the provisions of paragraphs (A) through (D) of this Section
4.10.
(F) The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations to
the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.10, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.10 by virtue thereof.
Section 4.11. Limitations on Transactions with Affiliates.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under the third paragraph of this Section 4.11 and (y) Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-
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length basis from a Person that is not an Affiliate of the Company or such
Restricted Subsidiary.
All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan) involving
aggregate payments or other property with a fair market value in excess of $2.5
million will be approved by the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $10.0 million, the Company or such
Restricted Subsidiary, as the case may be, will, prior to the consummation
thereof, obtain an opinion from an Independent financial Advisor stating that
such transaction or series of related transactions are fair to the Company or to
the relevant Restricted Subsidiary, as the case may be, from a financial point
of view.
The restrictions set forth in the first paragraph of this
Section 4.11 shall not apply to:
(1) reasonable fees and compensation paid to and
indemnity provided on behalf of officers, directors, employees or
consultants of the Company or any Restricted Subsidiary as determined
in good faith by the Company's Board of Directors or senior management;
(2) transactions exclusively between or among the Company
and any of its Restricted Subsidiaries or exclusively between or among
such Restricted Subsidiaries provided such transactions are not
otherwise prohibited by this Indenture;
(3) Restricted Payments and Permitted Investments
permitted by this Indenture; or
(4) management or advisory fees to BRS Group or its
affiliates in accordance with the terms of the Management Agreement as
in effect on the Issue Date or as the same may be modified or amended;
provided, however, that such modification or amendment cannot provide
for the payment of such fees in an amount in excess of 1.5% of
Consolidated EBITDA.
Section 4.12. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens upon any property or assets of the Company
or any of its Restricted Subsidiaries whether
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owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom unless:
(1) in the case of Liens securing Subordinated
Indebtedness, the Notes or the Guarantee of such Guarantor, as the case
may be, is secured by a Lien on such property, assets or proceeds that
is senior in priority to such Liens; and
(2) in all other cases, the Notes or the Guarantee of
such Guarantor, as the case may be, is secured on an equal and ratable
basis,
except for
(a) Liens existing as of the Issue Date to the extent and
in the manner such Liens are in effect on the Issue Date,
(b) (x) Liens securing Indebtedness permitted by clauses
(2) and (15) of the definition of "Permitted Indebtedness" and (y)
Liens securing Indebtedness permitted under Section 4.9 (other than
Indebtedness permitted by clauses (2) and (15) of the definition of
"Permitted Indebtedness"); provided that the principal amount of such
Indebtedness so incurred under Section -------- 4.9 (other than
pursuant to clauses (2) and (15) of the definition of Permitted
Indebtedness), and the principal amount of all other Indebtedness
secured by Liens permitted by this clause (y), shall, at the time such
Indebtedness is incurred and after giving effect to such incurrence,
not exceed an aggregate principal amount equal to the difference
between (i) 1.25 times Consolidated EBITDA for the most recently ended
four full fiscal quarters for which internal financial statements are
available and (ii) the amount of Indebtedness then outstanding under
clauses (2) and (15) of the definition of "Permitted Indebtedness,"
(c) Liens securing the Notes and Guarantees,
(d) Liens of the Company or a Restricted Subsidiary on
assets of any Restricted Subsidiary of the Company and Liens on the
assets of the Company in favor of a Restricted Subsidiary that is a
Guarantor,
(e) Liens securing Refinancing Indebtedness that is
incurred to Refinance any Indebtedness that has been secured by a Lien
permitted under this Indenture and that has been incurred in accordance
with the provisions of this Indenture; provided, however, that such
Liens
(x) are no less favorable to the Holders and are
not more favorable to the lienholders with respect to such
Liens, in each case in any material respect, than the Liens in
respect of the Indebtedness being Refinanced and
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(y) do not extend to or cover any property or
assets of the Company or any of its Restricted Subsidiaries
not securing the Indebtedness so Refinanced,
(f) Liens in favor of the Company and
(g) Permitted Liens.
Section 4.13. Continued Existence.
Subject to Article V, each of the Company and the Guarantors
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate or other existence in accordance with the
organizational documents (as the same may be amended from time to time) of the
Company or such Guarantor and (ii) the material rights (charter and statutory),
licenses and franchises of the Company or such Guarantor, except to the extent
that the applicable Board of Directors determines in good faith that the
preservation of such right, license or franchise, or the existence of any such
Guarantor, in either case is no longer necessary or desirable in the conduct of
the business of the Company or such Guarantor and that the loss thereof is not
disadvantageous in any material respect to the Holders.
Section 4.14. Insurance Matters.
The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company, are adequate and appropriate for the conduct of the business of
the Company and its Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be either (i) consistent with past practices of the Company or
the applicable Subsidiary or (ii) customary, in the reasonable, good faith
opinion of the Company, for corporations similarly situated in the industry,
unless the failure to provide such insurance (together with all other such
failures) would not have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
Section 4.15. Offer to Repurchase upon Change of Control.
Upon the occurrence of a Change of Control, each Holder will
have the right to require that the Company purchase all or a portion (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes (a "Change of
Control Offer") at a Purchase Price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and Additional Interest, if any,
thereon to the Change of Control Payment Date. The Change of Control Offer shall
be made in compliance with the applicable procedures set forth in Article III
and shall include all instructions and materials necessary to enable Holders to
tender their Notes.
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The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
Section 4.16. Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries transfers
or causes to be transferred, in one transaction or a series of related
transactions, any property to any Domestic Restricted Subsidiary that is not a
Guarantor having total assets (after giving effect to such transfer) with a book
value in excess of $500,000, or if the Company or any of its Restricted
Subsidiaries shall organize, acquire or otherwise invest in another Domestic
Restricted Subsidiary having total assets with a book value in excess of
$500,000, then such transferee or acquired or other Restricted Subsidiary shall:
(1) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to
which such Restricted Subsidiary shall unconditionally guarantee all of
the Company's obligations under the Notes and this Indenture on the
terms set forth in this Indenture; and
(2) deliver to the Trustee an Opinion of Counsel that
such supplemental indenture has been duly authorized, executed and
delivered by such Restricted Subsidiary and constitutes a legal, valid,
binding and enforceable obligation of such Restricted Subsidiary.
Thereafter, such Restricted Subsidiary shall be a Guarantor for all purposes of
this Indenture; provided, however, to the extent that a Restricted Subsidiary is
subject to any instrument governing Acquired Indebtedness, as in effect at the
time of acquisition thereof, that prohibits such Restricted Subsidiary from
issuing a Guarantee, such Restricted Subsidiary shall not be required to execute
such a supplemental indenture until it is permitted to issue such Guarantee
pursuant to the terms of such Acquired Indebtedness; provided, further, however,
that notwithstanding the above proviso, if any such Restricted Subsidiary incurs
Indebtedness under or guarantees the Credit Agreement, then such Restricted
Subsidiary shall guarantee the Notes as well.
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Section 4.17. Payments for Consent.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.18. Limitation on Preferred Stock of Restricted
Subsidiaries.
The Company will not permit any of its Restricted Subsidiaries
that are not Guarantors to issue any Preferred Stock (other than to the Company
or to a Wholly Owned Restricted Subsidiary) or permit any Person (other than the
Company or a Wholly Owned Restricted Subsidiary) to own any Preferred Stock of
any Restricted Subsidiary that is not a Guarantor.
Section 4.19. Limitation on Designation of Unrestricted
Subsidiaries.
(a) The Company may designate any Subsidiary of the
Company (other than a Subsidiary of the Company that owns Capital Stock of a
Restricted Subsidiary) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(1) no Default shall have occurred and be continuing at
the time of or after giving effect to such Designation;
(2) the Company would be permitted under this Indenture
to make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the sum of:
(a) the fair market value of the Capital Stock
of such Subsidiary owned by the Company and its Restricted
Subsidiaries on such date and
(b) the aggregate amount of other Investments of
the Company and its Restricted Subsidiaries in such Subsidiary
on such date; and
(3) the Company would be permitted to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.9 at the time of Designation (assuming the effectiveness of
such Designation).
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 4.7 for all purposes of this Indenture in the Designation Amount.
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(b) The Company shall not, and shall not permit any
Restricted Subsidiary to, at any time:
(1) provide direct or indirect credit support for or a
guarantee of any Indebtedness of any Unrestricted Subsidiary (including
of any undertaking, agreement or instrument evidencing such
Indebtedness); or
(2) be directly or indirectly liable for any Indebtedness
of any Unrestricted Subsidiary.
(c) The Company may revoke any Designation of a
Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such
Subsidiary shall then constitute a Restricted Subsidiary, if:
(1) no Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company certifying compliance with the foregoing provisions.
ARTICLE V.
SUCCESSORS
Section 5.1. Merger, Consolidation and Sale of Assets.
The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and its Restricted Subsidiaries) whether as
an entirety or substantially as an entirety to any Person, unless:
(1) either:
(a) the Company shall be the surviving or
continuing corporation; or
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(b) the Person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the
properties and assets of the Company and of its Restricted
Subsidiaries substantially as an entirety (the "Surviving
Entity"):
(x) will be a corporation organized and
validly existing under the laws of the United States
or any State thereof or the District of Columbia; and
(y) will expressly assume, by
supplemental indenture (in form and substance
reasonably satisfactory to the Trustee), executed and
delivered to the Trustee, the due and punctual
payment of the principal of and premium, if any, and
interest on all of the Notes and the performance of
every covenant of the Notes, this Indenture and the
Registration Rights Agreement on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such
transaction and the assumption contemplated by clause(1)(b)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect
of such transaction), the Company or such Surviving Entity, as the case
may be, shall be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.9;
(3) immediately before and immediately after
giving effect to such transaction and the assumption contemplated by
clause (1)(b)(y) above (including, without limitation, giving effect to
any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred and any Lien granted in connection with or in respect of
the transaction), no Default or Event of Default shall have occurred or
be continuing; and
(4) the Company or the Surviving Entity shall
have delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of
this Indenture and that all conditions precedent in this Indenture
relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries, the Capital Stock of which constitutes all
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or substantially all of the properties and assets of the Company, will be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing in which the Company is not the continuing corporation, the Surviving
Entity shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Notes with the same
effect as if such Surviving Entity had been named as such.
Each Guarantor (other than any Guarantor whose Guarantee is to
be released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with the provisions of Section 4.10)
will not, and the Company will not cause or permit any Guarantor to, consolidate
with or merge with or into any Person other than the Company or any other
Guarantor unless:
(1) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such
sale, lease, conveyance or other disposition shall have been made is a
corporation, limited liability company or partnership organized and
existing under the laws of the United States or any State thereof or
the District of Columbia;
(2) such entity assumes by supplemental indenture all of
the obligations of the Guarantor on the Guarantee; and
(3) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing.
Any merger or consolidation of a Guarantor with and into the
Company (with the Company being the surviving entity) or another Guarantor that
is a Restricted Subsidiary need only comply with clause (4) of the first
paragraph of this Section 5.1.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.1, the Surviving Entity shall succeed to
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such Surviving Entity had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal, Purchase Price
or Redemption Price of or interest or Additional Interest, if any, on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.1.
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ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
Each of the following constitutes an "Event of Default":
(a) the failure to pay interest on any Note when the same
becomes due and payable and the default continues for a period of 30
days;
(b) the failure to pay the principal of any Note, when
such principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
on the date specified for such payment in the applicable offer to
purchase;
(c) a default in the observance or performance of any
other covenant or agreement contained herein which default continues
for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied)
from the Trustee or the Holders of at least 25% of the outstanding
principal amount of the Notes (except in the case of a default with
respect to Section 5.1, which will constitute an Event of Default with
such notice requirement but without such passage of time requirement);
(d) the failure to pay at final stated maturity (giving
effect to any applicable grace periods and any extensions thereof) the
principal amount of any Indebtedness of the Company or any Restricted
Subsidiary of the Company, or the acceleration of the final stated
maturity of any such Indebtedness (which acceleration is not rescinded,
annulled or otherwise cured within 20 days of receipt by the Company or
such Restricted Subsidiary of notice of any such acceleration), if the
aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure
to pay principal at final stated maturity or which has been accelerated
(in each case with respect to which the 20-day period described above
has passed), aggregates $5.0 million or more at any time;
(e) one or more judgments in an aggregate amount in
excess of $5.0 million (to the extent not covered by insurance) shall
have been rendered against the Company or any of its Significant
Subsidiaries and such judgments remain undischarged, unpaid or unstayed
for a period of 60 days after such judgment or judgments become final
and non-appealable;
(f) the Company or any Significant Subsidiary of the
Company:
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(i) commences a voluntary case under any
Bankruptcy Law,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian
or receiver of it or for all or substantially, all of its
property, or
(iv) makes a general assignment for the benefit
of its creditors; or
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief in an involuntary case against
the Company or any Significant Subsidiary of the Company,
(ii) appoints a custodian or receiver of the
Company or any Significant Subsidiary or for all or
substantially all of the property of any of the foregoing, or
(iii) orders the liquidation of the Company or any
of its Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(h) any Guarantee of a Significant Subsidiary ceases to
be in full force and effect or any Guarantee of a Significant
Subsidiary is declared to be null and void and unenforceable or any
Guarantee of a Significant Subsidiary is found to be invalid or any
Guarantor that is a Significant Subsidiary denies its liability in
writing under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of this Indenture).
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) of Section 6.1 with respect to the Company) shall
occur and be continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of outstanding Notes may declare the principal of and accrued
interest on all the Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" and the same shall become immediately due and
payable. If an Event of Default specified in clause (f) or (g) of Section 6.1
relating to the Company occurs and is continuing, then all unpaid principal of
and premium, if any, and accrued and unpaid interest
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on all of the outstanding Notes shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder.
The Holders of not less than a majority in principal amount of
the Notes by written notice to the Company and the Trustee may, on behalf of the
Holders of all of the Notes, rescind such declaration and its consequences:
(1) if the rescission would not conflict with any
judgment or decree;
(2) if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due
solely because of the acceleration;
(3) to the extent the payment of such interest is lawful,
if interest on overdue installments of interest and overdue principal
that has become due otherwise than by such declaration of acceleration
has been paid;
(4) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements
and advances; and
(5) in the event of the cure or waiver of an Event of
Default of the type described in clause (f) or (g) of Section 6.1, if
the Trustee shall have received an Officers' Certificate and an Opinion
of Counsel stating that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, interest or Additional Interest, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding, and
any recovery or judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the Notes.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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Section 6.4. Waiver of Existing Defaults.
The Holders of a majority in principal amount of the Notes may
waive any existing Default or Event of Default under this Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Notes. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with applicable law or this Indenture that the Trustee
reasonably determines may be unduly prejudicial to the rights of other Holders
of Notes or that may subject the Trustee to personal liability and shall be
entitled to the benefit of Sections 7.1(c)(iii) and (e).
Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
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Section 6.7. Rights of Holders of Notes to Receive
Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal of, or premium, if
any, interest or Additional Interest, if any, on the Note, on or after the
respective due dates thereon (including in connection with an offer to
repurchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
written consent of such Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.l(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Additional Interest, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and Additional Interest, if any, and such further
amounts as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expense, disbursements and advances of
the Trustee, its agents and counsel.
Section 6.9. Notice.
The Company shall provide an Officers' Certificate to the
Trustee promptly upon any such Officer obtaining knowledge of any Default or
Event of Default (provided that such Officers shall provide such certification
at least annually whether or not such Officers know of any Default or Event of
Default) that has occurred and, if applicable, describe such Default or Event of
Default and the status thereof.
Section 6.10. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents (including
accountants, experts or such other processionals as the Trustee deems necessary,
advisable or appropriate) and counsel and the Holders of the Notes allowed in
any judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and
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counsel, and any other amounts due the Trustee
under Section 7.7 out of the estate in any such proceeding, shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.11. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, Purchase Price, Redemption Price and Additional
Interest, if any, and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
principal, Purchase Price, Redemption Price and Additional Interest, if
any, and interest, respectively; and
Third: to the Company, the Guarantors or to such party as a
court of competent jurisdiction shall direct.
The Trustee may fix a special record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.11.
Section 6.12. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE VII.
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such rights and powers vested in it by
this Indenture, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the TIA and the
Trustee need perform only those duties that are specifically set forth
in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture or the TIA against the
Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, without investigation, as to the truth
or the statements and the correctness of the opinions expressed
therein, upon and statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform on their face to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
this Section 7.1.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise
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any of its rights and powers under this Indenture at the request of any Holders,
pursuant to the provisions of this Indenture, including, without limitation,
Section 6.5, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense which might
be incurred by it in compliance with such request or direction.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its own selection and the written advice of
such counsel and Opinions of Counsel shall be full and complete authorization
and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys,
accountants, experts and such other professionals as the Trustee deems
necessary, advisable or appropriate and shall not be responsible for the
misconduct or negligence of any attorney, accountant, expert or other such
professional appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or within
the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficiently evidenced by a written order signed by two Officers of the Company.
(f) The Trustee shall not be charged with knowledge of
any Default or Event of Default under Section 6.1 (other than under Section
6.1(a) (subject to the following sentence) or Section 6.1(b)) unless either (i)
a Responsible Officer shall have actual knowledge thereof, or (ii) the Trustee
shall have received notice thereof in accordance with Section 12.2 from the
Company or any Holder of the Notes. The Trustee shall not be charged with
knowledge of the Company's obligation to pay Additional Interest, or the
cessation of
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such obligation, unless the Trustee receives written notice thereof from the
Company or any Holder.
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person specified as so
authorized in any such certificate previously delivered and not superseded.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest within the meaning of the TIA it must eliminate such conflict within 90
days, or apply (subject to the consent of the Company) to the Commission for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, or the Notes,
it shall not be accountable for the Company's use of the proceeds from the Notes
or any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing, the
Trustee shall mail to Holders of Notes a notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default in
payment on any Note (including the failure to make a mandatory repurchase
pursuant hereto), the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
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Section 7.6. Reports by Trustee to Holder of the Notes.
Within 60 days after each May 1 beginning with the May 1
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the Commission
and each stock exchange on which the Notes are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
Section 7.7. Compensation, Reimbursement and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and the rendering by it of the
services required hereunder as shall be agreed upon in writing by the Company
and the Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by or on behalf of it in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's attorneys, accountants, experts and
such other professionals as the Trustee deems necessary, advisable or
appropriate.
The Company shall indemnify the Trustee (which for purposes of
this Section 7.7 shall include its officers, directors, employees and agents)
and any predecessor Trustee against any and all losses, liabilities, claims,
damages or expenses, including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture (including its duties under Section 9.6), including the costs and
expenses of enforcing this Indenture or any Guarantee against the Company or a
Guarantor (including this Section 7.7) and defending itself against or
investigating any claim (whether asserted by the Company, any Guarantor, any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or willful
misconduct. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend any
claim or threatened claim asserted against the Trustee, and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
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Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall
survive the resignation or removal of the Trustee, the satisfaction and
discharge of this Indenture and the termination of this Indenture.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
Redemption Price or Purchase Price of or Additional Interest, if any, or
interest on, particular Notes. Such Lien shall survive the resignation or
removal of the Trustee, the satisfaction and discharge of this Indenture and the
termination of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
In no event shall the Trustee be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
In no event shall the Trustee be liable for any failure or
delay in the performance of its obligations hereunder because of circumstances
beyond its control, including, but not limited to, acts of God, flood, war
(whether declared or undeclared), terrorism, fire, riot, embargo, government
action, including any laws, ordinances, regulations, governmental action or the
like which delay, restrict or prohibit the providing of the services
contemplated by this Agreement.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
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(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian, receiver or public officer takes charge
of the Trustee or its property for the purpose of rehabilitation,
conversation or liquidation; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the date on which the successor Trustee
takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days
after the retiring trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction, in the case
of the Trustee, at the expense of the Company, for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a bona fide holder of a Note or Notes for at least six months,
fails to comply with Section 7.10, such Holder of a Note may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The Company shall mail a notice of its succession to each
Holder of a Note. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee; provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation that is eligible under Section 7.10, the successor corporation
without any further act shall be the successor Trustee.
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Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof (including the District of Columbia) that is
authorized under such laws to exercise corporate trust power, that is subject to
supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50.0 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or
Covenant Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a Board Resolution set forth in an Officers' Certificate, at any
time, elect to have either Section 8.2 or 8.3 applied to all outstanding Notes
upon compliance with the conditions set forth below in this Article VIII.
Section 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4, be deemed to have been discharged
from its obligations with respect to all outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.5 and the other Sections of this Indenture referred to in
clauses (a) through (d) below, and to have satisfied all their other obligations
under such Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions that shall survive until otherwise
terminated or discharged hereunder:
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(a) the rights of Holders to receive payments in respect
of the principal of, premium, if any, and interest on the Notes when
such payments are due;
(b) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or
agency for payments;
(c) the rights, powers, trust, duties and immunities of
the Trustee and the Company's obligations in connection therewith; and
(d) the Legal Defeasance provisions of this Article VIII.
Subject to compliance with this Article VIII, the Company may
exercise its option under this Section 8.2, notwithstanding the prior exercise
of its option under Section 8.3.
Section 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4, be released from its obligations
under the covenants contained in Sections 3.9, 3.10, 4.5, 4.7 through 4.12, 4.13
(except to the extent that it applies to the Company's existence), and 4.14
through 4.19, both inclusive, and Section 5.1 with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document, and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.1 of the
option applicable to this Section 8.3, subject to the satisfaction of the
conditions set forth in Section 8.4, Sections 6.1(c) through 6.1(e) and 6.1(h)
shall not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following are the conditions precedent to the application
of either Section 8.2 or 8.3 to the outstanding Notes:
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In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders cash in U.S. dollars,
U.S. Government Obligations, or a combination thereof, in such amounts
as will be sufficient, in the written opinion of a nationally
recognized firm of independent public accountants (a copy of which
shall be provided to the Trustee), to pay the principal of, premium, if
any, and interest on the Notes on the stated date for payment thereof
or on the applicable redemption date, as the case may be;
(2) in the case of Legal Defeasance, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that:
(a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling; or
(b) since the date of this Indenture, there has
been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders
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;
(4) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to
such deposit and the grant of any Lien securing such borrowings);
(5) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under
this Indenture (other than a Default or an Event or Default resulting
from the borrowing of funds to be applied to such deposit and the grant
of any Lien securing such borrowings) or any other material
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agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or others;
(7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; and
(8) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that, assuming no intervening
bankruptcy of the Company between the date of deposit and the 91st day
following the date of deposit and that no Holder is an insider of the
Company, after the 91st day following the date of deposit, the trust
funds will not be subject to the effect of any applicable federal
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
Notwithstanding the foregoing, the Opinion of Counsel required
by clauses (2)(a) and (3) above need not be delivered if all Notes not
theretofore delivered to the Trustee for cancellation (1) have become due and
payable, (2) will become due and payable on the maturity date within one year or
(3) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
Section 8.5. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions.
Subject to Section 8.6, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5 only,
the "Trustee") pursuant to Section 8.4 in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (other than the Company) as the Trustee may determine, to the
Holders of such Notes of all sums due and to become due thereon in respect of
principal or Redemption Price of, and Additional Interest, if any, interest on,
the Notes, that such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or U.S.
Government Obligations deposited pursuant to Section 8.4 or the principal and
interest received in respect thereof other than any
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such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or U.S. Government Obligations held by it as
provided in Section 8.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a)), are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6. Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal, Redemption
Price or Purchase Price of, or Additional Interest, if any, or interest on any
Note and remaining unclaimed for two years after such amount has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Company for payment thereof as a general creditor,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, at the expense of the Company, may cause to
be published once, in The New York Times and The Wall Street Journal (national
editions), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days after the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 8.2 or
8.3, as the case may be, by reason of any order of judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and the Guarantors under this
Indenture, and the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.2 or 8.3 until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.2 or 8.3, as the case may be; provided, however, that if the
Company makes any payment with respect to any Note following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money held by the Trustee or
Paying Agent.
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ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.
Notwithstanding Section 9.2, the Company, the Guarantors and
the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency so
long as such changes do not, in the opinion of the Trustee, adversely
affect the rights of any of the Holders in any material respect.
(b) to provide for uncertificated notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation or sale of all or substantially all of the Company's
assets pursuant to Article V;
(d) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA; or
(e) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Notes.
Upon the request of the Company, accompanied by a Board
Resolution (evidenced by an Officers' Certificate) (a copy of which shall be
provided to the Trustee) authorizing the execution of any such amended or
supplemental indenture, and upon receipt by the Trustee of an Officers'
Certificate and an Opinion of Counsel in compliance with Section 9.6, the
Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Company and
the Trustee may amend or supplement this Indenture and the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then
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outstanding (including, without limitation, consents obtained in connection with
a tender offer or exchange offer for the Notes), and, subject to Sections 6.2,
6.4 and 6.7, any existing Default or Event of Default or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).
Without the consent of each Holder affected, an amendment or
waiver may not:
(1) reduce the amount of Notes whose Holders must consent
to an amendment;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any Notes;
(3) reduce the principal of or change or have the effect
of changing the fixed maturity of any Notes, or change the date on
which any Notes may be subject to redemption or repurchase or reduce
the redemption or repurchase price therefor;
(4) make any Notes payable in money other than that
stated in the Notes;
(5) make any change in provisions of this Indenture
protecting the right of each Holder to receive payment of principal of
and interest on such Note on or after the due date thereof or to bring
suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default;
(6) after the Company's obligation to purchase Notes
arises hereunder, amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been consummated
or modify any of the provisions or definitions with respect thereto;
(7) modify or change any provision of this Indenture or
the related definitions affecting the ranking of the Notes or any
Guarantee in a manner which adversely affects the Holders; or
(8) release any Guarantor that is a Significant
Subsidiary from any of its obligations under its Guarantee or this
Indenture otherwise than in accordance with the terms of this
Indenture.
Upon the written request of the Company accompanied by a Board
Resolution (evidenced by an Officers' Certificate) (a copy of which shall be
provided to the Trustee) au-
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thorizing the execution of any such amended or supplemental indenture, and upon
the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
an Officers' Certificate and an Opinion of Counsel in compliance with Section
9.6, the Trustee shall join with the Company in the execution of such amended or
supplemental indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental indenture that complies with the
TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and therefore binds every Holder.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.6. Trustee to Sign Amendment, Etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article IX if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amended or supplemental indenture until the Board of
Directors approves such amended or supplemental indenture. In executing any
amended or supplemental indenture, the Trustee shall be entitled to receive, in
addition to the documents required by Sections 12.4 and 12.5, and, subject to
Section 7.1, shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that (i) the execution of such amended or
supplemental indenture is authorized or permitted by this Indenture, (ii) no
Event of Default shall occur as a result of the execution of such Officers'
Certificate or the delivery of such Opinion of Counsel and (iii) the amended or
supplemental indenture complies with the terms of this Indenture.
ARTICLE X.
GUARANTEE
Section 10.1. Unconditional Guarantee.
Each Guarantor hereby unconditionally guarantees (such
guarantee to be referred to herein as a "Guarantee"), on a senior unsecured
basis jointly and severally, to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, the
Notes or the obligations of the Company hereunder or thereunder, that: (i) the
principal of and interest on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Notes and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal of any Notes or
of any such other obligations, the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 10.3. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, and action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives diligence, presentment, demand of
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payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in the Notes, this Indenture and in this Guarantee. If any Holder or
the Trustee is required by any court or otherwise to return to the Company, any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article VI for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article VI, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
Section 10.2. Severability.
In case any provision of this Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 10.3. Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities (including all of its obligations under or with
respect to the Credit Agreement and all Interest Swap Obligations and
obligations under Currency Agreements) of such Guarantor and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.5, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
Section 10.4. Release of Guarantor.
(a) The Guarantee of a Guarantor will be automatically
and unconditionally released without any action on the part of the Trustee or
the Holders of the Notes: (1) in connection with any sale or other disposition
of all or substantially all of the
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assets of that Guarantor (including, without limitation, by way of merger or
consolidation), if the Company applies the Net Cash Proceeds of that sale or
other disposition in accordance with the applicable provisions of this
Indenture; (2) in connection with any sale of all of the Capital Stock of that
Guarantor, if the Company applies the Net Cash Proceeds of that sale in
accordance with the applicable provisions of this Indenture; (3) if the Company
designates that Guarantor as an Unrestricted Subsidiary in accordance with the
applicable provisions of this Indenture; or (4) upon the payment in full of the
Notes.
In addition, concurrently with any Legal Defeasance or
Covenant Defeasance, the Guarantors shall be released from all of their
Obligations under their respective applicable Guarantees.
(b) The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 10.4.
Section 10.5. Contribution.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets (as
defined below) of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's obligations with respect to the Securities or any other
Guarantor's obligations with respect to its Guarantee. "Adjusted Net Assets" of
such Guarantor at any date shall mean the lesser of the amount by which (x) the
fair value of the property of such Guarantor exceeds the total amount of
liabilities, including, without limitation, contingent liabilities (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date), but excluding liabilities under its Guarantee, of such Guarantor at such
date and (y) the present fair salable value of the assets of such Guarantor at
such date exceeds the amount that will be required to pay the probable liability
of such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), excluding debt in
respect of the Guarantee of such Guarantor, as they become absolute and matured.
Section 10.6. Waiver of Subrogation.
Until all Obligations are paid in full, each Guarantor hereby
irrevocably waives any claims or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under its Guarantee and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim
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or remedy of any Holder against the Company, whether or not such claim, remedy
or right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Guarantor in violation of the preceding sentence and the
Notes shall not have been paid in full, such amount shall have been deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders, and shall, forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the Notes, whether
matured or unmatured, in accordance with the terms of this Indenture. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by this Indenture and that the waiver
set forth in this Section 10.6 is knowingly made in contemplation of such
benefits.
Section 10.7. Execution of Guarantee.
To evidence their guarantee to the Holders set forth in this
Article X, the Guarantors hereby agree to execute the Guarantee in substantially
the form attached hereto as Exhibit C, which shall be endorsed on each Note
ordered to be authenticated and delivered by the Trustee. Each Guarantor hereby
agrees that its Guarantee set forth in this Article X shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
such Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor
by one of its authorized Officers prior to the authentication of the Note on
which it is endorsed, and the delivery of such Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of such Guarantor. Such signatures upon the Guarantee may be
by manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such officer who shall
have signed the Guarantee shall cease to be such officer before the Note on
which such Guarantee is endorsed shall have been authenticated and delivered by
the Trustee or disposed of by the Company, such Note nevertheless may be
authenticated and delivered or disposed of as though the Person who signed the
Guarantee had not ceased to be such officer of the Guarantor.
Section 10.8. Waiver of Stay, Extension or Usury Laws.
Each Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive each such Guarantor
from performing its Guarantee as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
each such Guarantor hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE XI.
SATISFACTION AND DISCHARGE
Section 11.1. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of
further effect (except as set forth below) and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture when:
(1) either:
(a) all the Notes theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have
been replaced or paid as provided in Section 2.7 and Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation; or
(b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable or will
be due and payable within one year and the Company has
irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the
entire Indebtedness on the Notes not theretofore delivered to
the Trustee for cancellation, for principal of, premium, if
any, and interest on the Notes to the date of deposit together
with irrevocable written instructions from the Company
directing the Trustee to apply such funds to the payment
thereof at maturity or redemption, as the case may be;
(2) the Company has paid all other sums payable by the
Company under this Indenture; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the Company's obligations in Sections 2.3, 2.4, 2.6, 2.7, 2.11, 7.7,
7.8, 12.2, 12.3 and 12.4 and the Trustee's and Paying Agent's obligations in
Section 11.2 shall survive until the Notes are no longer outstanding.
Thereafter, only the Company's obligations in Section 7.7 shall survive.
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Section 11.2. Application of Trust.
All money deposited with the Trustee pursuant to Section 11.1
shall be held in trust and, at the written direction of the Company, be invested
prior to maturity in U.S. Government Obligations, and applied by the Trustee in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
for the payment of which money has been deposited with the Trustee; but such
money need not be segregated from other funds except to the extent required by
law.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls.
If any provision hereof limits, qualifies or conflicts with a
provision of the TIA or another provision that would be required or deemed under
such Act to be part of and govern this Indenture if this Indenture were subject
thereto, the latter provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
Section 12.2. Notices.
Any notice or communication by the Company or the Trustee to
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Town Sports International, Inc.
888 Seventh Avenue
New York, New York 10106
Attention: Richard Pyle
Fax: (212) 664-8906
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With a copy to:
Kirkland & Ellis
153 E. 53rd Street
39th Floor
New York, New York 10022
Attention: Joshua N. Korff, Esq.
Fax: (212) 446-4943
If to the Trustee:
The Bank of New York
Attention: Corporate Trust Trustee Administration
101 Barclay Street, Floor 8W
New York, New York 10286
Fax: (212) 815-5707
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the address
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
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Section 12.3. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 12.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company and/or any
Guarantor to the Trustee to take any action under this Indenture, the Company
and/or any Guarantor shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been
satisfied.
Section 12.5. Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
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Section 12.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 12.7. No Personal Liability of Directors,
Officers, Employees and Stockholders.
No past, present or future director, officer, employee,
incorporator, agent or stockholder or Affiliate of the Company, as such, shall
have any liability for any obligations of the Company under the Notes, this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. No past, present or future director, officer,
employee, incorporator, agent or stockholder or Affiliate of any of the
Guarantors, as such, shall have any liability for any obligations of the
Guarantors under the Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes and Guarantees by accepting a Note and a Guarantee waives and releases all
such liabilities. The waiver and release are part of the consideration for
issuance of the Notes and the Guarantees. Such waiver may not be effective to
waive liabilities under the federal securities law and it is the view of the
Commission that such a waiver is against public policy.
Section 12.8. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial.
THIS INDENTURE, THE GUARANTEES AND THE NOTES 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 LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE, THE GUARANTEES AND THE NOTES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PRO-
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CEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER OF THE NOTES
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY
OTHER JURISDICTION.
Section 12.9. No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes
shall bind their successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 12.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and Sections of this Indenture, which have been inserted for
convenience of reference only, are not to be considered a part of this Indenture
and shall in no way modify or restrict any of the terms or provisions hereof.
Section 12.14. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all reasonable costs and expenses (including attorneys' fees for
the Company, the Trustee and the Holders of the Notes) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification of
this Indenture and the Notes and printing this Indenture and the Notes. The
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opin-
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ions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the TIA.
[Signatures on following page]
SIGNATURES
TOWN SPORTS INTERNATIONAL, INC.
By: /s/ R.G. Pyle
-----------------------------
Name: R.G. Pyle
Title: CFO
THE BANK OF NEW YORK,
as Trustee
By: /s/ Patricia Gallagher
-----------------------------
Name: Patricia Gallagher
Title: Vice President
S-1
THE GUARANTORS
Each Guarantor Listed On Schedule A
Attached Hereto
By: /s/ R.G. Pyle
--------------------------------
Name: R.G. Pyle
Title: CFO
S-2
SCHEDULE A
Jurisdiction of
Entity Ownership Organization
- --------------------------------- ------------------------------- ----------------
TSI Alexandria, LLC TSI Holdings (VA), Inc. Delaware
TSI Allston, Inc. Town Sports International, Inc. Delaware
TSI Andover, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Ardmore, LLC TSI Holdings (PA), Inc. Delaware
TSI Arthro-Fitness Services, Inc. Town Sports International, Inc. New York
TSI Battery Park, Inc. Town Sports International, Inc. New York
TSI Bethesda, LLC TSI Holdings (MD), Inc. Delaware
TSI Broadway, Inc. Town Sports International, Inc. New York
TSI 217 Broadway, Inc. Town Sports International, Inc. New York
TSI Brooklyn Belt, Inc. Town Sports International, Inc. New York
TSI Brunswick, Inc. Town Sports International, Inc. Delaware
TSI Bryn Mawr, LLC TSI Holdings (PA), Inc. Delaware
TSI Bulfinch, Inc. Town Sports International, Inc. Delaware
TSI Cash Management, Inc. Town Sports International, Inc. New York
TSI Central Square, Inc. Town Sports International, Inc. Delaware
TSI Centreville, LLC TSI Holdings (VA), Inc. Delaware
TSI Cherry Hill, LLC TSI Holdings (NJ), Inc. Delaware
TSI Chevy Chase, Inc. TSI Holdings (DC), Inc. Delaware
TSI Clarendon, LLC TSI Holdings (VA), Inc. Delaware
TSI Cobble Hill, Inc. Town Sports International, Inc. New York
TSI Colonia, LLC TSI Holdings (NJ), Inc. Delaware
TSI Commack, Inc. Town Sports International, Inc. New York
TSI Connecticut Avenue, Inc. TSI Holdings (DC), Inc. Delaware
TSI Copley, Inc. Town Sports International, Inc. Delaware
TSI Court Street, Inc. Town Sports International, Inc. New York
TSI Croton, Inc. Town Sports International, Inc. New York
TSI Danbury, Inc. Town Sports International, Inc. Delaware
TSI Danvers, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Downtown Crossing, Inc. Town Sports International, Inc. Delaware
TSI Dupont Circle, Inc. TSI Holdings (DC), Inc. Delaware
Jurisdiction of
Entity Ownership Organization
- --------------------------------- ------------------------------- ----------------
TSI Dupont II, Inc. TSI Holdings (DC), Inc. Delaware
TSI East Cambridge, Inc. Town Sports International, Inc. Delaware
TSI East Meadow, Inc. Town Sports International, Inc. New York
TSI East 23, Inc. Town Sports International, Inc. New York
TSI East 31, Inc. Town Sports International, Inc. New York
TSI East 34, Inc. Town Sports International, Inc. New York
TSI East 36, Inc. Town Sports International, Inc. New York
TSI East 41, Inc. Town Sports International, Inc. New York
TSI East 51, Inc. Town Sports International, Inc. New York
TSI East 59, Inc. Town Sports International, Inc. New York
TSI East 76, Inc. Town Sports International, Inc. New York
TSI East 86, LLC Town Sports International, Inc. New York
TSI East 91, Inc. Town Sports International, Inc. New York
TSI F Street, Inc. TSI Holdings (DC), Inc. Delaware
TSI Fairfax, LLC TSI Holdings (VA), Inc. Delaware
TSI Fenway, Inc. Town Sports International, Inc. Delaware
TSI Fifth Avenue, Inc. Town Sports International, Inc. New York
TSI First Avenue, Inc. Town Sports International, Inc. New York
TSI Forest Hills, Inc. Town Sports International, Inc. New York
TSI Fort Lee, LLC TSI Holdings (NJ), Inc. Delaware
TSI Framingham, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Franklin (MA), Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Franklin Park, LLC TSI Holdings (NJ), Inc. Delaware
TSI Freehold, LLC TSI Holdings (NJ), Inc. Delaware
TSI Gallery Place, Inc. TSI Holdings (DC), Inc. Delaware
TSI Garden City, Inc. Town Sports International, Inc. New York
TSI Germantown, LLC TSI Holdings (MD), Inc. Delaware
TSI Glover, Inc. TSI Holdings (DC), Inc. Delaware
TSI Grand Central, Inc. Town Sports International, Inc. New York
TSI Great Neck, Inc. Town Sports International, Inc. New York
TSI Greenwich, Inc. Town Sports International, Inc. Delaware
TSI Herald, Inc. Town Sports International, Inc. New York
Jurisdiction of
Entity Ownership Organization
- --------------------------------- ------------------------------- ----------------
TSI Highpoint, LLC TSI Holdings (PA), Inc. Delaware
TSI Hoboken, LLC TSI Holdings (NJ), Inc. Delaware
TSI Holdings (CIP), Inc. Town Sports International, Inc. Delaware
TSI Holdings (DC), Inc. Town Sports International, Inc. Delaware
TSI Holdings (IP), LLC TSI Insurance, Inc. Delaware
TSI Holdings (MA), Inc. Town Sports International, Inc. Massachusetts
TSI Holdings (MD), Inc. Town Sports International, Inc. Delaware
TSI Holdings (NJ), Inc. Town Sports International, Inc. Delaware
TSI Holdings (PA), Inc. Town Sports International, Inc. Delaware
TSI Holdings (VA), Inc. Town Sports International, Inc. Delaware
TSI Huntington, Inc. Town Sports International, Inc. New York
TSI Insurance, Inc. Town Sports International, Inc. New York
TSI International, Inc. Town Sports International, Inc. Delaware
TSI Irving Place, Inc. Town Sports International, Inc. New York
TSI Jersey City, LLC TSI Holdings (NJ), Inc. Delaware
TSI Larchmont, Inc. Town Sports International, Inc. New York
TSI Lexington (MA), Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Lincoln, Inc. Town Sports International, Inc. New York
TSI Long Beach, Inc. Town Sports International, Inc. New York
TSI Lynnfield, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI M Street, Inc. TSI Holdings (DC), Inc. Delaware
TSI Madison, Inc. Town Sports International, Inc. New York
TSI Mahwah, LLC TSI Holdings (NJ), Inc. Delaware
TSI Mamaroneck, Inc. Town Sports International, Inc. New York
TSI Market Street, LLC TSI Holdings (PA), Inc. Delaware
TSI Marlboro, LLC TSI Holdings (NJ), Inc. Delaware
TSI Matawan, LLC TSI Holdings (NJ), Inc. Delaware
TSI Merrifield, Inc. Town Sports International, Inc. Delaware
TSI Montclair, LLC TSI Holdings (NJ), Inc. Delaware
TSI Murray Hill, Inc. Town Sports International, Inc. New York
TSI Nanuet, Inc. Town Sports International, Inc. New York
TSI Nashua, LLC TSI Holdings (MA), Inc. Delaware
Jurisdiction of
Entity Ownership Organization
- --------------------------------- ------------------------------- ----------------
TSI Natick, Inc. Town Sports International, Inc. Delaware
TSI Newark, LLC TSI Holdings (NJ), Inc. Delaware
TSI Newbury Street, Inc. Town Sports International, Inc. Delaware
TSI North Bethesda, LLC TSI Holdings (MD), Inc. Delaware
TSI Norwalk, Inc. Town Sports International, Inc. Delaware
TSI Oceanside, Inc. Town Sports International, Inc. New York
TSI Old Bridge, LLC TSI Holdings (NJ), Inc. Delaware
TSI Parsippany, LLC TSI Holdings (NJ), Inc. Delaware
TSI Plainsboro, LLC TSI Holdings (NJ), Inc. Delaware
TSI Princeton, LLC TSI Brunswick, Inc. Delaware
TSI Ramsey, LLC TSI Holdings (NJ), Inc. Delaware
TSI Reade Street, Inc. Town Sports International, Inc. New York
TSI Ridgewood, LLC TSI Holdings (NJ), Inc. Delaware
TSI Rittenhouse, LLC TSI Holdings (PA), Inc. Delaware
TSI Rodin Place, LLC TSI Holdings (PA), Inc. Delaware
TSI Rye, Inc. Town Sports International, Inc. New York
TSI Scarsdale, Inc. Town Sports International, Inc. New York
TSI Seaport, Inc. Town Sports International, Inc. New York
TSI Sheridan, Inc. Town Sports International, Inc. New York
TSI Silver Spring, LLC TSI Holdings (MD), Inc. Delaware
TSI Society Hill, LLC TSI Holdings (PA), Inc. Delaware
TSI Soho, Inc. Town Sports International, Inc. New York
TSI Somerset, LLC TSI Holdings (NJ), Inc. Delaware
TSI South Park Slope, Inc. Town Sports International, Inc. New York
TSI Springfield, LLC TSI Holdings (NJ), Inc. Delaware
TSI Stamford Downtown, Inc. Town Sports International, Inc. Delaware
TSI Stamford Post, Inc. Town Sports International, Inc. Delaware
TSI Stamford Rinks, Inc. Town Sports International, Inc. Delaware
TSI Staten Island, Inc. Town Sports International, Inc. New York
TSI Sterling, LLC TSI Holdings (VA), Inc. Delaware
TSI Supplements, Inc. Town Sports International, Inc. Delaware
TSI Syosset, Inc. Town Sports International, Inc. New York
Jurisdiction of
Entity Ownership Organization
- --------------------------------- ------------------------------- ----------------
TSI Wall Street, Inc. Town Sports International, Inc. New York
TSI Waltham, LLC TSI Holdings (MA), Inc. Delaware
TSI Washington, Inc. TSI Holdings (DC), Inc. Delaware
TSI Water Street, Inc. Town Sports International, Inc. New York
TSI Wellesley, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI West Caldwell, LLC TSI Holdings (NJ), Inc. Delaware
TSI West Newton, Inc. Town Sports International, Inc. Delaware
TSI West Nyack, Inc. Town Sports International, Inc. New York
TSI West Springfield, LLC TSI Holdings (VA), Inc. Delaware
TSI West 14, Inc. Town Sports International, Inc. New York
TSI West 16, Inc. Town Sports International, Inc. New York
TSI West 23, Inc. Town Sports International, Inc. New York
TSI West 38, Inc. Town Sports International, Inc. New York
TSI West 41, Inc. Town Sports International, Inc. New York
TSI West 44, Inc. Town Sports International, Inc. New York
TSI West 48, Inc. Town Sports International, Inc. New York
TSI West 52, Inc. Town Sports International, Inc. New York
TSI West 73, Inc. Town Sports International, Inc. New York
TSI West 76, Inc. Town Sports International, Inc. New York
TSI West 80, Inc. Town Sports International, Inc. New York
TSI West 94, Inc. Town Sports International, Inc. New York
TSI West 125, Inc. Town Sports International, Inc. New York
TSI Westport, Inc. Town Sports International, Inc. Delaware
TSI Westwood, LLC TSI Holdings (NJ), Inc. Delaware
TSI Weymouth, Inc. Town Sports International, Inc. Delaware
TSI White Plains, Inc. Town Sports International, Inc. New York
TSI Whitestone, Inc. Town Sports International, Inc. New York
TSI Woodmere, Inc. Town Sports International, Inc. New York
EXHIBIT A
FORM OF SERIES A NOTE
(Face of Note)
TOWN SPORTS INTERNATIONAL, INC.
9 5/8% SENIOR NOTE DUE 2011
[THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"), (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGI-
- -------------------------------
(1) To be included only if the Note is issued in global form.
NAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
TOWN SPORTS INTERNATIONAL, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS NOTE), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF TOWN SPORTS INTERNATIONAL, INC. SO
REQUESTS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND TOWN SPORTS
INTERNATIONAL, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
A-2
TOWN SPORTS INTERNATIONAL, INC.
9 5/8% SENIOR NOTE DUE 2011
CUSIP No._______________
No.____________ $_______________________
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
TOWN SPORTS INTERNATIONAL, INC., a New York corporation (the
"Company," which term includes any successor corporation under the indenture
hereinafter referred to ), for value received promises to pay to
____________________________________________________ or registered assigns, the
principal sum of _____________________ Dollars on April 15, 2011.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefits under the Indenture referred to
on the reverse hereof or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed under its corporate seal.
[SEAL] Dated:
TOWN SPORTS INTERNATIONAL, INC.
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:___________________________
Name:
Title:
A-3
(Back of Note)
9 5/8% Senior Notes due 2011
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
(1) Interest. The Company promises to pay interest on the
principal amount of this Note at the rate of 9 5/8% per annum from [ ]
until maturity and shall pay the Additional Interest pursuant to Section 4 of
the Registration Rights Agreement referred below. The Company will pay interest
and Additional Notes semi-annually on April 15 and October 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Note will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be October 15, 2003. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue payments of the principal, Purchase Price
and Redemption Price of this Note from time to time on demand at the same rate
per annum on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Additional Interest, if any (without regard to any
applicable grace periods), hereon from time to time on demand at the same rate
to the extent lawful. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
(2) Method of Payment. The Company will pay interest on
the Notes (except defaulted interest) and Additional Interest, if any, to the
Persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 next preceding the Interest Payment Date, even if such
Notes are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. Any such installment of interest or Additional Interest, if
any, not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such Interest Payment Date, and may be paid
to the registered Holders at the close of business on a special interest payment
date to be fixed by the Trustee for the payment of such defaulted interest,
notice whereof shall be given to the registered Holders not less than 10 days
prior to such special interest payment date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture. The
Notes will be payable as to principal, Redemption Price, Purchase Price,
interest and Additional Interest, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Additional Interest
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, provided that payment by wire transfer of immediately
available funds will be required with respect to principal, Redemption Price and
Purchase Price of, and interest and Additional Interest (if any) on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Trustee or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
(3) Paying Agent and Registrar. Initially, The Bank of
New York, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company may act in any such capacity.
(4) Indenture and Guarantees. The Company issued the
Notes under an Indenture dated as of April 16, 2003 (as in effect from time to
time, the "Indenture") between the Company, the Guarantors and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S.C. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are general obligations of the Company. Payment on each Note is
guaranteed, jointly and severally, by the Guarantors pursuant to Article X of
the Indenture.
(5) Optional Redemption. The Company may redeem the
Notes, at the Company's option, in whole at any time, or in part from time to
time, on or after April 15, 2007, upon not less than 30 nor more than 60 days'
notice at the following Redemption Prices (expressed as a percentage of the
principal amount), if redeemed during the 12-month period commencing on April 15
of the year set forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
Redemption
Year Price
- ---- -----
2007............................................... 104.813%
2008............................................... 102.406%
2009 and thereafter................................ 100.000%
If less than all the Notes are to be redeemed, the Trustee
will select the particular Notes or portions thereof to be redeemed by lot, pro
rata or by any other method the Trustee shall deem fair and reasonable.
A-5
(6) Optional Redemption upon Equity Offerings. At any
time, or from time to time, on or prior to April 15, 2006, the Company may, at
its option, use the net cash proceeds of one or more Equity Offerings to redeem
up to 35% of the Notes issued under the Indenture at a Redemption Price equal to
109.625% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest (if any), to the date of redemption, provided, that at least
65% of the principal amount of Notes issued under the Indenture remains
outstanding immediately after any such redemption; and provided, further, that
the Company shall make such redemption not more than 120 days after the
consummation of any such Equity Offering. If less than all the Notes are to be
redeemed, the Trustee will select the particular Notes or portions thereof to be
redeemed by lot, only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to DTC procedures).
(7) Mandatory Redemption. Except as set forth in
Paragraph 9 below with respect to repurchases of Notes in certain events, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
(8) Notice of Redemption. Subject to the provisions of
the Indenture, a notice of redemption will be mailed at least 30 days but not
more than 60 days (or in the case of a Change of Control Offer, at least 30 days
but not more than 45 days, or in the case of a Net Proceeds Offer, within 30
days) before the applicable redemption date to each Holder whose Notes are to be
redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. On and after the redemption date
interest ceases to accrue on Notes or portions thereof called for redemption.
(9) Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a Purchase Price equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Additional Interest, if any, to the date of repurchase, in
accordance with the procedures set forth in the Indenture. Within 30 days
following any Change of Control, the Company shall send, by first class mail, a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) On the 361st day after an Asset Sale or such earlier
date, if any, as the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (3)(a), (3)(b) and (3)(c) of paragraph (A) of
Section 4.10 of the Indenture (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and
(3)(c) of paragraph (A) of Section 4.10 of the Indenture (each, a "Net Proceeds
Offer Amount") shall
A-6
be applied by the Company or such Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") on a date not less than 45 nor more than 60
days following the applicable Net Proceeds Offer Trigger Date, the maximum
principal amount of Notes and other Indebtedness of the Company and the
Guarantors that ranks pari passu in right of payment with the Notes or the
Guarantees, as the case may be (to the extent required by the instrument
governing such other Indebtedness), that may be purchased out of the Net
Proceeds Offer Amount (an "Offer"). Any Notes and other Indebtedness to be
purchased pursuant to an Offer shall be purchased pro rata based on the
aggregate principal amount of Notes and such other Indebtedness outstanding and
all Notes shall be purchased at an offer price in cash in an amount equal to
100% of the principal amount thereof, plus accrued and unpaid interest to the
date of purchase. Each Net Proceeds Offer will be mailed to the record Holders
as shown on the register of Holders within 25 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee, and shall comply with the
procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds
Offer, Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a pro rata basis (based on amounts tendered). A Net
Proceeds Offer shall remain open for a period of 20 Business Days or such longer
period as may be required by law.
(10) Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
(11) Persons Deemed Owners. The registered Holder of a
Note may be treated as its owner for all purposes.
(12) Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture and the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes
A-7
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
(13) Defaults and Remedies. Events of Default include: (i)
default for 30 days in the payment when due of interest or Additional Interest,
if any, on the Notes; (ii) default in payment when due of principal, Redemption
Price or Purchase Price of the Notes when the same becomes due and payable at
maturity, upon redemption, repurchase or otherwise (including the failure to
make a payment to purchase Notes tendered pursuant to a Change of Control Offer
or a Net Proceeds Offer); (iii) failure by the Company to comply with any
covenant contained in the Indenture for 30 days after notice to the Company by
the Trustee or the Holders of at least 25% of the aggregate principal amount of
the Notes outstanding; (iv) default under certain other agreements relating to
Indebtedness of the Company which default (a) is caused by a failure to pay any
amount due at the final stated maturity thereof or (b) results in the
acceleration of such Indebtedness prior to its express final stated maturity
and, in each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
default for failure to pay principal at final stated maturity or the final
stated maturity of which has been so accelerated, aggregates $5.0 million or
more and such failure shall not have been cured or waived within 20 days
thereof; (v) certain final judgments of the Company or any Significant
Subsidiary for the payment of money that remain undischarged for a period of 60
days, provided that the aggregate of all such undischarged judgments exceeds
$5.0 million; and (vi) certain events of bankruptcy or insolvency with respect
to the Company or any Significant Subsidiary of the Company. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Upon any such declaration, the entire principal
amount of, and accrued and unpaid interest and Additional Interest, if any, on
the Notes shall become immediately due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding Notes will
become due and payable without further action or notice. Holders may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
payment on any Note) if it determines that withholding notice is in their
interest. The Holders of a majority in principal amount of the Notes may waive
any existing or past Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of, or interest
on any Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the
A-8
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
(14) Trustee Dealings with Company. Subject to certain
limitations, the Trustee under the Indenture, in its individual or any other
capacity, may become owner or pledge of Notes and may otherwise deal with the
Company or its Affiliates as if it were not Trustee.
(15) No Recourse Against Others. No past, present or
future director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
(16) Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
(17) Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
(18) Discharge Prior to Maturity. If the Company deposits
with the Trustee or Paying Agent cash or U.S. Government Obligations sufficient
to pay the principal or Redemption Price of, and interest and Additional
Interest, if any, on, the Notes to maturity or a specified Redemption Date and
satisfies certain conditions specified in the Indenture, the Company will be
discharged from the Indenture, except for certain Sections thereof.
(19) Governing Law. The Indenture and Guarantees and this
Note 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 law of another jurisdiction would
be required thereby. Each of the Company and each Guarantor hereby irrevocably
submits to the jurisdiction of any New York state court sitting in the Borough
of Manhattan in the City of New York or any Federal court sitting in the Borough
of Manhattan in the City of New York in respect of any suit, action or
proceeding arising out of or relating to the Indenture and the Notes, and
irrevocably accept for itself and in respect of its property, generally and
unconditionally, jurisdiction of the aforesaid courts. Each of the Company and
each Guarantor irrevocably waives, to the fullest extent that it may effectively
do so under applicable law, trial by jury and any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of the Trus-
A-9
tee or any Holder of the Notes to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the Company or
any Guarantor in any other jurisdiction.
(20) CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the correctness or accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption or
repurchase and reliance may be placed only on the other identification numbers
placed thereon.
(21) Registration Rights. Pursuant to the Registration
Rights Agreement, the Company will be obligated upon the occurrence of certain
events to consummate an exchange offer pursuant to which the Holder of this Note
shall have the right to exchange this Series A Note for the Company's 9 5/8%
Senior Notes due 2011, Series B, which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Series A Notes. The Holders shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
Town Sports International, Inc.
888 Seventh Avenue
New York, New York 10106
Attention: Richard Pyle
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _____________________
Your Signature:_____
(Sign exactly as your name
appears on the face of
this Note)
Signature Guarantee:__________________________________________
(Participant in recognized signature
guarantee medallion program)
A-11
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Note
purchased by the Company pursuant to Section 4.10 ("Net Proceeds Offer") or
Section 4.15 ("Change of Control Offer") of the Indenture, check the applicable
boxes
[ ] Net Proceeds Offer: [ ] Change of Control Offer:
in whole [ ] in whole [ ]
in part [ ] in part [ ]
Amount to be Amount to be
purchased: $___________ purchased: $___________
Dated: __________________ Signature:______________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:__________________________________________________
(Participant in recognized signature guarantee
medallion program)
Social Security Number or
Taxpayer Identification Number:_______________________________________
A-12
EXHIBIT B
FORM OF SERIES B NOTE
(Face of Note)
TOWN SPORTS INTERNATIONAL, INC.
9 5/8% SENIOR NOTE DUE 2011
[THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](2)
- --------------------------
(2) To be included only if the Note is issued in global form
TOWN SPORTS INTERNATIONAL, INC.
9 5/8% SENIOR NOTE DUE 2011
CUSIP No._____________
No.___________ $_____________________
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
TOWN SPORTS INTERNATIONAL, INC., a New York corporation (the
"Company," which term includes any successor corporation under the indenture
hereinafter referred to ), for value received promises to pay to
____________________________________________________ or registered assigns, the
principal sum of _____________________ Dollars on April 15, 2011.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefits under the Indenture referred to
on the reverse hereof or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed under its corporate seal.
[SEAL] Dated:
TOWN SPORTS INTERNATIONAL, INC.
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
B-2
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:________________________________
Name:
Title:
B-3
(Back of Note)
9 5/8% Senior Notes due 2011
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. Interest. The Company promises to pay interest on the
principal amount of this Note at the rate of 9 5/8% per annum from [ ]
until maturity. The Company will pay interest and Additional Interest
semi-annually on April 15 and October 15 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Note will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 15, 2003. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue payments of the principal, Purchase Price and
Redemption Price of this Note from time to time on demand at the same rate per
annum on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Additional Interest, if any (without regard to any
applicable grace periods), hereon from time to time on demand at the same rate
to the extent lawful. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. Method of Payment. The Company will pay interest on
the Notes (except defaulted interest) and Additional Interest, if any, to the
Persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 next preceding the Interest Payment Date, even if such
Notes are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. Any such installment of interest or Additional Interest, if
any, not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such Interest Payment Date, and may be paid
to the registered Holders at the close of business on a special interest payment
date to be fixed by the Trustee for the payment of such defaulted interest,
notice whereof shall be given to the registered Holders not less than 10 days
prior to such special interest payment date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture. The
Notes will be payable as to principal, Redemption Price, Purchase Price,
interest and Additional Interest, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the op-
B-4
tion of the Company, payment of interest and Additional Interest may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, provided that payment by wire transfer of immediately available funds
will be required with respect to principal, Redemption Price and Purchase Price
of, and interest and Additional Interest (if any) on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Trustee or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, The Bank of
New York, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company may act in any such capacity.
4. Indenture and Guarantees. The Company issued the
Notes under an Indenture dated as of April 16, 2003 (as in effect from time to
time, the "Indenture") between the Company, the Guarantors and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S.C. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are general obligations of the Company. Payment on each Note is
guaranteed, jointly and severally, by the Guarantors pursuant to Article X of
the Indenture.
5. Optional Redemption. The Company may redeem the
Notes, at the Company's option, in whole at any time, or in part from time to
time, on or after April 15, 2007, upon not less than 30 nor more than 60 days'
notice at the following Redemption Prices (expressed as a percentage of the
principal amount), if redeemed during the 12-month period commencing on April 15
of the year set forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
Redemption
Year Price
- ---- -----
2007............................................... 104.813%
2008............................................... 102.406%
2009 and thereafter................................ 100.000%
If less than all the Notes are to be redeemed, the Trustee
will select the particular Notes or portions thereof to be redeemed by lot, pro
rata or by any other method the Trustee shall deem fair and reasonable.
6. Optional Redemption upon Equity Offerings. At any
time, or from time to time, on or prior to April 15, 2006, the Company may, at
its option, use the net cash proceeds of one or more Equity Offerings to redeem
up to 35% of the Notes issued under the
B-5
Indenture at a Redemption Price equal to 109.625% of the principal amount
thereof, plus accrued and unpaid interest and Additional Interest (if any), to
the date of redemption, provided, that at least 65% of the principal amount of
Notes issued under the Indenture remains outstanding immediately after any such
redemption; and provided, further, that the Company shall make such redemption
not more than 120 days after the consummation of any such Equity Offering. If
less than all the Notes are to be redeemed, the Trustee will select the
particular Notes or portions thereof to be redeemed by lot, only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures).
7. Mandatory Redemption. Except as set forth in
Paragraph 9 below with respect to repurchases of Notes in certain events, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
8. Notice of Redemption. Subject to the provisions of
the Indenture, a notice of redemption will be mailed at least 30 days but not
more than 60 days (or in the case of a Change of Control Offer, at least 30 days
but not more than 45 days, or in the case of a Net Proceeds Offer, within 30
days) before the applicable redemption date to each Holder whose Notes are to be
redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. On and after the redemption date
interest ceases to accrue on Notes or portions thereof called for redemption.
9. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a Purchase Price equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Additional Interest, if any, to the date of repurchase, in
accordance with the procedures set forth in the Indenture. Within 30 days
following any Change of Control, the Company shall send, by first class mail, a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) On the 361st day after an Asset Sale or such earlier
date, if any, as the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (3)(a), (3)(b) and (3)(c) of paragraph (A) of
Section 4.10 of the Indenture (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and
(3)(c) of paragraph (A) of Section 4.10 of the Indenture (each, a "Net Proceeds
Offer Amount") shall be applied by the Company or such Restricted Subsidiary to
make an offer to purchase (the "Net Proceeds Offer") on a date not less than 45
nor more than 60 days following the applicable Net Proceeds Offer Trigger Date,
the maximum principal amount of Notes and other In-
B-6
debtedness of the Company and the Guarantors that ranks pari passu in right of
payment with the Notes or the Guarantees, as the case may be (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Net Proceeds Offer Amount (an "Offer"). Any Notes and other
Indebtedness to be purchased pursuant to an Offer shall be purchased pro rata
based on the aggregate principal amount of Notes and such other Indebtedness
outstanding and all Notes shall be purchased at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase. Each Net Proceeds Offer will be mailed to the
record Holders as shown on the register of Holders within 25 days following the
Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply
with the procedures set forth in the Indenture. Upon receiving notice of the Net
Proceeds Offer, Holders may elect to tender their Notes in whole or in part in
integral multiples of $1,000 in exchange for cash. To the extent Holders
properly tender Notes in an amount exceeding the Net Proceeds Offer Amount,
Notes of tendering Holders will be purchased on a pro rata basis (based on
amounts tendered). A Net Proceeds Offer shall remain open for a period of 20
Business Days or such longer period as may be required by law.
10. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
11. Persons Deemed Owners. The registered Holder of a
Note may be treated as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture and the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply
B-7
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
13. Defaults and Remedies. Events of Default include: (i)
default for 30 days in the payment when due of interest or Additional Interest,
if any, on the Notes; (ii) default in payment when due of principal, Redemption
Price or Purchase Price of the Notes when the same becomes due and payable at
maturity, upon redemption, repurchase or otherwise (including the failure to
make a payment to purchase Notes tendered pursuant to a Change of Control Offer
or a Net Proceeds Offer); (iii) failure by the Company to comply with any
covenant contained in the Indenture for 30 days after notice to the Company by
the Trustee or the Holders of at least 25% of the aggregate principal amount of
the Notes outstanding; (iv) default under certain other agreements relating to
Indebtedness of the Company which default (a) is caused by a failure to pay any
amount due at the final stated maturity thereof or (b) results in the
acceleration of such Indebtedness prior to its express final stated maturity
and, in each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
default for failure to pay principal at final stated maturity or the final
stated maturity of which has been so accelerated, aggregates $5.0 million or
more and such failure shall not have been cured or waived within 20 days
thereof; (v) certain final judgments of the Company or any Significant
Subsidiary for the payment of money that remain undischarged for a period of 60
days, provided that the aggregate of all such undischarged judgments exceeds
$5.0 million; and (vi) certain events of bankruptcy or insolvency with respect
to the Company or any Significant Subsidiary of the Company. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Upon any such declaration, the entire principal
amount of, and accrued and unpaid interest and Additional Interest, if any, on
the Notes shall become immediately due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding Notes will
become due and payable without further action or notice. Holders may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
payment on any Note) if it determines that withholding notice is in their
interest. The Holders of a majority in principal amount of the Notes may waive
any existing or past Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of, or interest
on any Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
14. Trustee Dealings with Company. Subject to certain
limitations, the Trustee under the Indenture, in its individual or any other
capacity, may become owner or
B-8
pledge of Notes and may otherwise deal with the Company or its Affiliates as if
it were not Trustee.
15. No Recourse Against Others. No past, present or
future director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. Discharge Prior to Maturity. If the Company deposits
with the Trustee or Paying Agent cash or U.S. Government Obligations sufficient
to pay the principal or Redemption Price of, and interest and Additional
Interest, if any, on, the Notes to maturity or a specified Redemption Date and
satisfies certain conditions specified in the Indenture, the Company will be
discharged from the Indenture, except for certain Sections thereof.
19. Governing Law. The Indenture and Guarantees and this
Note 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 law of another jurisdiction would
be required thereby. Each of the Company and each Guarantor hereby irrevocably
submits to the jurisdiction of any New York state court sitting in the Borough
of Manhattan in the City of New York or any Federal court sitting in the Borough
of Manhattan in the City of New York in respect of any suit, action or
proceeding arising out of or relating to the Indenture and the Notes, and
irrevocably accept for itself and in respect of its property, generally and
unconditionally, jurisdiction of the aforesaid courts. Each of the Company and
each Guarantor irrevocably waives, to the fullest extent that it may effectively
do so under applicable law, trial by jury and any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of the Trustee or any Holder of the Notes to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company or any Guarantor in any other
jurisdiction.
20. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP
B-9
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the correctness or accuracy of such numbers either as printed on the Notes or
as contained in any notice of redemption or repurchase and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
Town Sports International, Inc.
888 Seventh Avenue
New York, New York 10106
Attention: Richard Pyle
B-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _____________________
Your Signature:______________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee:__________________________________________
(Participant in recognized signature
guarantee medallion program)
B-11
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Note
purchased by the Company pursuant to Section 4.10 ("Net Proceeds Offer") or
Section 4.15 ("Change of Control Offer") of the Indenture, check the applicable
boxes
[ ] Net Proceeds Offer: [ ] Change of Control Offer:
in whole [ ] in whole [ ]
in part [ ] in part [ ]
Amount to be Amount to be
purchased: $___________ purchased: $___________
Dated: __________________ Signature:______________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:__________________________________________________
(Participant in recognized signature guarantee
medallion program)
Social Security Number or
Taxpayer Identification Number:_________________________________________________
B-12
EXHIBIT C
GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of this
Note the cash payments in United States dollars of principal of, premium, if
any, and interest on this Note (and including Additional Interest payable
thereon) in the amounts and at the times when due and interest on the overdue
principal, premium, if any, and interest, if any, of this Note, if lawful, and
the payment or performance of all other Obligations of the Company under the
Indenture (as defined below) or the Note, to the Holder of this Note and the
Trustee, all in accordance with and subject to the terms and limitations of this
Note, Article X of the Indenture and this Guarantee. This Guarantee will become
effective in accordance with Article X of the Indenture and its terms shall be
evidenced therein. The validity and enforceability of this Guarantee shall not
be affected by the fact that it is not affixed to any particular Note.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Indenture dated as of April 16, 2003, among Town Sports
International, Inc., a New York corporation, as issuer (the "Company"), each of
the Guarantors named therein and The Bank of New York, as trustee (the
"Trustee") (as amended or supplemented, the "Indenture").
THIS GUARANTEE 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 LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Each Guarantor hereby
agrees to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth
in the Indenture.
[GUARANTOR]
By:_________________________________
Name:
Title:
EXHIBIT D(1)
FORM OF REGULATION S CERTIFICATE
___________________,_______
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Town Sports International, Inc. (the "Company")
9 5/8% Senior Notes due 2011 (the "Notes")
Dear Sirs:
This letter relates to U.S. $ ______________ principal amount
at maturity of Notes represented by a certificate (the "Legended Certificate")
which bears a legend outlining restrictions upon transfer of such Legended
Certificate. Pursuant to Section 2.1 of the Indenture (the "Indenture") dated as
of April 16, 2003 relating to the Notes, we hereby certify that we are (or we
will hold such securities on behalf of) a person outside the United States to
whom the Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the U.S. Securities Act of 1933, as amended.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this letter have the
meanings set forth in Regulation S).
Very truly yours,
[Name of Holder]
By:_________________________________
Authorized Signature
EXHIBIT D(2)
CERTIFICATE TO BE DELIVERED
UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
_________________,_______
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Town Sports International, Inc. (the "Company")
9 5/8% Senior Notes due 2011 (the "Notes")
Dear Sirs:
This Certificate relates to $ _____________ principal amount
of Notes held in *____ book-entry or * _____ certificated form by ______________
(the "Transferor").
The Transferor:*
[ ] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Note held by the Depositary a
Note or Notes in certificated, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
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* Check applicable box
[ ] Such Note is being acquired for the Transferor's own
account, without transfer.
[ ] Such Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A.
[ ] Such Note is being transferred to an "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in
accordance with Regulation D under the Securities Act.
[ ] Such Note is being transferred pursuant to an exemption
from registration in accordance with Regulation S under the Securities Act.
[ ] Such Note is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act.
[ ] Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, 144 or Rule 904 under the Securities Act.
An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
Very truly yours,
____________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________
Name:
Title:
Date: __________________
D(2)-2
EXHIBIT E
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON QIB ACCREDITED INVESTORS
______________________,_______
The Bank of New York
101 Barclay Street, Floor 8W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Town Sports International, Inc. (the "Company")
9 5/8% Senior Notes due 2011 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of 9 5/8% Senior
Notes due 2011 (the "Notes") of the Company, we confirm that:
We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of April 16, 2003 relating to the Notes (the "Indenture") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
We understand that the Notes have not been registered under
the Securities Act or any other applicable securities law, and that the Notes
may not be offered, sold or otherwise transferred except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should offer, sell,
transfer, pledge, hypothecate or otherwise dispose of any Notes within two years
after the original issuance of the Notes, we will do so only (A) to the Company
or any Subsidiary thereof, (B) inside the United States to a "qualified
institutional buyer" in compliance with Rule 144A under the Securities Act, (C)
inside the United States to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes to you a signed letter
substantially in the form of this letter, (D) outside the United States to a
foreign person in compliance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), (F) in accordance with another exemption from
the registration requirements of the Securities Act, or (G) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein and in the Indenture.
We understand that, on any proposed transfer of any Notes
prior to the later of the original issue date of the Notes and the last date the
Notes were held by an affiliate of the Company pursuant to paragraphs 2(C), 2(D)
and 2(E) above, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed transfer complies with the
foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are acquiring the Notes for investment purposes
and not with a view to, or offer of sale in connection with, any distribution in
violation of the Securities Act, and we are each able to bear the economic risk
of our or its investment.
We are acquiring the Notes purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
(Name of Transferee)
By:_________________________________
Authorized Signature
E(2)-2
EXHIBIT F
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
__________________,_______
The Bank of New York
Attention: Corporate Trust Trustee Administration
101 Barclay Street, Floor 8W
New York, New York 10286
Re: Town Sports International, Inc. (the "Company")
9 5/8% Senior Notes due 2011 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $_________ aggregate
principal amount at maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in
the United States;
(2) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States;
(3) no directed selling efforts have been made by us in
the United States in contravention of the requirements of Rule 903(b)
or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this letter have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_________________________________
Authorized Signature
F-2