1
Exhibit 4.1
THE HANOVER COMPANIES, Issuer
and
THE HORN & HARDART COMPANY
and
CERTAIN SUBSIDIARIES OF
THE HANOVER COMPANIES,
Guarantors
_________________________
$20,000,000
9.25% Senior Subordinated Notes
_________________________
Indenture
Dated as of August 17, 1993
FIRST TRUST NATIONAL ASSOCIATION
Trustee
2
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INCORPORATION
BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1.3. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . 18
Section 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2 THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.3. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.13. Home Office Payment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.2. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . 25
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.2. SEC Reports, Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.3. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.4. Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.5. Limitations on Distributions and Investments . . . . . . . . . . . . . . . . . . 31
Section 4.6. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.7. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.8. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.9. Limitation on Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Section 4.10. Indebtedness to Consolidated Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.11. Limitation on Incurrences of Additional Indebtedness . . . . . . . . . . . . . . . . . . . 34
Section 4.12. Maintenance of Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.13. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.14. Restriction on Payment of Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.15. Limitation on Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.16. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.17. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.18. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.19. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.20. Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.21 Repayment of Certain Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.22 Limitation on Ranking of Future Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.23 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.24 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.25 Limitation on Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . 42
Section 4.26. Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.27 PPN Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.28 Limitations on Sales of Assets and Subsidiary Stock . . . . . . . . . . . . . . . . . . . . 43
Section 4.29. Repurchase of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.30. Amendments of CFC Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.31. Execution of Guaranties by Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . 48
Section 4.32. Limitation on Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.33. Working Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.1. When Company, the Guarantor or Their Subsidiaries May Merge, etc . . . . . . . . . . . . . 49
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.9. Trustee may File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.9. Successor Trustee by Merger, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 8 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.1. Termination of Company's, Guarantor's and the Guarantor Subsidiaries' Obligations . . . . . 62
Section 8.2. Application of Trust Money . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.3. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.4. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 9 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.6. Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 10 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.1. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.2. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.3. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.4. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.5. Notice by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.6. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.7. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.8. Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.9. Distribution or Notice to Representatives . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.10. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.11. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . . 71
Section 10.12. Application by Trustee of Monies Deposited With It . . . . . . . . . . . . . . . . . . . . 71
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Section 10.13. Trustee's Compensation Not Prejudiced . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10.14. Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10.15. Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10.16. Names of Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10.17. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate . . . . . . . . . 73
Section 10.18. Reliance by Holders of Senior Indebtedness on Subordination Provisions . . . . . . . . . . 73
Section 10.19. Proof of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.20. No Fiduciary Duty to Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 73
Section 10.20. Limitations on Application of Article 10. . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 11 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.1. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.2. Execution and Delivery of Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 12 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.2. Recording, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.3. Suits to Protect the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 13.1. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 13.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 13.3. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . 81
Section 13.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.6. Rules by Trustee and Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.9. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.11. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.12. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.15. Table of Contents, Headings, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.16. Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.17. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
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INDENTURE dated as of August 17, 1993 among THE HANOVER
COMPANIES, a Nevada corporation (the "Company"), THE HORN & HARDART COMPANY, a
Nevada corporation (the "Guarantor"), the subsidiaries of the Company which
have executed this Indenture and First Trust National Association, a national
association, 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 of the Company's
9.25% Senior Subordinated Notes due August 1, 1998 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or
otherwise.
"Agent" means any Registrar, Paying Agent or coregistrar.
"Average Life" means, as of the date of determination, with
respect to any security or instrument, the quotient obtained by dividing (i)
the sum of the products of the number of years from the date of determination
to the dates of each successive scheduled principal (or redemption) payment of
such security or instrument multiplied by the amount of such principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA, other than a Multiemployer Plan, in respect of which
the Company, the Guarantor or any ERISA Affiliate is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA;
provided, however, that the term "Benefit Plan" shall not include any such
defined benefit plan for any period during which the termination of or
withdrawal from such defined benefit plan by such ERISA
7
Affiliate could not subject the Company, the Guarantor or any Guarantor
Subsidiary to any liability under the Internal Revenue Code or ERISA.
"Board of Directors" or "Board" means the Board of Directors
or any authorized committee of the Board of the Company or the Guarantor
empowered to act on such matters.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person, a certified copy
of which has been sent to the Trustee.
"Capital Stock" means with respect to any Person any and all
shares, interests, warrants, rights, options, participations or other
equivalents (however designated) of, in or to corporate stock, including of, in
or to common stock and preferred stock (whether or not included in
shareholders' equity).
"Capitalized Lease Obligation" means, as applied to any Person
for any period, any lease of any property (whether real, personal or mixed) by
that Person as lessee that, in conformity with GAAP, is or should be accounted
for as a capital lease on the balance sheet or for which the amount of the
asset or liability thereunder as if so capitalized should be disclosed in a
footnote to such balance sheet of that Person and the amount of such obligation
shall be the capitalized amount thereof, determined in accordance with such
principles.
"Cash and Marketable Securities" means cash, cash equivalents
of U.S. Government Obligations or certificates of deposit maturing within nine
months from the date of issuance thereof issued by a commercial bank or trust
company organized under the laws of the United States of America or any state
thereof or the District of Columbia or any other short-term money market type
obligations of such corporation, each having a rating for its unsecured
long-term debt of "A" or better from both Standard & Poor's Corporation ("S&P")
and Moody's Investors Service, Inc. ("Moody's") and commercial paper rated
A-1/P-1 by S&P and Moody's and not maturing more than 90 days from the date of
acquisition thereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section Section 9601,
et seq. or any analogous or similar state law.
"CFC Credit Agreement" means that certain Amended and Restated
Loan and Security Agreement, dated as of July 9, 1993, by and among Congress
Financial Corporation, a California corporation, Hanover Direct Fulfillment,
Inc., a Pennsylvania corporation, Brawn California, Inc., a California
corporation, Gump's By Mail, Inc., a Delaware corporation, and GSF Acquisition
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Corp., a California corporation, as the same may be amended, modified or
supplemented.
"Change in Control" means (i) directly or indirectly a sale,
transfer or other conveyance of all or substantially all of the assets of the
Guarantor (or HDI after the Reorganization), on a consolidated basis, to any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), excluding transfers or
conveyances to or among Restricted Subsidiaries and to HDI, pursuant to the
Reorganization, as an entirety or substantially as an entirety in one
transaction or series of related transactions, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) other than NAR, directly or through its
subsidiaries, is or becomes the "beneficial owner" (as that term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except
that a person shall be deemed to have "beneficial ownership" of all Capital
Stock that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of a sufficient number of issued and outstanding shares of Capital
Stock of the Company or the Guarantor on a fully diluted basis, to elect a
majority of the members of the respective Boards of Directors of the Company or
the Guarantor, as the case may be, or (iii) during any period of 24 consecutive
months, individuals who at the beginning of such period constituted the Board
of Directors of the Company or the Guarantor, as the case may be (together with
any new directors whose election by such Board or whose nomination for election
by the shareholders of the Company or the Guarantor was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company or the Guarantor then in office.
"Class B Preferred Stock" shall mean the Class B preferred
stock, par value $.01 per share, of the Company.
"Collateral" shall mean the collateral pledged pursuant to the
Collateral Documentation.
"Collateral Documentation" shall mean the Pledge and Security
Agreement, the Pledged Note, financing statements and all other deeds of trust,
assignments, endorsements, collateral assignments and other instruments,
documents, agreements or conveyances at any time creating or evidencing Liens
or assigning Liens to the Trustee, to secure the obligations of the Company,
the Guarantor or the Guarantor Subsidiaries under the Documents.
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"Common Stock" shall mean the common stock, par value $.662/3
per share, of the Guarantor.
"Company" means the Person named as such above until a
successor replaces it in accordance with Article 5, including without
limitation pursuant to the Reorganization, and thereafter means the successor.
"Consolidated Current Assets" shall mean at any date, all
amounts which, in conformity with GAAP, would be included under current assets
on a consolidated balance sheet of the Company, the Guarantor and the
Restricted Subsidiaries, as at such date.
"Consolidated Current Liabilities" shall mean at any date, all
amounts which, in conformity with GAAP, would be included under current
liabilities on a consolidated balance sheet of the Company, the Guarantor and
the Restricted Subsidiaries, excluding the Revolving Loan Balance to the extent
included in such current liabilities, as at such date.
"Consolidated Earnings" shall mean, with respect to any
period, the sum for such period of (i) Consolidated Net Income, plus (ii) taxes
not currently due and payable of the Company and the Restricted Subsidiaries,
in each case as determined on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" shall mean, with respect to any
period, the net income (or loss) of the Company and the Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP
consistently applied for each period, adjusted to exclude (only to the extent
included in computing such net income (or loss)), extraordinary and
nonrecurring items and gains (or losses) on investments or assets, unremitted
equity in earnings of Affiliates (except for such unremitted equity that is
within the complete control of the Company and is not otherwise restricted and
for which funds are currently available for disbursement), minority interests,
gains on retirement of debt, cash dividends received in liquidation or
discontinuance of any Affiliate or in the form of intercompany transfer of cash
not constituting repayment of Indebtedness or payment in respect of liquidation
or discontinuance of the transferor or any write-up of any asset and any
deferred credit or amortization of a deferred credit arising from any
acquisition in any manner of any Person.
"Consolidated Assets" shall mean, at any date, the
consolidated assets of the Company, the Guarantor and their subsidiaries as
determined on a consolidated basis and in accordance with GAAP.
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"Consolidated Net Worth" shall mean, at any date, the total
shareholders' equity of each of the Company, the Guarantor and its respective
subsidiaries determined on a consolidated basis in accordance with GAAP , less
(i) any item that by its terms (or by the terms of any security which it is
convertible into or exchangeable for) or upon the happening of any event is (a)
convertible into or exchangeable for Indebtedness, or (b) matures or is
mandatorily redeemable pursuant to a sinking fund or otherwise, less (ii)
declared but unpaid dividends on any class of Capital Stock and less (iii) any
treasury stock.
"Consolidated Subsidiary" of any specific Person means any
subsidiary, all of whose shares of Capital Stock are owned by such Person
and/or by another Consolidated Subsidiary of such Person, and the accounts of
which are, or under GAAP are required to be, consolidated with the accounts of
such Person.
"Convertible Preferred Stock" shall mean the 7.5% cumulative
convertible preferred stock, par value $.01 per share and stated value $20 per
share, of the Company.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 13.9 or such other address of which
the Trustee may give notice to the Company and the Guarantors.
"Corporation" includes corporations, associations, companies
and business trusts.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Distribution Facility Subsidiary" shall mean a Consolidated
Subsidiary of the Company formed after the date hereof to acquire the New
Distribution Facility.
"Documents" means the Purchase Agreement, the Indenture, the
Registration Rights Agreement, the Securities, the Guaranty, the Collateral
Documentation, the Escrow Agreement and all other security agreements,
mortgages, deeds of trust, financing statements, lease assignments, guaranties
and other agreements and instruments, together with any assignments,
endorsements of, exhibits, schedules or other attachments to all of the
foregoing, delivered in connection with the transactions contemplated hereby or
thereby, all as amended, supplemented or otherwise modified from time to time.
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, license, order, permit or regulation pertaining to
health, industrial hygiene, hazardous waste or the environmental conditions on,
under, from or about any real property, including without limitation, CERCLA
and RCRA.
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"Equity Interests" means Capital Stock or warrants, options or
other rights to acquire Capital Stock or other equity participations, excluding
any debt securities that are convertible into or exchangeable for Capital Stock
or other equity participations.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as the Company, (ii) partnership or other
trade or business (whether or not incorporated) under common control (within
the meaning of Section 414(c) of the Internal Revenue Code) with the Company;
and (iii) member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as the Company.
"Excess Availability" shall mean at any date, the aggregate
amount, as determined by any lender according to any revolving loans or lines
of credit that stipulates the amount of funds available to the Company, the
Guarantor and the Restricted Subsidiaries, for immediate and unrestricted
drawdown or advance, and which pursuant to any such drawdown or advance will by
its nature increase the aggregate outstanding balance owed to such lender by
the Company, the Guarantor and the Restricted Subsidiaries.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (a) the sum for such period of (i) Consolidated Net Income, plus (ii)
Interest Expense (excluding interest income) (whether or not capitalized), plus
(iii) federal, state and local income tax expense to the extent deducted in
determining Consolidated Net Income, plus (iv) principal and interest on
Capital Lease Obligations, plus (v) operating rents less directly associated
sublease income to the extent that (x) such sublease income does not exceed the
associated rents of the Company and (y) the sublease is for a term equal to or
beyond the stated maturity of the Securities, to (b) the sum for such period of
(i) Interest Expense (excluding interest income) (whether or not capitalized),
plus (ii) Capital Lease Obligations, plus (iii) cash dividends declared or due
for payment (whether paid or not), plus (iv) operating rents less directly
associated sublease income to the extent that (x) such sublease income does not
exceed the associated rents of the Company and (y) the sublease is for a term
equal to or beyond the stated maturity of the Securities. For purposes of the
preceding
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definition, interest on Capital Lease Obligations shall be deemed to accrue at
an interest rate implicit in such Capital Lease Obligations in accordance with
GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
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 in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination, consistently applied.
"GECC Agreement" means the Account Purchase Agreement, dated
as of December 31, 1992, by and among the Company, Hanover Direct Fulfillment,
Inc., a Pennsylvania corporation, Brawn of California, Inc., a California
corporation, GSF Acquisition Corp., a California corporation, Gump's by Mail,
Inc., a Delaware corporation, Gump's Holdings, Inc., a Delaware corporation,
and General Electric Capital Corporation, a New York corporation, as the same
may be further amended or modified or supplemented.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of any city or other political subdivision or otherwise and whether
now or hereafter in existence, or any officer or official thereof.
"Guarantor" means the Person named as such above until a
successor replaces it in accordance with Article 5, including without
limitation pursuant to the Reorganization, and thereafter means the successor.
"Guarantor Subsidiaries" means the Restricted Subsidiaries of
the Company on the date hereof (except for Gump's Corp., a California
corporation) and any subsidiary of the Company that becomes a Restricted
Subsidiary after the date hereof pursuant to Section 4.31.
"Hazardous Materials" means any flammable, explosive,
radioactive, hazardous or toxic waste, substance, material or constituent
(whether in solid, liquid, gaseous or any other form) ("substance") and any
other substance defined, designated or regulated as a hazardous or toxic
substance, material, waste, contaminant or pollutant by any Environmental Law
presently in effect or as amended or promulgated in the future and shall
include, without limitation:
(i) those substances included within the
definitions of, or classified as "hazardous substances"
pursuant to CERCLA;
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13
(ii) petroleum or its constituents, products,
byproducts or related substances; and
(iii) such other substances which are or become
regulated, or which are classified as hazardous, toxic,
flammable, explosive, or radioactive, under any Environmental
Law.
"HDI" means Hanover Direct, Inc., a Delaware corporation.
"Holder" or "Securityholder" means a Person in whose name a
Security is registered from time to time.
"Indebtedness" means, without duplication, with respect to any
Person, (a) all obligations of such person (i) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such person or only to a portion thereof), (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) representing the balance deferred and
unpaid of the purchase price of any property or services (other than accounts
payable outstanding less than ninety (90) days and arising in the ordinary
course of business), (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit
(other than trade letters of credit on which amounts have been owed for less
than 180 days and arising in the ordinary course of business and consistent
with past practices); (b) all obligations of such person under interest swap
obligations and foreign currency hedges; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such person has
guaranteed or that is otherwise its legal liability; (d) all obligations
secured by a Lien to which the property or assets (including, without
limitation, leasehold interests and any other tangible or intangible property
rights) of such person are subject, whether or not the obligations secured
thereby shall have been assumed by or shall otherwise be such person's legal
liability; (e) indebtedness under conditional sales contracts and other types
of title retention agreements; and (f) any and all deferrals, renewals,
extensions, refinancings and refundings (whether direct or indirect) of, or
amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a), (b), (c) or (d), (e), or this
clause (f), whether or not between or among the same parties.
"Indenture" means this Indenture as amended or supplemented
from time to time.
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14
"Independent" when used with respect to any specified Person
means such a Person who (i) is in fact independent, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Company or any other obligor upon the Securities or in any Affiliate of the
Company or such other obligor, and (iii) is not connected with the Company or
such other obligor or any Affiliate of the Company or such other obligor, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by a written order of the Company and approved
by the Trustee in the exercise of reasonable care and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Independent Financial Advisor" means an accounting, appraisal
or investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, as the case may be,
(i) qualified to perform the task for which it has been engaged, and (ii)
disinterested and Independent insofar as it relates to such engagement with
respect to the Company, all of its subsidiaries, and each Affiliate of the
Company and/or their subsidiaries.
"Interest Expense" shall mean, for any period, the total
interest expense of the Company and its subsidiaries during such period,
determined on a consolidated basis in accordance with GAAP.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time hereafter, and any successor statute.
"Investments" means any direct or indirect purchase or other
acquisition by a Person of, or a beneficial interest in, Capital Stock or other
securities of any other Person other than a Person that prior to the relevant
time was a subsidiary of that Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution by that Person to any other Person including all
Indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person in the ordinary
course of business and any agreement to purchase, sell or lease assets,
products, supplies, materials, transportation or services, or to advance funds
and/or guaranty such, for the purpose of giving financial assurance to any
creditors of any Person, or grant any lien on property of such Person to secure
any obligations of another Person.
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15
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, collateral assignment, encumbrance or
adverse claim affecting title or resulting in a charge against real or personal
property of any kind in respect of such asset (including any agreement to give
any security interest). For the purposes of this Indenture, a Person shall be
deemed to own subject to a Lien any asset that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement, any
option or other agreement to sell, Capitalized Lease Obligation or other title
retention agreement relating to such asset.
"Mail Order Joint Venture" shall mean any joint undertaking in
which any Person not an Affiliate of the Company, the Guarantor or their
subsidiaries is engaged with the Company, the Guarantor or their subsidiaries,
including, without limitation, a joint venture, partnership, business trust,
licensing agreement or other similar entity or arrangement, for the purpose of
research, marketing and development of the direct specialty retail business of
the Company.
"Management Fee" means any fee or other compensation payable
to NAR or any Affiliate or related party of NAR by the Company or any of its
subsidiaries or Affiliates for services rendered with respect to the management
of the Company or any of its subsidiaries or Affiliates.
"Management Incentive Stock Option Agreement" shall mean the
1993 Equity Incentive Plan of the Guarantor and the 1993 All-Employee Equity
Investment Plan of the Guarantor or any successor or replacement plan having
substantially similar terms.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA and subject to Title IV of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by the
Company, the Guarantor, any Guarantor Subsidiary or any ERISA Affiliate;
provided, however, that the term "Multiemployer Plan" shall not include any
such multiemployer plan for any period during which the withdrawal from such
multiemployer plan by such ERISA Affiliate could not subject the Company, the
Guarantor or any Guarantor Subsidiary to any liability under the Internal
Revenue Code or ERISA.
"NAR" means North American Resources Limited, a British Virgin
Islands corporation.
"Net Cash Flow" shall mean four (4) times the Consolidated Net
Income for the immediately preceding fiscal quarter plus, to the extent
deducted in determining Consolidated Net Income for such quarter, depreciation,
amortization (including without limitation, amortization of assets under
Capitalized Lease Obligations), depletion, and provision for
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taxes not currently due. To the extent that Net Cash Flow for the immediately
preceding fiscal quarter is less than zero, then "Net Cash Flow" shall mean two
(2) times Consolidated Net Income for the immediately preceding two (2) fiscal
quarters plus, to the extent deducted in determining Consolidated Net Income
for such quarters, depreciation, amortization (including without limitation,
amortization of assets under Capitalized Lease Obligations), depletion, and
provision for taxes not currently due.
"New Distribution Facility" means the new fulfillment center
and distribution facility established, acquired and improved by the
Distribution Facility Subsidiary to be used exclusively by the Company, the
Guarantor and their subsidiaries in their mail order and retail businesses.
"Officer's Certificate" means a certificate signed by any duly
authorized officer, who must be the President, the Chief Financial Officer, the
Treasurer or a Vice President of the Company or a Consolidated Subsidiary
thereof, as the context may indicate.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, the Guarantor or the Trustee.
"Permitted Encumbrances" means (i) Liens (other than any Lien
imposed under ERISA or any Environmental Laws) for taxes, assessments, or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, and with respect to which adequate reserves of other
appropriate provisions are being maintained in accordance with the provisions
of GAAP and enforcement thereof is not being sought or is stayed; (ii) Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens
(other than any Lien imposed under ERISA) not voluntarily granted for amounts
not yet due or which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with the provisions of GAAP, and enforcement thereof is not being
sought or stayed; (iii) Liens (other than any Lien imposed under ERISA)
incurred or deposits made in the ordinary course of business (including,
without limitation, surety bonds, appeal bonds and letters of credit, in
connection with workers' compensation, unemployment insurance and other types
of social security benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Indebtedness), statutory
obligations and other similar obligations or arising as a result of progress
payments under government contracts; (iv)
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easements (including, without limitation, reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and other similar restrictions, charges or
encumbrances (whether or not recorded) and other Liens incurred in the ordinary
course of business, which do not secure Indebtedness or the deferred purchase
price of any asset and which do not interfere materially with the ordinary
conduct of the business of the Company or any subsidiary and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Company or any subsidiary; (v)
building restrictions, zoning laws and other statutes, laws, rules,
regulations, ordinances and restrictions, and any amendments thereto, now or at
any time hereafter adopted by any governmental authority having jurisdiction;
(vi) the Liens set forth on Schedule II hereto, including renewals and
extensions thereof, (vii) a Lien in connection with a first mortgage on the New
Distribution Facility, provided that the associated Indebtedness is used for
expansion of the New Distribution Facility and other capital expenditures
associated with it and (viii) Liens pursuant to capital leases incurred
pursuant to Section 4.24.
"Permitted Investments" means (i) Cash and Marketable
Securities, (ii) investments in Restricted Subsidiaries that are Consolidated
Subsidiaries and (iii) investments in a Mail Order Joint Venture that is not a
subsidiary of the Company, the Guarantor or any of their subsidiaries, provided
that the aggregate amount of capital, investments, equity, loans, payments or
assets of any kind contributed, directly or indirectly, by the Company, the
Guarantor and its subsidiaries to all Mail Order Joint Ventures shall not
exceed (i) $5,000,000 for the period from the date hereof through December 31,
1993 and (ii) $10,000,000 for the period from the date hereof and thereafter.
"Person" and "person" mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust or estate,
unincorporated organization or government or any agency or political
subdivision thereof or any other entity, foreign or domestic.
"Pledged Note" means a demand note in an aggregate principal
amount as required under paragraph 6 of the Securities from the Distribution
Facility Subsidiary in favor of the Company in the form of Exhibit E attached
hereto.
"Purchase Agreement" means that certain Purchase Agreement
dated as of August 17, 1993 by and among the Company and the Purchaser.
"Purchaser" means Sun Life Insurance Company of America,
including its transferees and assigns.
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"RCRA" means the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section Section 6901, et seq.
"Registered Exchange Offer" means the offer by the Company,
pursuant to an effective registration statement filed with the SEC, to exchange
all of the Series B Securities for all of the outstanding Series A Securities
in accordance with the terms and provisions of the Registration Rights
Agreement.
"Registered Exchange Offer Consummation Date" means the date
on which the Registered Exchange Offer is consummated in accordance with the
terms and provisions of the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement attached as Annex B to the Purchase Agreement.
"Registration Statements" means the Company's Form S-4
Registration Statement containing a joint proxy statement prospectus relating
to the distribution of certain securities in connection with the Mergers
initially filed with the Securities and Exchange Commission on April 19, 1993.
"Reorganization" means the reorganization of the Company and
the Guarantor as described in the Registration Statement on Form S-4 (File No.
33-61252) of Hanover Direct, Inc., a Delaware corporation.
"Representative" means the indenture trustee or other trustee,
agent or representative, if any, for an issue of Senior Indebtedness.
"Restricted Investment" means any Investment, contribution or
transfer of property, assets or value in consideration or on account of any
Indebtedness or equity interest (by way of transfers of property, contribution
to capital, acquisitions of stock, securities or evidences of Indebtedness, or
otherwise) in or to any Person, except in any Permitted Investment.
"Restricted Securities" means Securities which were acquired
by the Holder thereof other than pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or acquired in a public
transaction that complies with Rules 144 or 144A (or any successor rules) under
such Act, whether or not the exemption provided by paragraph (k) of Rule 144
(or any comparable exemption) is available.
"Restricted Subsidiary" means any subsidiary of the Company,
including, without limitation, the Distribution Facility Subsidiary, that is
not an Unrestricted Subsidiary.
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"Revolving Loan Balance" shall mean any date, the aggregate
outstanding balance owed to one or more lenders by the Company, the Guarantor
and the Restricted Subsidiaries consisting of secured loans and advances made
on a revolving basis (involving advances, repayments and readvances) whose
primary purpose is to provide the Company, the Guarantor or the Restricted
Subsidiaries with working capital.
"SEC" means the Securities and Exchange Commission, or any
successor Governmental Authority.
"Securities" means the securities issued under this Indenture.
"Security and Pledge Agreement" means the agreement in the
form attached hereto as Exhibit D executed or to be executed by the Company
pledging the Pledged Note as security for the respective obligations under the
Documents.
"Senior Indebtedness" means the principal of, and interest on,
any Indebtedness of the Company, the Guarantor or the Guarantor Subsidiaries,
whether outstanding on the date of this Indenture or hereafter created,
incurred for borrowed money, including amounts drawn under letters of credit or
other similar financial accommodations, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same expressly provides
that such Indebtedness shall be pari passu or subordinate in right of payment
to the Securities; provided, however, Senior Indebtedness shall not include (a)
in the case of the respective obligation of the Company, the Guarantor and the
Guarantor Subsidiaries in respect of each Security, the respective obligation
of the Company, the Guarantor and the Guarantor Subsidiaries in respect of
other Securities, (b) Indebtedness of the Company, the Guarantor or any
Guarantor Subsidiary to a subsidiary of the Company, the Guarantor or any
Guarantor Subsidiary or an Affiliate of the Company, the Guarantor or any
Guarantor Subsidiary, (c) Indebtedness to, or guaranteed on behalf of, any
individual shareholder, director, officer or employee of the Company, the
Guarantor or of any subsidiary of the Company or the Guarantor (including,
without limitation, amounts owed for compensation), (d) Indebtedness and other
amounts incurred in connection with obtaining goods, materials or services, (e)
Indebtedness incurred in violation of this Indenture and (f) Indebtedness that
by its terms is subordinated to any other Indebtedness of the Company, the
Guarantor or the Guarantor Subsidiaries.
"Series A Securities" means the 9.25% Senior Subordinated
Notes due August 1, 1998, Series A, being issued and sold pursuant to the
Purchase Agreement and this Indenture.
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"Series B Securities" means the 9.25% Senior Subordinated
Notes due August 1, 1998, Series B (the terms of which are identical to the
Series A Securities except that the Series B Securities shall be registered
under the Securities Act of 1933, as amended, and shall not contain the
restrictive legend on the face of the form of Series A Securities), to be
issued in exchange for the Series A Securities pursuant to the Registered
Exchange Offer and this Indenture.
"Subordination Agreement" means the Subordination Agreement
among Congress Financial Corporation, a California corporation, Sun Life
Insurance Company of America, attached hereto as Exhibit C, as in effect on the
date hereof and as amended or modified.
"subsidiary" of any specified Person means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person or by such Person and a subsidiary or subsidiaries of such
Person or by a subsidiary or subsidiaries of such Person, (ii) any other Person
(other than a corporation) in which such Person or such Person and a subsidiary
or subsidiaries of such Person or a subsidiary or subsidiaries of such Person
directly or indirectly, at the date of determination thereof, has at least a
majority ownership interest, or (iii) any other person in which such person,
one or more subsidiaries of such person, directly or indirectly, at the date of
determination thereof is required by GAAP or the rules and regulations of the
SEC to be combined or consolidated with such person for purposes of general
financial reporting.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, until such time as this Indenture is qualified under the TIA, and
thereafter as in effect on the date on which this Indenture is qualified under
the TIA, except as otherwise provided in Section 9.3.
"Trustee" means the Person named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor.
"Trust Officer" means the any officer or assistant officer of
the Trustee assigned by the Trustee to administer its corporate trust matters.
"Unrestricted Subsidiary" means the subsidiaries of the
Company or the Guarantor listed on Schedule 1.1 hereof. In addition,
Unrestricted Subsidiaries shall mean any subsidiary of the Company or the
Guarantor that:
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(i) is formed or acquired after the date hereof prior to the
occurrence of an Event of Default (or an event that, after notice or lapse of
time, or both, would become an Event of Default) which is continuing at the
time of receipt of such notice;
(ii) has been formed or acquired without any direct or
indirect investment, whether in cash or property, of the Company, the Guarantor
or any Restricted Subsidiary, other than Capital Stock of the Company or the
Guarantor upon which no dividends are paid or payable (except dividends paid or
payable in additional Capital Stock of the Company or the Guarantor similarly
restricted as to dividends), by the Company, the Guarantor or any Restricted
Subsidiary and without the incurrence of any Indebtedness, directly or
indirectly, by either of the Company, the Guarantor or any Restricted
Subsidiary in connection with such acquisition or the business to be engaged in
by such Unrestricted Subsidiary;
(iii) maintains separate books and records and engages in no
transaction, direct or indirect, with the Company, the Guarantor or any
Restricted Subsidiary, other than such Unrestricted Subsidiary's declaration
and payment to the Company, the Guarantor or any Restricted Subsidiary of
dividends in its own Capital Stock, or the payment by such Unrestricted
Subsidiary to the Company, the Guarantor or any Restricted Subsidiary, of
overhead and other administrative charges in the ordinary course of business;
and
(iv) obtains financing, if any, on a completely stand alone
basis, i.e., not requiring any direct or indirect guarantee or other form of
financial support or credit enhancement from the Company, the Guarantor or any
Restricted Subsidiary, other than the non-recourse pledge of the Capital Stock
of another Unrestricted Subsidiary and cross-corporate guaranties between or
among Unrestricted Subsidiaries formed or acquired at the same time as part of
a single transaction upon the consummation of which such cross-guaranties are
executed in favor of the provider of such stand alone financing.
Any subsidiary of the Company or the Guarantor formed or acquired after the
date hereof which at any time does not meet or no longer meets any of the
foregoing requirements shall not be considered, for purposes hereof, or if
initially so considered, shall lose its status as, an Unrestricted Subsidiary
and shall be subject to all of the requirements set forth herein with respect
to Restricted Subsidiaries. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary of the Company or the
Guarantor; provided, however, that immediately after giving effect to such
designation, on a pro forma basis, as if such Unrestricted Subsidiary had been
a Restricted Subsidiary for the entire immediately preceding four (4)
consecutive fiscal
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quarters (x) the Company is in compliance with all of the terms, conditions and
covenants of the Securities and this Indenture and (y) no Default or Event of
Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to such designation
and an Officer's Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Legal Tender" shall mean such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
"8% Notes" shall mean the Amended 8% Senior Subordinated Notes
due 1994 of the Company.
"14% Debentures" shall mean the 14% Senior Subordinated
Debentures due 1997 of the Guarantor.
"71/2% Convertible Debentures" shall mean the 71/2%
Convertible Subordinated Debentures due 2007 of the Guarantor.
"8% Senior Subordinated Note Indenture" shall mean the
Indenture, dated as of October 15, 1984, by and between the Company, as
assignee of the Guarantor, and BankAmerica National Trust Company (formerly
BankAmerica Trust Company of New York), as Trustee, as amended, governing the
8% Notes.
Section 1.2. Other Definitions.
Defined in
Terms Section
----- -------
"Bankruptcy Law" 6.1
"Change in Control Date" 4.13
"Custodian" 6.1
"Event of Default" 6.1
"Guaranty" 11.1
"Legal Holiday" 13.7
"Officer" 13.9
"Paying Agent" 2.3
"Registrar" 2.3
"Repurchase Date" 4.13
"Repurchase Offer" 4.13
"Repurchase Price" 4.13
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Defined in
Terms Section
----- -------
"Restricted Payments" 4.5
"U.S. Government Obligations" 8.1
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 Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company, the Guarantor,
and any other obligor upon the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular; and
(5) provisions apply to successive events and
transactions.
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ARTICLE 2
THE SECURITIES
Section 2.1. Form and Dating.
The Series A Securities shall be substantially in the form of
Exhibit A-1, which is part of this Indenture. The Series B Securities shall be
substantially in the form of Exhibit A-2, which is part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Security shall be dated the date of its
authentication. After the Securities have ceased to be Restricted Securities,
the Company shall deliver to the Trustee a printed form of Security.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture, and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2. Execution and Authentication.
One Officer, duly authorized, shall sign the Securities for
the Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Securities.
If an officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The Trustee shall authenticate Series A Securities for
original issue in the aggregate principal amount of up to $20,000,000 upon a
written order of the Company signed by two Officers. In addition, on or prior
to the Registered Exchange Offer Consummation Date, the Trustee shall
authenticate Series B Securities issued at the time of the Registered Exchange
Offer in the aggregate principal amount of up to $20,000,000 upon a written
order of the Company signed by two Officers. The written order shall specify
the amount of Series B Securities to be authenticated and the date on which the
original issue of Series B Securities pursuant to the Registered Exchange Offer
is to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $20,000,000, except as provided in
Section 2.7.
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The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain in the county where the principal
corporate office of the Trustee is located and in such other locations as it
shall determine (i) an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Securities may be presented for payment ("Paying Agent");
provided, however, that neither the Company nor any of its Affiliates may
service as Paying Agent or Registrar. The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Company shall appoint
one or more co-registrars and one or more paying agents. The term "Paying
Agent" includes any paying agent. Subject to the foregoing provisions, the
Company may change any Paying Agent, Registrar or co-registrar upon notice to
the Trustee. The Company shall notify the Trustee of the name and address of
any 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 shall, if the Securities are listed on the New
York Stock Exchange, designate as authenticating agent, co-registrar and Paying
Agent with respect to the Securities a bank or trust company in good standing,
organized under the laws of the United States of America or any State, doing
business in or having a correspondent relationship with a bank or trust company
doing business in the Borough of Manhattan, City of New York, State of New
York, and having a capital and surplus (including subordinated capital notes
and earned surplus) aggregating at least $100,000,000. Whenever, pursuant to
this Indenture, the Trustee is obligated, empowered or authorized to perform
any act with respect to the authentication and issuance of the Securities, or
their transfer, other than the authentication and issuance of Securities upon
original issue or in cases of Securities mutilated, destroyed, lost or stolen,
such act may be performed by the authenticating agent and co-registrar,
notwithstanding anything in this Indenture to the contrary. Whenever, pursuant
to this Indenture, the Trustee is obligated, empowered or authorized to perform
any act with respect to payment of the principal of (and premium, if any) or
interest on the Securities, such acts may be performed by the Paying Agent,
notwithstanding anything in this Indenture to the contrary.
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The Company covenants that whenever necessary to avoid or fill
a vacancy in the office of authenticating agent, co-registrar and Paying Agent,
the Company will appoint a successor authenticating agent, co-registrar and
Paying Agent so that there shall, at all times that the Securities are listed
for trading on the New York Stock Exchange, be one or more offices or agencies
in the Borough of Manhattan, City of New York, State of New York, acceptable to
the New York Stock Exchange, where Securities may be presented or surrendered
for payment and where Securities may be surrendered for registration of
transfer or exchange.
In case, at the time of the appointment of a successor to the
authenticating agent, any of the Securities shall have been authenticated but
not delivered, any such successor may adopt the certificate of authentication
of the original authenticating agent or of any successor to it as
authenticating agent hereunder, and deliver such Securities so authenticated;
and in case at any time any of the Securities shall not have been
authenticated, any successor to the authenticating agent by merger or
consolidation may authenticate such securities either in the name of its
predecessor hereunder or in the name of the successor authenticating agent; and
in all such cases such certificate shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate
of authentication shall have.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Securityholders or the Trustee all money received by the Paying
Agent for the payment of principal or interest or other amounts owed on the
Securities (whether such money has been paid to it by the Company or any other
obligor on the Securities or any other Person), and will notify the Trustee of
any default by the Company (or any other obligor on the Securities or any other
Person) in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or a subsidiary) shall have no further liability for the
money. The Trustee shall not be responsible for paying interest while holding
any money in trust, unless otherwise previously agreed to in writing. If the
Company or a subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Securityholders all money held by it
as Paying Agent.
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Section 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
and any other obligor shall furnish to the Trustee on or before each interest
payment date and at such other times as the Trustee may request in writing, but
in any event at least semi-annually, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
Section 2.6. Transfer and Exchange.
(a) Where Securities are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of Securities of other denominations, the Registrar
shall, subject to clause (c) of this Section 2.6 in the case of a Registered
Exchange Offer, register the transfer or make the exchange if its requirements
for such transactions are met (including, if required by the Company for
transfers with respect to which no registration statement has been declared
effective, an opinion of counsel to the Holder requesting transfer that an
exemption from registration under the Securities Act of 1933, as amended, is
available for such transfer). To permit registrations of transfer and
exchanges, the Company shall issue and the Trustee shall authenticate
Securities at the Registrar's request. No service charge shall be made to the
Holder for any registration of transfer or exchange (except as otherwise
expressly permitted herein), 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 tax or similar governmental
charge payable upon exchanges pursuant to Section 2.10, 3.6 or 9.5).
(b) The Company shall not be required (i) to issue,
register the transfer of or exchange Securities during a period beginning at
the opening of business 15 days before the day of any selection of Securities
for redemption under Section 3.02 and ending at the close of business on the
day of selection or (ii) to register the transfer or exchange of any Security
so selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part.
(c) Any Series A Securities which are presented to the
Registrar or a co-registrar for exchange pursuant to a Registered Exchange
Offer shall be exchanged for Series B Securities of equal principal amount upon
surrender to the Registrar or coregistrar of the Series A Securities to be
exchanged; provided, however, that the Series A Securities surrendered for
exchange in a Registered Exchange Offer shall be duly endorsed and
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accompanied by a letter of transmittal or written instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney who shall be
duly authorized in writing to execute such document. Whenever any Series A
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver to the Registrar or coregistrar, the
same aggregate principal amount of Series B Securities as the aggregate
principal amount of Series A Securities that have been surrendered.
Section 2.7. Replacement Securities.
If the Holder of a Security claims that the Security has been
lost, damaged, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Company, an indemnity bond must be
provided which is sufficient in the judgment of both to protect the Company,
the Trustee, any Agent or any authenticating agent from any loss which any of
them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security. The Company is not required to provide a
replacement Security that is called for redemption in accordance with its
terms.
Every replacement Security is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
Section 2.8. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.1, they
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 2.9, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
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Section 2.9. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, the Guarantor, any of their subsidiaries or
any other obligor on the Securities or an Affiliate of the Company, the
Guarantor, any of their subsidiaries or any other obligor on the Securities
shall be considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities without charge to the Securityholders. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive securities in exchange for temporary Securities without
charge to the Securityholders.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange (including, without limitation, exchange pursuant to a
Registered Exchange Offer), payment, replacement or cancellation and shall
dispose of cancelled Securities as the Company directs. The Company may not
issue new securities to replace Securities that it has paid or that have been
delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company fails to make a payment of interest on the
Securities, it shall pay such defaulted interest plus any interest payable on
the defaulted interest, if any, in any lawful manner. It may pay such
defaulted interest, plus any such interest payable on it, to the Persons who
are Securityholders on a subsequent special record date. The Company shall fix
any such record date and payment date. At least 15 days before any such record
date, the Company shall mail to Securityholders a notice that states the record
date, payment date and amount of such interest to be paid.
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Section 2.13. Home Office Payment Agreements.
Notwithstanding any provisions of this Indenture and of the
Securities to the contrary, payments of interest on, and all or any portion of
the principal of, any Security, other than the final payment of principal on a
Security, shall be made by the Paying Agent directly to the Holder of such
Security or their designee without surrender or presentation thereof to the
Paying Agent, if the Company has so agreed with such Holder and has filed with
the Trustee a copy of the Purchase Agreement or an agreement between the
Company and a Holder who is not a Purchaser (or the Person for whom such Holder
is a nominee) providing that (i) such payment will be so made and (ii) such
Holder (or the Person for whom such Holder is a nominee) will, before selling,
transferring or otherwise disposing of any such Security, make a notation
thereon, or submit the same to the Trustee for notation thereon, of the date to
which interest has been paid with respect thereof and, in the event redemptions
previously have been made thereof, surrender the same to the Trustee in
exchange for a Security or Securities aggregating the same principal amount as
the unredeemed principal amount of the Securities surrendered. The Company
will indemnify and save the Trustee and Paying Agent harmless against any
liability resulting from any act or omission to act on the part of the Company
in connection with any such agreement or which the Paying Agent may incur as a
result of making any payment in accordance with any such agreement.
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee.
If the Company elects to redeem the Securities pursuant to the
optional redemption provisions of Paragraph 5 of the Securities, or is required
to redeem Securities pursuant to the mandatory redemption provisions of
Paragraph 6 of the Securities, it shall notify the Trustee in writing of the
redemption date and the principal amount of the Securities to be redeemed.
The Company shall give each notice provided for in this
Section at least 60 days before the redemption date (unless a shorter notice
period shall be satisfactory to the Trustee); provided, however, that the
Trustee shall have no liability to any Holder if it deems such shorter notice
period satisfactory to it.
Section 3.2. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed as follows:
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(1) each redemption shall be pro rata as between
Restricted Securities and the remaining Securities,
(2) the Trustee shall select the Restricted
Securities to be redeemed on a substantially pro rata basis in
multiples of $1,000 among the Holders of Restricted Securities, and
(3) the Trustee shall select the remaining
Securities to be redeemed on a substantially pro rata basis among the
Holders of the remaining Securities in accordance with a method the
Trustee considers fair and appropriate (in such manner as complies
with applicable legal and stock exchange requirements, if any).
The amount of remaining Securities shall be calculated as the aggregate
principal amount of Securities originally issued hereunder less (i) the
aggregate principal amount of outstanding Restricted Securities and (ii) the
aggregate principal amount of any Securities previously redeemed. The Trustee
shall make the selection not more than 60 days and not less than 30 days before
the redemption date from outstanding Securities not previously called for
redemption.
The Trustee shall promptly notify the Company of the
Securities or portions of Securities to be called for redemption. The Trustee
may select for redemption portions of the principal of Securities that have
denominations larger than $1,000. Securities and portions of them it selects
shall be in amounts of $1,000 or integral multiples of $1,000. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail by first class mail, postage prepaid a notice of
redemption to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part,
the portion of the principal amount of such Security to be
redeemed and that, after the redemption date, upon surrender
of such Security, a new Security or
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Securities in principal amount equal to the unredeemed portion
will be issued;
(4) the name and address of the Paying Agent;.
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(6) that interest on Securities called for
redemption ceases to accrue on and after the redemption date;
and
(7) the paragraph of the Securities pursuant to
which the Securities called for redemption are being redeemed.
At the Company's written request which shall include an
Officer's Certificate setting forth the information to be stated in such
notice, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date at the price set forth
in the Security.
Section 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent immediately available funds
sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date. The Trustee or the Paying Agent shall
return to the Company any money not required to pay the redemption price of all
Securities to be redeemed.
Section 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
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ARTICLE 4
COVENANTS
Section 4.1. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities. With
respect to interest payments pursuant to Section 3(b) of the Registration
Rights Agreement, the Company shall notify the Trustee within five (5) business
days prior to any interest payment date of the amount of such interest payable
to each Holder. Principal and interest shall be considered paid on the date
due if the Paying Agent (other than the Company or a subsidiary or an
Affiliate) holds on that date money designated for and sufficient to pay all
principal and interest and any other amounts then due.
To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on (i) overdue principal at the rate borne by the Securities plus three percent
(3%) per annum, compounded annually (without regard to any applicable grace
period) and (ii) installments of interest overdue (without regard to any
applicable grace period), at the rate borne by the Securities plus three
percent (3%) per annum. The obligation of the Company described in the
preceding two (2) sentences is absolute and unconditional, irrespective of any
tax or accounting treatment of such obligation.
Section 4.2. SEC Reports, Financial Reports.
The Company and the Guarantor shall deliver to the Trustee and
the Holders of at least $1,000,000 in aggregate principal amount of Restricted
Securities, within 15 days after it files with the SEC, and shall make
available to all of the Holders upon request, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act.
If the Company or the Guarantor is not subject to, or for any
reason is not complying with, the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Trustee and the Holders of at
least $1,000,000 in aggregate principal amount of Restricted Securities, within
15 days after any of them would have been required to file such with the SEC,
and shall make available to all of the Holders upon request, quarterly and
annual reports, including financial statements, notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
information, documents or other reports comparable to that which the Company
and the
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Guarantor would have been required to file with the SEC if each were subject to
the requirements of Section 13 or 15(d) of the Exchange Act.
The Company will deliver, at the time it delivers the reports,
including financial statements, as required above in this Section 4.2,
consolidated and consolidating unaudited balance sheets of the Company and the
Guarantor Subsidiaries as at the end of such period and consolidated and
consolidating unaudited statements of income and expense and changes in
financial position for the Company and the Guarantor Subsidiaries for such
period, together with the accompanying notes thereto, if any, all in reasonable
detail, fairly presenting the financial position and results of operation of
the Company and the Guarantor Subsidiaries as at the date thereof and for such
periods, prepared in accordance with GAAP.
The Company will deliver or cause to be delivered within ten
(10) days after requested by any holder of Restricted Securities, any other
information specified in subsection (d)(4) of Rule 144A.
Subsequent to the qualification of the Indenture under the
TIA, the Company, the Guarantor and the Guarantor Subsidiaries also shall
comply with the provisions of TIA Section 314(a). The Company, the Guarantor
and the Guarantor Subsidiaries shall timely comply with its reporting and
filing obligations under applicable federal securities law.
The foregoing requirements do not replace or supersede and are
in addition to the requirements set forth in the Purchase Agreement and in any
of the Documents.
Section 4.3. Compliance Certificate.
(a) The Company and the Guarantor shall deliver to the
Trustee and Holders of at least $1,000,000 in aggregate principal amount of
Securities, within ninety (90) days after the end of each fiscal year and
within forty-five (45) days after the end of each fiscal quarter, an Officer's
Certificate stating that a review of the activities of the Company, the
Guarantor and their respective subsidiaries during the preceding fiscal period
has been made under the supervision of the signing officers with a view to
determining whether the Company, the Guarantor and the Guarantor Subsidiaries,
as the case may be, have kept, observed, performed and fulfilled its
obligations under this Indenture and the Documents, as applicable, and further
stating (including all relevant calculations in reasonable detail), as to each
such officer signing such certificate, that to the best of his or her knowledge
the Company, the Guarantor and the Guarantor Subsidiaries have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
the Documents,
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as applicable, and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof or thereof (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he may have knowledge) and that to the best of his knowledge
no event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Securities are
prohibited, or if such event has occurred, a description of the event.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants or to
a written policy adopted by the independent, public accountants of the Company
and the Guarantor or their subsidiaries which has been previously applied (a
copy of which shall be delivered to the Trustee), the annual financial
statements delivered pursuant to Section 4.2 shall be accompanied by a written
statement of the independent public accountants (which shall be a firm listed
in Section 4.26(b)) of the Company and the Guarantor that in making the
examination necessary for certification of such financial statements nothing
has come to their attention which would lead them to believe that the Company
or the Guarantor has violated any provisions of Article 4 or 5 of this
Indenture or any of the Documents pursuant to engagement instructions directing
such determination of compliance, 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 that would not be
disclosed in the course of an audit examination conducted in accordance with
generally accepted auditing standards.
(c) The Company and the Guarantor will, so long as any of
the Securities are outstanding, deliver to the Trustee and the Securityholders,
within two days of becoming aware of (i) any Default, Event of Default or
default in the performance of any covenant, agreement or condition contained in
this Indenture or any Document or (ii) any default under the CFC Credit
Agreement or (iii) any event of default under any other mortgage, indenture,
instrument or agreement as that term is used in Section 6.1(4), an Officer's
Certificate specifying such Default, Event of Default, default, or event of
default.
(d) The Company and the Guarantor shall deliver to the
Trustee and the Holders of the Restricted Securities, and shall make available
to all of the Holders upon request, copies of all information and calculations
provided to the lenders under the CFC Credit Agreement if a Default or Event of
Default shall have occurred and be continuing and copies of all notices
delivered or received by the Company and the Guarantor under the CFC Credit
Agreement, within 5 days of the provision of such information and calculations
by the Company and the Guarantor to such lenders or
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the delivery by or receipt of such notices by the Company and the Guarantor.
Section 4.4. Stay, Extension and Usury Laws.
Each of the Company, the Guarantor and the Guarantor
Subsidiaries 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, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture or any other Document; and the Company, the
Guarantor and the Guarantor Subsidiaries (to the extent it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, 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 has been
enacted.
Section 4.5. Limitations on Distributions and Investments.
(a) Neither the Company nor the Guarantor shall,
directly or indirectly, nor cause or permit any Restricted Subsidiary or
any person controlled by the Company, the Guarantor or any Restricted
Subsidiary to, declare, pay or make any dividends or distributions on any
shares of Capital Stock (other than dividends or distributions payable in the
Guarantor's Capital Stock, or warrants to purchase the Guarantor's Capital
Stock, or splitups or reclassifications of the Guarantor's Capital Stock into
additional or other shares of the Company's or the Guarantor's Capital Stock or
dividends from Consolidated Subsidiaries solely to the Company or Consolidated
Subsidiaries of the Company), or pay any Management Fee permitted under Section
4.14 in excess of $750,000 in the aggregate in any fiscal year or make or
permit or suffer to exist any Restricted Investments (collectively, "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(i) the aggregate amount of Restricted Payments
(and to the extent applicable, the amount of any Restricted Payment
shall be the original principal or capital or guarantee amount thereof
less returns of principal or equity thereon without adjustment by
reason of the financial condition or results of operations of any
subsidiary or investment), declared, paid or made during the period
beginning July 1, 1993 to and including the date any such Restricted
Payment is made (excluding any amounts permitted under subsection (c)
below) would not exceed twenty percent (20%) of aggregate Consolidated
Net Income (plus, in determining the amount available to make any
Restricted
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Payment consisting solely of a Restricted Investment, the amount of
the net proceeds from the issuance and sale of Capital Stock by the
Company, the Guarantor or any Restricted Subsidiary) for the period
from July 1, 1993 to the end of the immediately preceding ended fiscal
quarter at the date any such Restricted Payment is made (it being
agreed that the amount of any Restricted Payment made by transfer of
property of any Person other than cash shall be the greater of (A) the
fair market value of such property, as determined in good faith by the
Board of Directors of such Person and evidenced by a Board Resolution
or (B) the book value of such property);
(ii) the Company could incur $1.00 of additional
Indebtedness pursuant to the covenants of the Indenture, the CFC
Credit Agreement and any other instrument or evidence of Indebtedness;
and
(iii) no Default or Event of Default (and no event
that, after notice or lapse of time, or both, would become an Event of
Default) shall have occurred and be continuing.
(b) Neither the Company nor the Guarantor shall, directly
or indirectly, nor cause or permit any Restricted Subsidiary or any person
controlled by the Company, the Guarantor or any Restricted Subsidiary to, (1)
redeem, purchase, repurchase, prepay, defease or otherwise acquire, reduce or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking final payment or pay interest on, any debt of the Guarantor, the
Company or any subsidiary pari passu with or subordinated to the Securities,
(2) redeem, purchase, repurchase or otherwise acquire, reduce or retire for
value any shares of the Company's, the Guarantor's or any Restricted
Subsidiary's Capital Stock, other than through conversion of the Company's
Convertible Preferred Stock into the Company's Common Stock.
(c) Notwithstanding subsections (a) and (b) above, the
Company and the Guarantor shall be permitted to (i) pay interest on debt
subordinated to the Securities; provided that such interest payment is fully
subordinated in all respects to the Securities and subject to subordination
provisions that are consented to in writing by a majority of Holders in
principal amount of the then outstanding Securities, (ii) make payments in
respect of cancellation of options to purchase the Common Stock pursuant to the
Management Incentive Stock Option Agreement; provided that (x) at the time of
and after giving effect to such payment, no Event of Default shall have
occurred and be continuing and (y) the redemption price is not greater than the
then market price of the Common Stock, (iii) make loans to employees of the
Company or the Guarantor for the purpose of acquiring Common Stock pursuant to
an equity incentive or equity
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investment plan; provided that such loans do not result in the transfer of any
assets of the Company or the Guarantor other than Capital Stock and the
purchase price therefor, (iv) make one-time loans to employees of the Company
or the Guarantor not to exceed $350,000 in the aggregate, and (v) pay dividends
to the holders of Convertible Preferred Stock and Class B Preferred Stock;
provided that (x) at the time of and after giving effect to such payment, no
Event of Default shall have occurred and be continuing and (y) the aggregate
amount of such payments made during the immediately preceding four (4)
consecutive fiscal quarters does not exceed $4,060,000.
(d) Notwithstanding anything else contained herein,
neither the Company nor the Guarantor shall, directly or indirectly, increase
the dividend rate or other consideration paid with respect to any class of
preferred stock of the Company, the Guarantor or any Restricted Subsidiary.
(e) Without limiting the foregoing, neither the Company
nor the Guarantor shall permit to exist any Unrestricted Subsidiary except as
permitted by this Section 4.5.
Section 4.6. Corporate Existence.
Subject to Article 5 hereof, each of the Company and the
Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate, partnership
or other existence of each subsidiary of the Company or the Guarantor in
accordance with the respective organizational documents of each such subsidiary
and the rights (charter and statutory), licenses and franchises of the Company,
the Guarantor and their subsidiaries; provided, however, that the Company and
the Guarantor shall not be required to preserve any such right, license or
franchise, or corporate, partnership or other existence of any subsidiary, if
the Board of Directors of the Company or the Guarantor, as the case may be,
shall determine in good faith in accordance with the Company's or the
Guarantor's charter, as applicable, that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its subsidiaries or
the Guarantor and its subsidiaries, if any, in each case taken as a whole, and
that the loss thereof is not adverse in any material respect to the Holders.
Section 4.7. Payment of Taxes and Claims.
The Company and the Guarantor shall, and shall cause each of
their subsidiaries to, pay, prior to delinquency, all taxes, assessments and
other governmental levies imposed upon the Company, the Guarantor or any of
their subsidiaries, except as contested in good faith by appropriate
proceedings or where failure to pay would not have a material adverse effect on
the
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Company, the Guarantor or the Guarantor and its subsidiaries taken as a whole.
Section 4.8. Investment Company Act.
Neither the Company, the Guarantor nor any Restricted
Subsidiary shall become an investment company subject to registration under the
Investment Company Act of 1940, as amended.
Section 4.9. Limitation on Encumbrances.
The Company and the Guarantor will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist or otherwise cause or suffer to become effective any Lien of
any kind other than Permitted Encumbrances.
Section 4.10. Indebtedness to Consolidated Earnings Ratio.
The Company shall not permit, as at the end of any fiscal
quarter commencing during each period set forth below, the ratio of (i)
Indebtedness of the Company and its Restricted Subsidiaries and the Guarantor,
determined on a consolidated basis as at such date, to (ii) Consolidated
Earnings on such date of determination, to exceed the ratio set forth opposite
such period:
Period Ratio
- ------------------------------------ -----------
December 31, 1993 to December 31, 1994 5.0 to 1.0
January 1, 1995 to December 31, 1996 4.5 to 1.0
January 1, 1997 to July 1, 1998 4.0 to 1.0
For the purposes of this Section 4.10, Consolidated Earnings shall be
calculated on the basis of the financial performance for the immediately
preceding four (4) consecutive fiscal quarters.
Section 4.11. Limitation on Incurrences of Additional
Indebtedness.
The Company and the Guarantor shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume,
guarantee, suffer to exist or otherwise in any manner become liable or commit
to become liable with respect to any Indebtedness except for:
(a) the Securities;
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(b) Indebtedness existing on the date hereof as
set forth in Schedule 2.5 (except Indebtedness which is to be repaid
from the proceeds of the sale of the Securities); and
(c) intercompany Indebtedness between (i) the
Company and a Restricted Subsidiary and (ii) a Restricted Subsidiary
and another Restricted Subsidiary, provided that such intercompany
Indebtedness is fully subordinated in all respects to the Securities
and subject to subordination provisions that are consented to in
writing by a majority of Holders in principal amount of the then
outstanding Securities; and
(d) other Indebtedness that on a proforma basis,
as if such Indebtedness were outstanding for the entire immediately
preceding four (4) consecutive fiscal quarters, complies with all the
terms, conditions and covenants of the Securities and this Indenture,
provided, that (i) on the date such Indebtedness is incurred, created
or assumed, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing and (ii) if such
Indebtedness is to be used to redeem any Securities pursuant to
paragraph 5 of the Securities, such Indebtedness shall (x) have an
interest cost that is equal to or less than the interest cost on the
Securities and (y) not have an Average Life shorter than the remaining
Average Life of the Securities at the time of such redemption.
Section 4.12. Maintenance of Consolidated Net Worth.
The Company and the Guarantor shall not permit Consolidated
Net Worth of the Company or the Guarantor at the end of any fiscal quarter
commencing during each period set forth below to be less than the amount set
forth below opposite such period:
Consolidated Net
Period Worth
------------------------------------ ----------------
July 1, 1993 to December 31, 1993 $13,000,000
January 1, 1994 to December 31, 1994 18,000,000
January 1, 1995 to December 31, 1998 28,000,000
January 1, 1996 to July 1,1998 40,000,000
Section 4.13. Change in Control.
If there is a Change in Control (such time of a Change in
Control being referred to as the "Change in Control Date"), then the Company
shall within ten (10) business days following the Change in Control Date, (a)
commence an offer to repurchase
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(the "Repurchase Offer") all of the then outstanding Securities at the price
(the "Redemption Price") equal to 101% of the principal amount of each
Security, plus accrued interest to the Repurchase Date (as defined below) and
other amounts owing under the Securities, and (b) deposit with the Paying Agent
an amount equal to the aggregate Repurchase Price for all Securities then
outstanding so as to be available for payment to the Holders of Securities who
elect to require the Company to repurchase all or a portion of their
Securities.
If the Repurchase Date is on or after an interest payment
record date and on or before the related interest payment date, any accrued
interest will be paid to the Person in whose name a Security is registered at
the close of business on such record date, and no additional interest will be
payable to Holders who tender Securities pursuant to the Repurchase offer.
Notice of any Repurchase Offer shall be mailed by certified
mail by the Company to the Trustee and the Holders of the Securities at their
last registered addresses. The Repurchase Offer shall remain open from the
time of mailing until the repurchase date which shall be no earlier than 30
days nor later than 60 days from the date of such mailing (the date on which
the Repurchase Offer closes being the "Repurchase Date"). The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Repurchase Offer. The notice, which shall
govern the terms of the Repurchase Offer, shall state:
(1) that the Repurchase Offer is being made
pursuant to this Section 4.11 and that Securities will be accepted for
payment either (A) in whole or (B) in part in integral multiples of
$1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue
to accrue interest;
(4) that any Security accepted for payment
pursuant to the Repurchase Offer shall cease to accrue interest from
and after the Repurchase Date;
(5) that Holders electing to have a Security
purchased pursuant to the Repurchase Offer will be required to
surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the
Paying Agent at the address specified in the notice prior to the close
of business on the Repurchase Date;
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(6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than three
business days before the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of Securities the Holder delivered for repurchase and
a statement that such Holder is withdrawing his election to have such
Securities repurchased; and
(7) that Holders whose Securities are purchased
only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
If any consent under the CFC Credit Agreement is necessary to
permit the Company to effect the Repurchase Offer, the Company will obtain the
requisite consent under the CFC Credit Agreement; provided, however, that the
failure to obtain such consent will not in any event excuse any failure by the
Company to perform its obligations under this Section 4.13.
On the Repurchase Date, the Company shall, to the extent
lawful, (i) accept for payment Securities or portions thereof tendered pursuant
to the Repurchase Offer and (ii) deliver to the Trustee Securities so tendered
together with an Officer's Certificate stating the Securities or portions
thereof accepted for payment by the Company. The Paying Agent shall in
accordance with written wire transfer instructions promptly wire transfer in
immediately available funds to Holders of Securities so accepted payment in an
amount equal to the Repurchase Price. The Trustee shall promptly authenticate
and mail or deliver to each Holder who tendered a Security, a new Security or
Securities equal in outstanding principal amount to any untendered portion of
the Security surrendered. The Paying Agent shall invest funds deposited with
it pursuant to this Section 4.13 for the benefit of, and at the written
direction of, the Company to the Repurchase Date.
Section 4.14. Restriction on Payment of Management Fees.
The Company and the Guarantor shall not, directly or
indirectly, nor cause or permit any Restricted Subsidiary or any person
controlled by the Company, the Guarantor or any Restricted Subsidiary to, pay
any Management Fees except for Management Fees paid in equal quarterly
installments that in the aggregate do not exceed $750,000 in any twelve-month
period, provided that such Management Fees may not be paid unless (i) at the
time of and after giving effect to payment of any Management Fee, no Event of
Default shall have occurred and be continuing, (ii) an independent committee of
the Board of Directors of the Company or the Guarantor, as the case may be, has
approved the management
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agreement applicable to the relevant period and the payment of such Management
Fee as evidenced by a Board Resolution and (iii) any Management Fee payment is
fully subordinated in all respects to the Securities and made subject in right
and time of payment to amounts owing under the Securities, and, provided,
further, however, that the aggregate amount of any Management Fees paid
pursuant to this Section 4.14 in excess of $750,000 in any fiscal year shall be
Restricted Payments and permitted only to the extent allowed under Section
4.5(a).
Section 4.15. Limitation on Transactions With Affiliates.
Neither the Company nor the Guarantor shall, nor shall either
of them permit any Restricted Subsidiary to (i) sell, lease, transfer or
otherwise dispose of any of its properties, assets or securities to, (ii)
purchase or lease any property, assets or securities from, (iii) make any
Restricted Investment in, (iv) make any loan or advance on the guaranty of any
Indebtedness, or (v) obtain services or enter into or amend any contract or
agreement with or for the benefit of, either an (A) Affiliate of any of them,
(b) any person or person who is a member of a group (as such term is used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) that, directly or indirectly, is the beneficial holder of 5% or
more of any class of equity securities of the Company, the Guarantor or any of
their subsidiaries or any Affiliates thereof, (C) any person who is an
Affiliate of any such holder, or (D) any officers, directors, or employees of
any of the above (each case, an "Affiliate Transaction"), except for
transactions evidenced by an Officer's Certificate addressed and delivered to
the Trustee stating that such Affiliate Transaction is made in good faith, and
that the terms of such Affiliate Transaction are fair and reasonable to the
Company and on terms no less favorable than those obtainable in an arm's length
transaction with a third party that is not an Affiliate, the Guarantor or such
Restricted Subsidiary, as the case may be, provided, that with respect to any
Affiliate Transaction with an aggregate value (to either party) in excess of
$1,000,000, the Company must, prior to the consummation thereof, obtain a
written favorable opinion that such transactions is favorable to the Company
and to the Holders from an Independent Financial Advisor from a financial point
of view. Notwithstanding the foregoing, (x) transactions exclusively between
or among the Company, the Guarantor and any Restricted Subsidiaries, (y) loans
and advances to employees of the Company, the Guarantor or any Restricted
Subsidiaries for expenses in the ordinary course of business and consistent
with past practices and (z) Restricted Payments made in compliance with Section
4.5, payments made in compliance with Section 4.14 and transactions permitted
by, and complying with, the provisions of Article Five shall not constitute
"Affiliate Transactions."
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Section 4.16. Maintenance of Properties; Insurance.
The Company and the Guarantor shall maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in its business and from time to time shall make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Company and the
Guarantor shall maintain or cause to be maintained, with financially sound and
reputable insurers, insurance in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Company, the Guarantor and
their subsidiaries operate. All insurance policies shall be maintained and
renewed with insurance carriers having an A.M. Best & Co. rating of "A" or
better.
Section 4.17. Compliance with Laws.
The Company, the Guarantor and their subsidiaries shall comply
with all laws, rules, regulations and judicial decisions or decisions of
arbitrators applicable to or binding upon each of them and any property owned
or leased by each of them (including without limitation, all Legal Requirements
and all Environmental Laws) noncompliance with which could have a material
adverse effect upon the condition (financial or otherwise), business,
operations, assets, nature of assets, liabilities or prospects of the Company,
the Guarantor and their subsidiaries, taken as a whole, or the ability of the
Company or the Guarantor to perform their obligations under the Indenture and
other Documents.
Section 4.18. ERISA.
(a) The Company, the Guarantor and the Guarantor
Subsidiaries shall not, and shall not permit any of their subsidiaries or any
ERISA Affiliate to:
(i) permit to exist with respect to any Benefit
Plan any accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Internal Revenue Code) whether or not
waived;
(ii) fail to make any contribution or payment to
any Multiemployer Plan required to be made by it under any agreement
relating to such Multiemployer Plan, or a law pertaining thereto,
which shall have become due;
(iii) terminate any Benefit Plan other than in a
"standard termination" within the meaning of Section 4041(b) of ERISA;
(iv) fail to pay with respect to any Benefit Plan
any installment or other payment required under Section 412
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of the Internal Revenue Code on or before the due date for such
installment or other payment; or
(v) amend any Benefit Plan so as to increase
current liability for the plan year such that the Company, the
Guarantor, the Guarantor Subsidiaries, any of their subsidiaries or
any ERISA Affiliate is required to provide security to such Benefit
Plan under Section 401(a)(29) of the Internal Revenue Code; and
(b) the Company, the Guarantor, the Guarantor
Subsidiaries and their subsidiaries will not engage in any prohibited
transaction (within the meaning of Section 406(a) of ERISA or Section
4975(c)(1)(A), (B), (C) or (D) of the Internal Revenue Code) for which an
administrative or statutory exemption is not available;
if any such event or condition described in clauses (a)(i) through (a)(iv) and
clause (b) above could reasonably be expected to result in a liability on the
part of, or any event described in clause (a)(v) above results in the posting
of security under section 401(a)(29) of the Internal Revenue Code by, the
Company, the Guarantor or any Guarantor Subsidiary which liability or posting
of security, individually or in the aggregate, would have a material adverse
effect on the business, operations, condition (financial or otherwise),
properties or assets of the Company, the Guarantor and the Guarantor
Subsidiaries, taken as a whole.
Section 4.19. Environmental Matters.
None of the Company, the Guarantor, the Guarantor Subsidiaries
or any of their subsidiaries (i) will use, generate, manufacture, produce,
store, discharge, dispose of, place, handle or release (collectively,
"manage"), or cause any Person to manage, any Hazardous Materials on, from or
under, any real property now or hereafter owned, operated or leased by the
Company, the Guarantor or any of their subsidiaries or (ii) will transport or
cause any Person to transport any Hazardous Materials to or from such real
property, in a manner so that such management or transport of Hazardous
Materials constitutes a violation of, or could lead to liability under,
applicable Environmental Law that could reasonably be expected to have a
material adverse effect upon the condition (financial or otherwise), business,
operations, assets, nature of the assets, liabilities or prospects of the
Company, the Guarantor and their subsidiaries, taken as a whole. None of the
Company, the Guarantor or any of their subsidiaries will cause any real
property now or hereafter owned, operated or leased by any of them to be used
in a manner that could constitute a violation of, or could lead to liability
under, applicable Environmental Law that could reasonably be expected to have a
material adverse effect upon the condition (financial or otherwise), business,
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operations, assets, nature of the assets, liabilities or prospects of the
Company, the Guarantor and their subsidiaries, taken as a whole.
Section 4.20. Fixed Charge Coverage Ratio.
The Company shall not permit, as at the end of any fiscal
quarter commencing during each period set forth below, the Fixed Charge
Coverage Ratio of the Company to be less than the ratio set forth opposite such
period:
Minimum
Fixed Charge
Period Coverage Ratio
- ------------------------------------ --------------
July 1, 1993 to December 31, 1993 1.70 to 1.00
January 1, 1994 to December 31, 1994 1.80 to 1.00
January 1, 1995 to December 31, 1996 2.00 to 1.00
January 1, 1997 to December 31, 1998 2.15 to 1.00
and at all times thereafter
For purposes of this Section 4.20, the Fixed Charge Coverage Ratio shall be
calculated on the basis of the financial performance for the immediately
preceding four (4) consecutive fiscal quarters.
Section 4.21 Repayment of Certain Existing Indebtedness.
(a) The Company shall have on or prior to the date hereof
delivered an irrevocable notice of redemption to all holders of the 8% Notes
and deposited with the trustee under the 8% Subordinated Note Indenture an
amount of money sufficient to pay the principal amount of, and accrued interest
on, all of the outstanding 8% Notes and (b) the Guarantor shall redeem in full
or retire the 14% Debentures in connection with the Reorganization.
Section 4.22 Limitation on Ranking of Future Indebtedness.
Neither the Company nor the Guarantor shall, directly or
indirectly, incur, create, or suffer to exist any Indebtedness which is
subordinated or junior in right of payment (to any extent) to any Senior
Indebtedness and senior or superior in right of payment (to any extent) to the
Securities.
Section 4.23 Books and Records.
The Company and the Guarantor shall, and shall cause each of
their subsidiaries to, keep books and records which
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accurately reflect all of their respective material business affairs and
transactions.
Section 4.24 Sale and Leaseback.
Neither the Company nor the Guarantor shall, nor shall either
permit any Restricted Subsidiary to, (i) enter into any arrangement with any
lender or investor or to which such lender or investor is a party providing for
the lease by the Company, the Guarantor or any such Restricted Subsidiary of
real or personal property or any other asset, tangible or intangible, which has
been or is to be sold or transferred by the Company, the Guarantor or such
Restricted Subsidiary to such lender or investor or to any person to whom the
funds have been or are to be advanced by such lender or investor, which advance
is secured by such property, assets or rental obligations of the Company, the
Guarantor or such Restricted Subsidiary or (ii) sell or transfer any real or
personal property or any other asset, tangible or intangible, that is used or
useful in conducting the business of the Company, the Guarantor or any
Restricted Subsidiary and then or thereafter rent or lease any other real or
personal property or other asset that is to be used for substantially the same
purpose as such property or asset that has been sold or transferred.
Notwithstanding the foregoing, and subject to the provisions set forth in this
Indenture, the Company, the Guarantor or any Restricted Subsidiary shall be
permitted to (A) enter into a transaction described in the foregoing clauses
(i) and (ii) provided that such transaction is only between or among the
Company, the Guarantor and any Restricted Subsidiary, (B) enter into a capital
lease at the time of, or within four (4) months after, the initial acquisition
or completion of construction by the Company, the Guarantor or any Restricted
Subsidiary of the property or other asset that is subject to such capital lease
and (C) renew or extend any capital lease permitted under the foregoing clause
(B) of this sentence.
Section 4.25 Limitation on Payment Restrictions Affecting
Subsidiaries.
The Company and the Guarantor shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create or suffer to exist
or allow to become effective any consensual encumbrance or restriction on the
ability of (i) any of the subsidiaries of the Company or the Guarantor to (a)
pay dividends or make other distributions on its Capital Stock or pay any
obligation, liability or any Indebtedness owed to the Company, the Guarantor or
any Restricted Subsidiary, (b) make loans or advances to the Company, the
Guarantor or any Restricted Subsidiary or (c) transfer any of its properties or
assets to the Company, the Guarantor or any Restricted Subsidiary, or (ii) the
Company, the Guarantor or any Restricted Subsidiary to receive or retain
vis-a-vis the transferor any such amounts set forth in
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clauses (i) (a), (i) (b) or (i) (c) above, except for encumbrances or
restrictions existing on the date hereof contained in this Indenture, the CFC
Credit Agreement, any replacement of the CFC Credit Agreement, provided that
such encumbrances or restrictions are no more restrictive with respect to
matters set forth in clauses (i) and (ii) above than those under the CFC Credit
Agreement as in effect on the date hereof, or under or by reason of applicable
law.
Section 4.26. Accounting Changes.
(a) The Company and the Guarantor shall not, and shall not
permit any of their subsidiaries to, (i) make or permit any change in
accounting principles or reporting practices, except as permitted by GAAP or
(ii) change its fiscal year other than with respect to any subsidiary acquired
after the date hereof to that of the Company.
(b) The Company, the Guarantor and the Restricted
Subsidiaries will use one of the following accounting firms, or their
respective successors:
KPMG Peat Marwick
Arthur Andersen
Coopers & Lybrand
Ernst & Young
Deloitte & Touche
Price Waterhouse
Section 4.27. PPN Application.
Promptly after the date hereof, the Company shall file an
application with Standard & Poor's Corporation CUSIP Service Bureau for the
assignment of a Private Placement Number with respect to each of the Securities
and the Company shall file with such bureau all documents and materials
required to be submitted with such application. All of the costs associated
with the filing of such application or the obtaining of such a Private
Placement Number shall be borne solely by the Company.
Section 4.28. Limitations on Sales of Assets and Subsidiary
Stock.
(a) Neither the Company, the Guarantor nor any Restricted
Subsidiary shall in one or a series of related transactions convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, tangible or intangible (including shares of
Capital Stock of any direct or indirect subsidiaries of the Company or the
Guarantor, by sale, issuance or otherwise) whether now owned or hereafter
acquired (an "Asset Sale"), unless (A) the Net Cash Proceeds (as defined below)
therefrom (1) within a period of not
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greater than twelve (12) months after the date of such Asset Sale, are invested
in assets or property that are directly related to the fundamental nature of
the business of the Company, the Guarantor and the Restricted Subsidiaries as
of the date of this Indenture or in the acquisition of a Restricted Subsidiary
that is engaged in a business that is directly related to the fundamental
nature of the business of the Company, the Guarantor and the Restricted
Subsidiaries as of the date of the Indenture, or, (2) if such Net Cash Proceeds
are not invested within twelve (12) months as provided for in the foregoing
clause (1), the Company applies the amount not so invested of such Net Cash
Proceeds to the redemption of the Securities pursuant to paragraph 5 of the
Securities or the repurchase of the Securities pursuant to an Offer to Purchase
(as defined below), (B) 50% of the value of the consideration for such Asset
Sale consists of U.S. Legal Tender or unrestricted marketable securities and
(C) any promissory note received in connection with such Asset Sale shall not
have a maturity, including any extensions thereof, greater than seven (7)
years. Notwithstanding the foregoing provisions of this Section 4.28:
(i) the Company, the Guarantor and any Restricted
Subsidiary may convey, sell, transfer or otherwise dispose of assets
or Capital Stock of any Unrestricted Subsidiary of the Company or the
Guarantor, provided that such conveyance, sale, transfer or other
disposition is without recourse, except for warranties, indemnities
and price adjustments, to the Company, Guarantor or any Restricted
Subsidiary;
(ii) the Company, the Guarantor and any Restricted
Subsidiary may in the ordinary course of business and consistent with
past practices lease customer and mailing lists;
(iii) the Company, the Guarantor and any Restricted
Subsidiary may convey, sell, lease, transfer or otherwise dispose of
assets pursuant to and in accordance with the provisions of Article
Five of this Indenture;
(iv) the Company, the Guarantor and any Restricted
Subsidiary may for value convey, sell, transfer or otherwise dispose
of inventories in the ordinary course of business and consistent with
past practices;
(v) the Company, the Guarantor and any Restricted
Subsidiary may for value convey, sell, lease, transfer, or assign
property no longer necessary for the proper conduct of the business
(as evidenced by a Board Resolution and as disclosed to the Trustee in
an Officer's Certificate immediately thereupon for Asset Sales with a
fair market value of at least $250,000);
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(vi) the Company, the Guarantor and any Restricted
Subsidiary may abandon assets and properties of the Company or the
Guarantor which are no longer useful in its business and cannot be
sold and may for value convey, sell, lease, transfer, or assign
damaged, worn out or other obsolete property in the ordinary course of
business;
(vii) the Company, the Guarantor and any Restricted
Subsidiary may sell accounts pursuant to the GECC Agreement and may in
the ordinary course of business and consistent with past practices
sell accounts receivable for fair market value and without recourse or
claim against the Company, the Guarantor or any Restricted Subsidiary;
(viii) the Company, the Guarantor and any Restricted
Subsidiary may convey, sell, lease, transfer, assign or otherwise
dispose of assets to the extent that the aggregate Net Cash Proceeds
from all such Asset Sales occurring on or after the date of this
Indenture in any consecutive twelve (12) months (other than Asset
Sales otherwise permitted in clauses (i) through (vii) above) do not
exceed ten percent (10%) of the Consolidated Assets of the Company,
the Guarantor and the Restricted Subsidiaries as at the end of the
most recent fiscal quarter.
For purposes of this Section 4.28, "Net Cash Proceeds" means
the aggregate amount of U.S. Legal Tender received by the Company, the
Guarantor and the Restricted Subsidiaries in respect of an Asset Sale, other
than those expressly permitted in clauses (i) through (viii) above, less the
sum of (a) all reasonable fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated reasonably in
good faith by the Company and the Guarantor and evidenced by a Board
Resolution) of income, franchise, sales and other applicable taxes required to
be paid by the Company, the Guarantor or any Restricted Subsidiary in
connection with such Asset Sale; provided, however, that if actual taxes paid
are less than such estimated taxes, the difference shall be reincluded in Net
Cash Proceeds and (b) the aggregate amount of U.S. Legal Tender so received
which is used to retire any existing Indebtedness of the Company, the Guarantor
or the Restricted Subsidiaries which is required by the express terms of the
instruments to which they relate to be repaid in connection with such Asset
Sale.
The Company shall accumulate all Net Cash Proceeds in excess
of the amount provided in clause (viii) above, and the aggregate amount of such
accumulated Net Cash Proceeds not used for the purposes permitted by this
Section 4.28(a) and within the time provided by this Section 4.28(a) shall be
referred to as the "Accumulated Amount."
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Notwithstanding anything contained in this Section 4.28, none
of the Company, the Guarantor or any Restricted Subsidiary shall convey, sell,
transfer, assign or otherwise dispose of, any of its property, business or
assets, if immediately before or immediately after giving effect to such
transaction, a Default or an Event of Default (including an event that, after
notice or lapse of time, or both, would become an Event of Default) shall have
occurred and be continuing.
(b) For the purposes of this Section 4.28, "Minimum
Accumulation Date" means each date on which the Accumulated Amount exceeds
$3,000,000. Not later than 10 Business Days after each Minimum Accumulation
Date the Company shall make an unconditional offer (an "Offer to Purchase") to
the Holders to purchase, on a pro rata basis, Securities having a principal
amount (the "Offer Amount") equal to the Accumulated Amount, at a purchase
price (the "Offer Price") equal to 100% of principal amount, plus (i) accrued
but unpaid interest to, and including, the date (the "Purchase Date") the
Securities tendered are purchased and paid for in accordance with this Section
4.28 and, (ii) any premium that would be payable if the Company were to have,
on such Purchase Date, redeemed the Securities pursuant to Article Three and
paragraph 5 of the Securities. Notice of an Offer to Purchase shall be sent,
at least twenty (20) Business Days prior to the close of business on the Final
Put Date (as defined below), by first- class mail, by the Company to each
Holder at its registered address, with a copy to the Trustee. The notice to
the Holders shall contain all information, instructions and materials required
by applicable law or otherwise material to such Holders' decision to tender
Securities pursuant to the Offer to Purchase. The Notice, which shall govern
the terms of the Offer to Purchase shall state:
(1) that the Offer to Purchase is being made pursuant to
such notice and this Section 4.28;
(2) the Offer Amount, the Offer Price (including the
amount of accrued and unpaid interest and any premium over the principal
amount), the Final Put Date (as defined below), and the Purchase Date, which
Purchase Date shall be on or prior to 25 Business Days following the date the
Accumulated Amount was at least $3,000,000;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing U.S.
Legal Tender with the Paying Agent in accordance with the last paragraph of
this clause (b) or payment to Holders is otherwise prevented, any Security, or
portion thereof, accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest after the Purchase Date;
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(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Offer to Purchase will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent (which
may not for purposes of this Section 4.28, notwithstanding any other provision
of this Indenture, be the Company or any Affiliate of the Company) at the
address specified in the notice prior to the close of business on the third
Business Day prior to the Purchase Date (the "Final Put Date");
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may not for purposes
of this Section 4.28, notwithstanding any other provision of this Indenture, be
the Company, the Guarantor or any Affiliate of the Company or the Guarantor)
receives, up to the close of business on the Final Put Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withholding and a statement
containing a facsimile signature that such Holder is withdrawing his election
to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the Offer to
Purchase are tendered and not withdrawn, the Company shall purchase Securities
on a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding such
Asset Sales.
Any such Offer to Purchase shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture that conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
On or before a Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Offer
to Purchase on or prior to the Final Put Date (on a pro rata basis if required
pursuant to paragraph (7) above, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Offer Price for all Securities or portions thereof
so accepted and (iii) deliver to the Trustee Securities so accepted together
with an Officer's Certificate
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setting forth the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Offer Price for such
Securities, and the Trustee shall promptly authenticate and mail or deliver to
such Holders a new Security equal in principal amount to any unpurchased
portion of the Security surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Offer to Purchase on or as soon as
practicable after the Purchase Date.
(c) If the amount required to acquire all Securities
tendered by Holders pursuant to the Offer to Purchase (the "Acceptance Amount")
shall be less than the Offer Amount, the excess of the Offer Amount over the
Acceptance Amount may be used by the Company for general corporate purposes
without restriction, unless otherwise restricted by the other provisions of
this Indenture. Upon consummation of any Offer to Purchase made in accordance
with the terms of this Section 4.28, the Accumulated Amount as of the Minimum
Accumulation Date shall be reduced to zero and accumulations thereof shall be
deemed to recommence from the day next following such Minimum Accumulation
Date.
Section 4.29. Repurchase of the Securities.
Notwithstanding anything to the contrary contained herein,
other than pursuant to a Registered Exchange Offer, Section 4.13 or 4.28 of
this Indenture or as set forth in paragraph 5 of the Securities, neither the
Guarantor, the Company, any of their subsidiaries nor any Affiliate of any of
the foregoing may, directly or indirectly, purchase, acquire, hold, redeem,
prepay, or own any Securities prior to July 1, 1998.
Section 4.30. Amendments of CFC Credit Agreement.
None of the Company, the Guarantor or any of their
subsidiaries shall amend, supplement or otherwise modify the CFC Credit
Agreement in any respect that would (a) accelerate the repayment of any
Indebtedness thereunder or (b) limit the Company's or the Guarantor's ability
to receive distributions or dividends from any of their subsidiaries.
Section 4.31. Execution of Guaranties by Restricted
Subsidiaries.
The Company shall cause any Restricted Subsidiary that is not
a Guarantor Subsidiary on the date hereof, except for Gump's Corp., to execute
and deliver to the Trustee, immediately after such subsidiary becomes a
Restricted Subsidiary, a guaranty
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agreement pursuant to which such Restricted Subsidiary will guarantee payment
of the Securities and the performance of the Company's other obligations under
this Indenture to the extent set forth in Article 11 hereof.
Section 4.32. Limitation on Activities.
The Company and the Guarantor shall not, and shall not permit
any material Restricted Subsidiary to, primarily engage in any business or
investment activities other than those necessary for, incident to, connected
with or arising out of the Company's and the Guarantor's principal activities
in direct specialty retailing or directly related activities.
Section 4.33. Working Capital Adequacy
The Company shall not permit, as at the end of any fiscal
quarter, the sum of Consolidated Current Assets plus Net Cash Flow plus Excess
Availability to be less than the sum of Consolidated Current Liabilities plus
Revolving Loan Balance.
ARTICLE 5
SUCCESSORS
Section 5.1. When Company, the Guarantor or Their
Subsidiaries May Merge, etc.
The Company and the Guarantor shall not, and shall not permit
any Restricted Subsidiary to, consolidate with or merge with or into any other
entity or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets (determined on a consolidated
basis for the Company, the Guarantor and their subsidiaries taken as a whole)
to any entity, unless:
(1) either (a) the Company shall be the continuing
corporation or (b) the entity (if other than the Company) formed by such
consolidation or into which the Company is merged or the entity that acquires,
by sale, conveyance, assignment, transfer, lease or disposition, all or
substantially all of the properties and assets of the Company or the Guarantor
shall be a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District of
Columbia, and shall expressly assume by a supplemental indenture or in the case
of HDI by signing this Indenture the due and punctual payment of the principal
of and premium, if any, and interest on all the Securities and the performance
and observance of every covenant of the Indenture and the other Documents on
the part of the Company or the Guarantor, as the case may be, to be performed
or observed, provided,
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however, that such assumption by HDI is conditioned upon the consummation of
the Reorganization.
(2) immediately before and immediately thereafter, no
Event of Default (and no event that, after notice or lapse of time, or both,
would become an Event of Default) shall have occurred and be continuing;
(3) immediately after giving effect to any such
transaction involving the incurrence by the Company, the Guarantor or any of
their subsidiaries, directly or indirectly, of additional Indebtedness (and
treating any Indebtedness not previously an obligation of the Company or any of
its subsidiaries incurred in connection with or as a result of such transaction
as having been incurred at the time of such transaction), the Company (if it is
the continuing corporation), the Guarantor (if it is the continuing
corporation) or such other entity could incur at least $1.00 of additional
Indebtedness pursuant to Section 4.18; and
(4) immediately thereafter, the Company (if it is the
continuing corporation), the Guarantor (if it is the continuing corporation) or
such other entity shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of the Company immediately prior to such
transaction.
The Company and the Guarantor shall deliver to the Trustee
prior to the consummation of the proposed transaction an Officer's Certificate
to the foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with this Indenture.
(b) Notwithstanding any of the provisions contained in
this Article 5, any Restricted Subsidiary of the Company may consolidate or
merge with or into, or sell, convey, assign, transfer or otherwise dispose of
all or substantially all of its assets to, the Company, or any other Restricted
Subsidiary of the Company so long as the Company or a Restricted Subsidiary of
the Company shall be the continuing corporation.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of assets in accordance with Section 5.1, the
successor corporation, including without limitations, HDI after the
Reorganization, formed by such consolidation or into or with which the Company,
the Guarantor or any Restricted Subsidiary is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company, the
Guarantor or the Restricted Subsidiaries, as the case may be, under this
Indenture and the Documents with the same
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effect as if such successor Person, including without limitations, HDI after
the Reorganization, had been named as the Company, the Guarantor or the
Restricted Subsidiary, as the case may be, herein or therein; provided,
however, that the predecessor Company, Guarantor or the Restricted Subsidiary,
as the case may be, including without limitations, HDI after the
Reorganization, in the case of a sale, lease, conveyance or other disposition
shall not be released from the obligation to pay the principal of and interest
on the Securities or the obligations under the Purchase Agreement and the
Registration Rights Agreement, or any of the other Documents, as the case may
be.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company, the Guarantor or the Guarantor
Subsidiaries default in the payment of interest or any other amounts
owing on any Security when the same becomes due and payable and the
Default continues for a period of ten (10) days; or the Distribution
Facility Subsidiary defaults in the payment of interest or any other
amounts owing on the Pledged Note when the same becomes due and
payable;
(2) the Company defaults in the payment of the
principal of any Security when the same becomes due and payable at
maturity, upon redemption or otherwise; or the Distribution Facility
Subsidiary defaults in the payment of the principal of the Pledged
Note when the same becomes due and payable upon demand, upon
acceleration, upon redemption or otherwise; or the Company fails to
pay to the Holders any interest, principal, proceeds, assets or other
amounts collected by the Company with respect to the Pledged Note
within one day after receipt thereof; or any payment default occurs
under the CFC Credit Agreement or any default under Section 6.18 or
6.19 of the CFC Credit Agreement occurs and continues for a period of
forty-five (45) days; or the Trustee receives a Payment Block Notice
pursuant to the Subordination Agreement; or any representation or
warranty made in the Purchase Agreement or any other Document was
false in any material respect on the date as of which made or deemed
made.
(3) either the Company, the Guarantor or the
Guarantor Subsidiaries fail to comply with any of its other agreements
or covenants in, or provisions of, the Securities, this Indenture, the
Guaranty or the other Documents to which it is a party and such
failure shall have
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continued for a period of thirty (30) days after the earlier of
written notice by the Trustee or when such failure shall first have
become known to the Company, the Guarantor or the Guarantor
Subsidiaries;
(4) an acceleration of payment prior to
scheduled maturity occurs under any mortgage, indenture, instrument or
agreement under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company, the Guarantor or
any of their subsidiaries in an aggregate amount in excess of
$1,000,000 (other than the CFC Credit Agreement covered by subsection
(2) hereof), whether such Indebtedness now exists or shall be created
hereafter;
(5) a final judgment or final judgments for the
payment of money are entered by a court or courts of competent
jurisdiction against the Company, the Guarantor or any Restricted
Subsidiary and such remains undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that
the aggregate of all such judgments exceeds $1,000,000;
(6) the Company, the Guarantor or any Restricted
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order
for relief against it in an involuntary case,
(C) consents to the appointment of a
Custodian of it or for all or substantially all of its
property,
(D) makes a general assignment for the
benefit of its creditors, or
(E) admits in writing its inability
generally to pay its debts as the same become due;
(7) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against any of the
Company, the Guarantor or any Restricted Subsidiary in an
involuntary case,
(B) appoints a Custodian of any of the
Company, the Guarantor or any Restricted Subsidiary or
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for all or substantially all of the property of the Company, the
Guarantor or any Restricted Subsidiary, or
(C) orders the liquidation of any of
the Company, the Guarantor or any Restricted Subsidiary, and
the order or decree remains unstayed and in effect for 60
days;
(8) there has occurred a revocation, suspension
or involuntary loss of any material license, contract or franchise of
the Company, the Guarantor or any Guarantor Subsidiary which results
in the cessation of operation of the business of any of such entities
for a period of more than 30 consecutive days;
(9) a court of competent jurisdiction enters a
final judgment holding any of the Guaranty or any other Documents to
be invalid or unenforceable and such judgment remains unstayed and is
in effect for a period of 60 consecutive days; or if either the
Company, the Guarantor or any Guarantor Subsidiary shall assert, in
any pleading filed in such a court, that the Guaranty or any other
Documents are invalid or unenforceable;
(10) the Company, the Guarantor or any Guarantor
Subsidiary default in the payment of any amounts due pursuant to the
terms of the Purchase Agreement, the Registration Rights Agreement or
the other Documents (other than payments already covered by subsection
(1) and (2) hereof) when the same become due and payable; or
(11) the Company or the Guarantor admits in any
writing that it is unable to pay its debts as they become due.
The term "Bankruptcy Law" means title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
In the case of any Event of Default pursuant to the provisions
of this Section 6.1 occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company, the Guarantor or the
Guarantor Subsidiaries with the intention of avoiding payment of the premium
which the Company would have had to pay if the Company then had elected to
redeem the Securities pursuant to Paragraph 5 of the Securities, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law, anything in this Indenture or in the Securities contained to
the contrary notwithstanding.
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Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (6) or (7) of Section 6.1) occurs and is continuing, the
Trustee by notice to the Company (on behalf of itself and the Guarantor
Subsidiaries) and the Guarantor, or the Holders of at least 25% in principal
amount of the then outstanding Securities by notice to the Company (on behalf
of itself and the Guarantor Subsidiaries) and the Guarantor, and the Trustee,
may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration, the principal and
interest shall be due and payable immediately. If an Event of Default
specified in clause (6) or (7) of Section 6.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder. The Holders of a majority
in principal amount of the then outstanding Securities by notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
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 or interest
on the Securities or to enforce the performance of any provision of the
Securities, the Guaranty, this Indenture or the Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default
or Event of Default and its consequences except a continuing Default or Event
of Default in the payment of the principal of or interest on any Security.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the
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Trustee or exercising any trust or power conferred on it. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture,
that is unduly prejudicial to the rights of other Securityholders, or would
involve the Trustee in personal liability.
Section 6.6. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this
Indenture or the Securities only if:
(1) the Holder gives to the Trustee notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal
amount of the then outstanding Securities make a written request to
the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of
indemnity; and
(5) during such 60-day period the Holders of a
majority in principal amount of the then outstanding securities do not
give the Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal and interest
on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, the Guarantor or any other
obligor on the Securities for the whole amount of principal and interest
remaining unpaid on
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the Securities and interest on overdue principal and interest and such further
amount as shall be sufficient to cover the costs and, to the extent lawful,
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee may File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Company, the Guarantor or any other obligor or their respective creditors
or property. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Securityholder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article or
by exercise of its remedies under the Documents, it shall pay out the money in
the following order:
First: to the Trustee for amounts due under Section 7.7
hereof;
Second: to holders of Senior Indebtedness to the extent
permitted under Article 10 hereof;
Third: to Securityholders for amounts due and unpaid on the
Securities for principal and interest and premium, if
any, ratably, first to interest, then principal and
then premium, according to the amounts due and
payable on the Securities for principal and interest
and premium, if any, respectively; and
Fourth: to Securityholders for other amounts due under the
Indenture, the Securities and the other Documents; and
Fifth: to the Company, the Guarantor or any other obligors
on the Securities, as their interests may appear, or
as a court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any
payment to Securityholders.
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Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as 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 Securities.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties
that are specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section.
(2) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer,
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unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it
against any loss, liability or expense.
(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, the Guarantor and the Guarantor Subsidiaries. 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 rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an 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 Officer's Certificate or opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with an attorney and shall
not be liable for any action it takes or omits to take in reliance on such
attorney's advice.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal
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with the Company, the Guarantor, the Guarantor Subsidiaries or an Affiliate of
any of them with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture, the Securities, the Guaranty or any other Document,
it shall not be accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement of the Company or
the Guarantor or the Guarantor Subsidiaries in the Indenture or any other
Document or any statement in any Security other than its authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Securityholders a
notice of the Default or Event of Default within 15 days after it occurs.
Except in the case of a Default or Event of Default in payment on any Security
(including any failure to make any mandatory redemption payment required
hereunder), the Trustee may withhold the notice if and so long as a committee
of its Trust officers in good faith determines that withholding the notice is
in the interests of Securityholders.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section
13.9, the Trustee shall mail to Securityholders a brief report dated as of such
reporting date that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b)(1) and TIA Section 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
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reasonable compensation and out-of-pocket expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim 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 Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence or bad
faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal
and interest on particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company in writing.
The Holders of a majority in principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company
in writing. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged as bankrupt or
insolvent or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of
the Trustee or its property; or
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(4) the Trustee becomes incapable of acting or is
not performing to the satisfaction of Holders of a majority in
aggregate principal amount of the then outstanding Securities.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company, the Guarantor and any other
obligor shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount
of the then outstanding Securities may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee (at the
expense of the Company), the Company or the Holders of at least 10% in
principal amount of the then outstanding Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.7. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7
hereof shall continue for the benefit of the retiring trustee with respect to
expenses and liabilities incurred by it prior to such replacement.
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, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall always have a
combined capital and surplus as stated in Section
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13.9. The Trustee is subject to TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9).
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 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's, Guarantor's and the
Guarantor Subsidiaries' Obligations.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Section 7.7 and the Company's and the
Trustee's obligations under Section 8.3 shall survive) when all outstanding
Securities theretofore authenticated and issued have been delivered to the
Trustee for cancellation, and the Company, the Guarantor or the Guarantor
Subsidiaries have paid all sums payable hereunder and under the other
Documents. In addition, the Company, the Guarantor and the Guarantor
Subsidiaries may terminate all of their respective obligations under this
Indenture (except the Company's obligations under Sections 7.7 and 8.3) if:
(1) the Company irrevocably deposits in trust
with the Trustee money or U.S. Government Obligations sufficient to
pay principal and interest and premium, if any, on the Securities to
maturity or redemption, as the case may be, and to pay all other sums
payable by it hereunder; and
(2) the Company shall have delivered to the
Trustee an opinion of Counsel satisfactory to the Trustee that the
Holders of the Securities should not recognize income, gain or loss
for federal income tax purposes as a result of the Company's exercise
of its option under this Section 8.1 and will be subject to federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been
exercised.
However, the Company's, the Guarantor's and the Guarantor Subsidiaries'
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1, 7.7, 8.3 and 8.4 shall
survive until the Securities are no
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longer outstanding. Thereafter, only the Company's obligations in Sections 7.7
and 8.3 shall survive.
After a deposit made pursuant to this Section 8.01, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's, the Guarantor's and the Guarantor Subsidiaries' obligations under
this Indenture except for those surviving obligations specified above.
"U.S. Government Obligations" means direct obligations of the
United States of America, or obligations unconditionally guaranteed by the
United States of America, for the payment of which the full faith and credit of
the United States of America is pledged. In order to have money available on a
payment date to pay principal or interest on the Securities, the U.S.
Government Obligations shall be payable as to principal or interest on or
before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.
Section 8.2. Application of Trust Money.
The Trustee shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Section 8.1. It shall
apply the deposited money and the money from U.S. Government Obligations
through the Paying Agent and in accordance with this Indenture to the payment
of principal and interest on the Securities.
Section 8.3. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have first caused
notice of such payment to the Company to be mailed to each Securityholder
entitled thereto no less than 30 days prior to such payment. After payment to
the Company, Securityholders entitled to the money must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another Person.
Section 8.4. Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any
money in accordance with Section 8.2 by reason of any order or judgment of any
court or governmental authority enjoining,
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restraining or otherwise prohibiting such application and (ii) the Holders of
at least a majority in principal amount of the then outstanding Securities so
request by written notice to the Trustee, the Company's and the Guarantor's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.1 until such
time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.2.
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders.
The Company, the Guarantor, the Guarantor Subsidiaries and the
Trustee may amend this Indenture, the Securities or the other Documents without
the consent of any Securityholder:
(1) to comply with Section 5.1;
(2) to comply with any requirements of the SEC in
connection with the qualification or requalification of this Indenture
under the TIA; or
(4) to provide for uncertificated Securities in
addition to certificated Securities.
Within five (5) days after an amendment under this Section
becomes effective, the Company shall mail to Securityholders and the Trustee a
notice briefly describing the amendment.
Section 9.2. With Consent of Holders.
Subject to Section 6.7, the Company, the Guarantor, the
Guarantor Subsidiaries and the Trustee may amend this Indenture, the Securities
or any other Document with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities. Subject to
Sections 6.4 and 6.7, the Holders of a majority in principal amount of the
Securities then outstanding may also waive compliance in a particular instance
by the Company or the Guarantor with any provision of this Indenture or the
Securities or any other Document.
However, without the consent of each Securityholder affected,
an amendment or waiver under this Section may not:
(1) reduce the amount of Securities whose
Holders must consent to an amendment or waiver;
(2) reduce the rate of or change the time for
payment of interest on any Security;
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(3) reduce the principal of or change the fixed
maturity of any Security or alter the redemption provisions with
respect thereto;
(4) make any Security payable in money other
than that stated in the Security;
(5) make any change in Section 6.4, 6.7 or 9.2
(this sentence); or
(6) waive a default in the payment of the
principal of, or interest or premium on, any Security.
To secure a consent of the Holders under this Section it shall
not be necessary for the Holders to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Within five (5) days after an amendment or waiver under this
Section becomes effective, the Company shall mail to Securityholders and the
Trustee a notice briefly describing the amendment or waiver.
Section 9.3. Compliance with Trust Indenture Act.
From the date on which this Indenture is qualified under the
TIA, every amendment, waiver or supplement under this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same Indebtedness as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if
the Trustee receives notice of revocation before the date on which the Trustee
receives an Officer's Certificate certifying that the Holders of the requisite
principal amount of Securities have consented to the amendment or waiver (or
before such later date as may be required by law or stock exchange rule).
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
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Persons, shall be entitled to consent to such amendment or waiver or to revoke
any consent previously given, whether or not such Persons continue to be
Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
principal amount of Securities required hereunder for such amendment or waiver
to be effective shall have also been given and not revoked within such 90-day
period.
After an amendment or waiver becomes effective it shall bind
every Securityholder, unless it is of the type described in any of clauses (1)
through (6) of Section 9.2. In such case, the amendment or waiver shall bind
each Holder of a Security who has consented to it and every subsequent Holder
of a Security that evidences the same debt as the consenting Holder's Security.
Section 9.5. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment or waiver.
Section 9.6. Trustee Protected.
The Trustee shall sign all supplemental indentures, except
that the Trustee need not sign any supplemental indenture that adversely
affects its rights. The Trustee may request an opinion of Counsel and an
Officer's Certificate stating that such supplemental indenture is permitted
hereunder and all conditions precedent have been complied with in the form set
forth in Sections 12.04 and 12.05.
ARTICLE 10
SUBORDINATION
Section 10.1. Securities Subordinated to Senior
Indebtedness.
Each of the Company, the Guarantor and the Guarantor
Subsidiaries agrees, and each Holder by accepting a Security agrees, that the
Indebtedness evidenced by the Securities and the Guaranties, including for all
purposes of this Article 10, all repurchase and redemption obligations with
respect to the Securities, is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment in full of
all existing and future Senior Indebtedness and that the subordination is for
the benefit of and enforceable by the holders of Senior Indebtedness, and
authorizes and directs the Trustee to take such action as may be necessary or
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appropriate to acknowledge or effectuate the subordination as provided in this
Article 10 and the Subordination Agreement and appoints the Trustee as
attorney-in-fact for any and all such purposes.
Only Indebtedness of the Company, the Guarantor and the
Guarantor Subsidiaries which is Senior Indebtedness shall rank senior to the
Securities in accordance with the provisions set forth herein. This Article 10
shall remain in full force and effect as long as any Senior Indebtedness is
outstanding or any commitment to advance Senior Indebtedness exists, assuming
that all conditions precedent to any such advance could be satisfied.
Section 10.2. Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution, whether of cash, securities
or other property, to creditors of the Company, the Guarantor or any Guarantor
Subsidiary in a liquidation (total or partial), reorganization or dissolution
of the Company, the Guarantor or any Guarantor Subsidiary, whether voluntary or
involuntary, or in a bankruptcy, reorganization, insolvency, receivership,
assignment for the benefit of creditors, marshalling of assets or similar
proceeding relating to each of the Company, the Guarantor, any Guarantor
Subsidiary or its respective properties:
(1) holders of Senior Indebtedness shall be
entitled to receive payment in full, in cash or cash equivalents, of
such Senior Indebtedness before Holders shall be entitled to receive
from the Company, the Guarantor or any Guarantor Subsidiary, any
payment of principal of, or interest on, or any other distribution
with respect to, the securities; and
(2) until the Senior Indebtedness is paid in full
as provided in clause (1) above, any distribution to which Holders
would be entitled from the Company, the Guarantor or the Guarantor
Subsidiaries but for this Article 10 shall be made to the holders of
Senior Indebtedness as their interests may appear;
in each case except that Holders may receive shares of stock and debt
securities that are subordinated to Senior Indebtedness to at least the same
extent and pursuant to the same or more stringent terms as are the Securities.
Upon any distribution of assets of the Company, the Guarantor
or any Guarantor Subsidiary referred to in this Section 10.2, the Trustee and
the Holders shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such bankruptcy, reorganization, insolvency,
receivership, assignment for the benefit of creditors, marshalling of assets or
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similar proceedings are pending, or a certificate of the liquidating trustee or
agent or other such person making any distribution to the Trustee or to the
Holders, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Indebtedness, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Section 10.2. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness or a Representative,
as the case may be, to establish that such notice has been given by a holder of
Senior Indebtedness or a Representative, as the case may be. In the event that
the Trustee determines, in good faith, that further evidence is required with
respect to the right of any person, as a holder of Senior Indebtedness, to
participate in any payment or distribution pursuant to this Section 10.2, the
Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held
by such person, as to the extent to which such person is entitled to
participation in such payment or distribution and as to other facts pertinent
to the rights of such person under this Section 10.2, and, if such evidence is
not furnished, the Trustee may defer any payment to such person (or to the
Securityholder) pending judicial determination as to the right of such person
to receive such payment.
Section 10.3. Default on Senior Indebtedness.
During the continuance of any event of default with respect to
Senior Indebtedness pursuant to which the maturity of such Senior Indebtedness
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration), upon the occurrence of receipt by
the Trustee of written notice from the Representative with respect to, or the
holders of at least a majority in aggregate principal amount of, such Senior
Indebtedness then outstanding, no direct or indirect payment may be made by the
Company, the Guarantor or the Guarantor Subsidiaries upon or in respect of the
Securities for a period (a "Payment Blockage Period") commencing on the earlier
of the date of receipt of such notice by the Trustee or the date of such
acceleration and ending 120 days thereafter (unless such Payment Blockage
Period shall be terminated by written notice to the Trustee from such
Representative or such holders). Not more than one Payment Blockage Period in
the aggregate may be commenced with respect to the Securities during any period
of 360 consecutive days, irrespective of the number of defaults with respect to
Senior Indebtedness during such period. In no event will a Payment Blockage
Period extend beyond 119 days from the date such payment upon or in respect of
the Securities was due; and there must be 180 days in any 360-day period in
which no Payment Blockage Period is in effect as to the Company, the
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Guarantor or the Guarantor Subsidiaries. For all purposes of this Section
10.3, no default or event of default which existed or was continuing on the
date of the commencement of the Payment Blockage Period with respect to the
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis for the commencement of a subsequent Payment Blockage Period by
the Representative or requisite holders of such Senior Indebtedness whether or
not within a period of 360 consecutive days unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
Section 10.4. When Distribution Must Be Paid Over.
In the event that the Company, the Guarantor or any Guarantor
Subsidiary shall make any payment to the Trustee pursuant to the Securities at
a time when such payment is prohibited by Section 10.2 or 10.3, such payment
shall be held by the Trustee, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Indebtedness (pro rata
as to each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them) or their Representatives, as their respective
interests may appear, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in full
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
If a distribution is made to Holders that because of this
Article 10 should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of Senior indebtedness and pay
it over to them as their interests may appear.
Section 10.5. Notice by Company.
The Company shall promptly notify the Trustee and any Paying
Agent by an appropriate Officer's Certificate of the Company delivered to a
Trust Officer and the Paying Agent of any facts known to the Company that would
cause a payment under the Securities of principal of or interest on the
Securities to violate this Article 10, but failure to give such notice shall
not affect the subordination of the Securities to the Senior Indebtedness
provided in this Article 10.
Section 10.6. Subrogation.
After all Senior Indebtedness is paid in full and all
commitments to advance Senior Indebtedness have been terminated, and until the
Securities are paid in full pursuant to the Securities and this Indenture or
otherwise, Holders shall be
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subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to Holders have been applied to payment of
Senior Indebtedness. A distribution made under this Article 10 to holders of
Senior Indebtedness which otherwise would have been made to Holders is not, as
between the Company and the Holders, a payment by the Company on Senior
Indebtedness.
Section 10.7. Relative Rights.
This Article 10 defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture (but subject to the
provisions of paragraph 5 of the Securities) shall:
(1) impair, as between the Company, the Guarantor or the
Guarantor Subsidiaries and the Holders, the obligation of the Company,
the Guarantor and the Guarantor Subsidiaries, which is absolute and
unconditional, to pay principal of and interest on the Securities,
including the Guaranty, in accordance with their terms;
(2) affect the relative rights of Holders and creditors
of the Company, the Guarantor and the Guarantor Subsidiaries other
than such creditors as are holders of Senior Indebtedness;
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive distributions
otherwise payable to Holders; or
(4) create or imply the existence of any commitment on
the part of the holders of Senior Indebtedness to extend credit to the
Company other than as set forth in the terms governing such Senior
Indebtedness.
Section 10.8. Subordination May Not Be Impaired by Company.
No right of any present or future holder of Senior
Indebtedness to enforce the subordination of the Indebtedness evidenced by the
Securities and this Article 10 shall be impaired by any act or failure to act
by the Company, the Guarantor or any Guarantor Subsidiary or anyone in custody
of its assets or property or by its failure to comply with this Indenture.
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Section 10.9. Distribution or Notice to Representatives.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representatives, if any.
Section 10.10. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.2 or 10.3, the Trustee or any
Paying Agent may continue to make payments of principal of or interest on the
Securities unless, in the case of the Trustee, a Trust Officer or, in the case
of a Paying Agent other than the Trustee, an officer of such Paying Agent,
shall have received, at least three Business Days prior to the date such
payments are due and payable, written notice of the occurrence of an event
under Section 10.2 or 10.3 and that any payment under the Securities would
violate this Article 10. Only the Company or a Representative with respect to
or holders of a least a majority in principal amount of an issue of Senior
Indebtedness may give such notice. Nothing contained in this Section 10.10
shall limit the right of any holder of Senior Indebtedness to recover payments
as contemplated by Section 10.4.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee shall be entitled to
all the rights set forth in this Article 10 with respect to Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any
of its rights as such holder, except as otherwise provided by the TIA.
Section 10.11. Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice.
Notwithstanding any of the provisions of this Article 10 or
any other provision of this Indenture, unless a Trust Officer has received a
written notice pursuant to Section 10.10, the Trustee shall not at any time be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee, and in the absence of such written
notice the Trustee may make such payment without liability or obligation to the
Senior Indebtedness.
Section 10.12. Application by Trustee of Monies Deposited
With It.
Nothing contained in this Article 10 or elsewhere in this
Indenture, or in the Securities, shall (i) affect the obligation of the
Company, the Guarantor or the Guarantor
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Subsidiaries to make, or prevent the Company, the Guarantor or the Guarantor
Subsidiary from making, at any time except as specified in Section 10.2 or 10.3
to the extent provided therein, payments at any time pursuant to the
Securities, (ii) prevent the application by the Trustee or any Paying Agent of
any monies or the proceeds of any U.S. Government Obligations received from the
Company and held by the Trustee or such Paying Agent in trust for the benefit
of the Holders of Securities as to which notice of redemption shall have been
given, to the payment of or on account of the principal of or interest on the
Securities if, at the time such notice was given, a payment by the Company
under the Securities would not have been prohibited by the foregoing provisions
of this Article 10 or (iii) prevent the application by the Trustee or any
Paying Agent of any monies or the proceeds of any U.S. Government Obligations
deposited with it by the Company under Article 8 hereof to the payment of or on
account of the principal of or interest on the Securities if, at the time of
such deposit, a payment by the Company under the Securities would not have been
prohibited by the foregoing provisions of this Article 10.
Section 10.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee pursuant to Section 7.7.
Section 10.14. Officer's Certificate.
If there occurs any event referred to in Section 10.2, the
Company, the Guarantor or any Guarantor Subsidiary, as the case may be, shall
promptly give to the Trustee an Officer's Certificate (on which the Trustee may
conclusively rely) identifying all holders of Senior Indebtedness and the
principal amount of Senior Indebtedness then outstanding held by each such
holder and stating the reasons why such Officer's Certificate is being
delivered to the Trustee.
Section 10.15. Certain Payments.
Nothing in this Article 10 shall prevent or delay (i) the
Company from or in redeeming any Securities pursuant to Sections 4.13 or 4.28
of this Indenture or paragraph 5 of the Securities or (ii) the receipt by the
Holders of payments of principal of and interest on the Securities as provided
in Section 8.2.
Section 10.16. Names of Representatives.
The Company, the Guarantor and the Guarantor Subsidiaries
shall from time to time, upon request of the Trustee, provide to the Trustee an
Officer's Certificate setting
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forth the name and address of each Representative of all outstanding Senior
Indebtedness.
Section 10.17. Article 10 Not To Prevent Events of Default
or Limit Right To Accelerate.
The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 10 shall have any effect
on the right of the Holders or the Trustee to accelerate the maturity of the
Securities.
Section 10.18. Reliance by Holders of Senior Indebtedness on
Subordination Provisions.
Each Holder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold, or to continue to
hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness. No provision in any supplemental indenture which modifies this
Article 10 in any manner adverse to the holders of Senior Indebtedness shall be
effective against the holders of Senior Indebtedness who have not consented
thereto in accordance with the provisions of the documents governing such
Senior Indebtedness.
Section 10.19. Proof of Claim.
In the event that the Company, the Guarantor or any Guarantor
Subsidiary is subject to any proceeding under any Bankruptcy Law and the
Holders and the Trustee fail to file any proof of claim permitted to be filed
in such proceeding with respect to the Securities, then any Representative of
Senior Indebtedness may file such proof of claim no earlier than the later of
(i) the expiration of 15 days after such Representative notifies the Trustee of
its intention to do so and (ii) 30 days preceding the last day permitted to
file such claim.
Section 10.20. No Fiduciary Duty to Holders of Senior
Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 10, and no implied
covenants or obligations with respect
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to the holders of Senior Indebtedness shall be read into this indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and, subject to the provisions of Article 7,
the Trustee shall not be liable to any holder of Senior Indebtedness if it
shall mistakenly pay over or deliver to Holders, the Company, the Guarantor,
the Guarantor Subsidiaries or any other person, monies or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article 10 or
otherwise.
Section 10.20. Limitations on Application of Article 10.
(a) This Article 10 shall not apply to any payments or
proceeds received by the Holders from the Company which are paid to the Holders
from amounts due on or proceeds of the Pledged Note.
(b) This Article 10 shall only apply to persons other
than those subject to the Subordination Agreement.
ARTICLE 11
GUARANTY
Section 11.1. Guaranty.
The Guarantor and the Guarantor Subsidiaries hereby
unconditionally, jointly and severally, guarantee (such guarantee being the
"Guaranty") to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Securities or the other
Documents or the obligations of the Company under this Indenture, the
Securities or the other Documents, that: (i) the principal of and interest on
and premium, if any, and any other amounts owing on the Securities will be paid
in full when due, whether at the maturity or interest payment date, by
acceleration, redemption or otherwise, and interest on the overdue principal
and interest, if any, of the Securities and all other obligations of the
Company to the Holders or the Trustee under this Indenture, the Securities or
the other Documents will be promptly paid in full or performed, all in
accordance with the terms of this Indenture, the Securities and the other
Documents; and (ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, they will be paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing timely payment when
due of any amount so guaranteed for whatever reason, the Guarantor and the
Guarantor Subsidiaries will be jointly and severally obligated to pay the same
whether
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or not such failure to pay has become an Event of Default which could cause
acceleration pursuant to Section 6.2 hereof.
The Guarantor and the Guarantor Subsidiaries hereby agree that
its obligations with regard to this Guaranty shall be absolute, unconditional,
joint and several, irrespective of the validity, regularity or enforceability
of the Securities, this Indenture or the other Documents, the absence of any
action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof or of any other
Document, the recovery of any judgment against the Company or any other obligor
on the Securities, any action to enforce the same or any other circumstances
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor and the Guarantor Subsidiaries hereby waive
diligence, notice, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, the Guarantor,
any Guarantor Subsidiary or any other obligor on the Securities, any right to
require a proceeding first against the Company, the Guarantor, any Guarantor
Subsidiary or any other obligor on the Securities, protest, notice and all
demands whatsoever and covenant that this Guaranty will not be discharged
except by complete performance of the obligations contained in the Securities,
this Indenture and the other Documents.
If any Securityholder or the Trustee is required by any court,
proceedings in bankruptcy or reorganization or otherwise to return to the
Company, the Guarantor, any Guarantor Subsidiary or any custodian, trustee, or
similar official acting in relation to either the Company, the Guarantor or any
Guarantor Subsidiary any amount paid by the Company, the Guarantor or any
Guarantor Subsidiary to the Trustee or such Securityholder, this Guaranty, to
the extent theretofore discharged, shall be reinstated in full force and
effect.
The Guarantor and the Guarantor Subsidiaries further agree
that, as between the Guarantor and the Guarantor Subsidiaries, on the one hand,
and the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.2 of
the Indenture for the purposes of this Guaranty, notwithstanding any stay,
injunction or other prohibition preventing such acceleration as to the Company,
the Guarantor, any Guarantor Subsidiary or any other obligor on the Securities
of the obligations guaranteed hereby, and (ii) in the event of any declaration
of acceleration of those obligations as provided in Section 6.2 of the
Indenture, those obligations (whether or not due and payable) will forthwith
become due and payable by the Guarantor and the Guarantor Subsidiaries for the
purpose of this Guaranty.
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The Guarantor and each Guarantor Subsidiary hereby acknowledge
that the guarantee in this Article 11 constitutes an instrument for the payment
of money, and consent and agree that any Holder or the Trustee, at its sole
option, in the event of a dispute by the Guarantor or any Guarantor Subsidiary
in the payment of any moneys due hereunder, shall have the right to bring
motion-action under New York CPLR Section 3324.
The Guarantor and each Guarantor Subsidiary and by its
acceptance hereof each Holder hereby confirms that it is the intention of all
such parties that the guarantee by the Guarantor and the Guarantor Subsidiaries
pursuant to this Guaranty not constitute a fraudulent transfer or conveyance
for purposes of the 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 the Guarantor and the
Guarantor Subsidiaries hereby irrevocably agree that the obligations of the
Guarantor and the Guarantor Subsidiaries under this Guaranty shall be limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of the Guarantor and any Guarantor Subsidiary and after
giving effect to any collections from or payments made by or on behalf of the
Guarantor or any Guarantor Subsidiary in respect of the obligations of the
Guarantor or such other Guarantor Subsidiary under its Guaranty or pursuant to
the contribution rights hereunder, result in the obligations of the Guarantor
or such Guarantor Subsidiary under this Guaranty not constituting such
fraudulent transfer or conveyance.
In order to provide for just and equitable contribution among
the Guarantor and the Guarantor Subsidiaries, the Guarantor and the Guarantor
Subsidiaries agree, inter se, that in the event any payment or distribution is
made by the Guarantor or any Guarantor Subsidiary (a "Funding Guarantor") under
this Guaranty, such Funding Guarantor shall be entitled to a contribution from
all other Guarantors, including Guarantor Subsidiaries, in a pro rata amount
based on the Adjusted Net Assets of each Guarantor and each Guarantor
Subsidiary (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 Guarantors' obligations
with respect to the Guaranty. "Adjusted Net Assets" of the Guarantor or such
Guarantor Subsidiary, as the case may be, at any date shall mean the lesser of
the amount by which (x) the fair value of the property of the Guarantor or such
Guarantor Subsidiary, as the case may be, exceeds the total amount of
liabilities, including, without limitation, contingent liabilities, but
excluding liabilities under the Guaranty, of the Guarantor or such Guarantor
Subsidiary, as the case may be, at such date and (y) the present fair salable
value of the assets of the Guarantor or such Guarantor Subsidiary, as the case
may be, at such date exceeds the amount that will be required to pay the
probably
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liability of, the Guarantor or such Guarantor Subsidiary, as the case may be,
on its debts (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), excluding debt in respect of this Guaranty,
as they become absolute and matured. If any subsidiary becomes a Guarantor
Subsidiary hereunder subsequent to the date hereof, then for purposes of this
paragraph such subsequent Guarantor Subsidiary shall be deemed to have been a
Guarantor Subsidiary as of the date hereof and the aggregate present fair
saleable value of all assets and the amount of all the debts and liabilities,
of such Guarantor Subsidiary as of the date hereof shall be deemed to be equal
to such value and amount on the date such Guarantor Subsidiary becomes a
Guarantor Subsidiary hereunder. The provisions of this paragraph shall
supersede all other rights of subrogation and contribution, whether arising by
contract or operation of law (including, without limitation, any such right
arising under the Bankruptcy Code) or otherwise by reason of any payment by any
Guarantor Subsidiary pursuant to the provisions of this Article 11 and, to the
extent that any Guarantor Subsidiary shall have any such other rights of
subrogation or contribution, such Guarantor Subsidiary hereby irrevocably
waives the same.
The Guarantor and the Guarantor Subsidiaries hereby
irrevocably waive any claim or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of the Guarantor's and the Guarantor Subsidiaries' obligations
under this Guaranty, this Indenture, and the other Documents, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Securities 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 until payment in
full of all obligations guaranteed hereby. If any amount shall be paid to the
Guarantor or any Guarantor Subsidiary in violation of the preceding sentence
and the Securities shall not have been paid in full, such amount shall have
been deemed to have been paid to the Guarantor or such Guarantor Subsidiary for
the benefit of, and held in trust for the benefit of, the Holders of the
Securities, and shall, forthwith be paid to the Trustee for the benefit of such
Holders to be credited and applied upon the Securities, whether matured or
unmatured, in accordance with the terms of this Indenture. The Guarantor and
the Guarantor Subsidiaries acknowledge that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and
that the waiver set forth herein is knowingly made in contemplation of such
benefits.
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In case any provision of this Guaranty shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 11.2. Execution and Delivery of Guaranty.
To evidence the Guaranty set forth in Section 11.1, the
Guarantor and the Guarantor Subsidiaries agree that a notation of the Guaranty
substantially in the form of Exhibit B shall be endorsed on each Security
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of each of the Guarantor by its Chairman of the Board, its
President, its Chief Financial Officer or one of its Vice Presidents, under a
facsimile of its seal reproduced on this Indenture and attested to by an
officer other than the officer executing the Indenture.
The Guarantor and the Guarantor Subsidiaries agree that the
Guaranty set forth in Section 11.1 will remain in full force and effect and
apply to all the Securities notwithstanding any failure to endorse on each
Security a notation of the Guaranty.
If an Officer whose facsimile signature is on a Security no
longer holds that office at the time the Trustee authenticates the Security on
which the Guaranty is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of the Guarantor and the Guarantor
Subsidiaries.
ARTICLE 12
SECURITY
Section 12.1. Security.
The performance of the Company, the Guarantor and the
Guarantor Subsidiaries shall be secured by the Collateral.
Section 12.2. Recording, etc.
The Guarantor, the Guarantor Subsidiaries and the Company will
have caused or will cause this Indenture, the Collateral Documentation and the
other Documents and all amendments or supplements to each of the foregoing to
be registered, recorded and filed and/or rerecorded, re-filed and renewed in
such manner and in such place or places, if any, as may be required by law or
reasonably requested by the Trustee or the Holders of a majority of the then
outstanding Securities in
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order fully to preserve and protect the Lien of the Indenture, the Collateral
Documentation and the other Documents on all parts of the Collateral to
effectuate and preserve the security of the Holders and all rights of the
Trustee.
The Company, the Guarantor and the Guarantor Subsidiaries
shall furnish, and shall cause any other obligor to furnish, to the Trustee:
(i) promptly after the execution and delivery of
the Indenture, and promptly after the execution and delivery of any
Collateral Documentation or other instrument of further assurance or
amendment, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, this Indenture, the Collateral Documentation
and all other instruments of further assurance or amendment have been
properly recorded, registered and filed to the extent necessary to
make effective the Lien intended to be created by the Indenture and
the Collateral Documentation and reciting the details of such action
or referring to prior opinions of Counsel in which such details are
given, and stating that as to the Indenture and Collateral
Documentation and such other instruments such recording, registering
and filing are the only recordings, registerings and filings necessary
to give notice thereof and that no rerecordings, re-registerings or
re-filings are necessary to maintain such notice, and further stating
that all financing statements and continuation statements and
mortgages have been executed and filed that are necessary fully to
preserve and protect the rights of the Holders and the Trustee
hereunder and under the Collateral Documentation or (b) stating that,
in the opinion of such counsel, no such action is necessary to make
such Lien and pledge effective; and
(ii) on or before March 1 in each year beginning with
the year 1994, an Opinion of Counsel, dated as of such date, either
(a) stating that, in the opinion of such counsel, such action has been
taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of the Indenture and all
supplemental indentures, financing statements, continuation statements
and mortgages or other instruments of further assurance as is
necessary to maintain the Lien of the Indenture and the Collateral
Documentation and reciting the details of such action or referring to
prior opinions of Counsel in which such details are given, and stating
that all financing statements and continuation statements and
mortgages have been executed and filed that are necessary fully to
preserve and protect the rights of the Holders and the Trustee
hereunder and under the Collateral Documentation or (b) stating that,
in the opinion of such counsel, no such action is necessary to
maintain such Lien.
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The Guarantor, the Guarantor Subsidiaries, the Company and any
other obligor shall cause TIA Section 314(d) relating to the release of
Collateral from the Liens under the Collateral Documentation to be complied
with. Any certificate or opinion required by TIA Section 314(d) may be made
by any Officer; provided, however, that to the extent required by TIA Section
314(d), any such certificate or opinion shall be made by an Independent Person.
Section 12.3. Suits to Protect the Collateral.
To the extent permitted thereunder, the Trustee shall have
power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Collateral Documentation or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral and
the Collateral Documentation or this Indenture, and in the profits, rents,
revenues and other income arising therefrom, including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the Collateral or be
prejudicial to the interests of the Holders or the Trustee.
ARTICLE 13
MISCELLANEOUS
Section 13.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 13.2. Notices.
Any notice or communication by the Company, the Guarantor, the
Guarantor Subsidiaries or the Trustee to any of the others is duly given if in
writing and delivered in Person or mailed by first-class mail to the others'
addresses stated in Section 13.10. The Company, the Guarantor or the Trustee by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication to a Securityholder shall be
mailed by first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or
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communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company or the Guarantor mails a notice or
communication to Securityholders, it shall mail a copy to the Trustee and each
Agent at the same time.
All other notices or communications shall be in writing.
Section 13.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section
312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Guarantor, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section 312(c).
Section 13.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company, the Guarantor,
the Guarantor Subsidiaries or any other obligor to the Trustee to take any
action under this Indenture, the Company, the Guarantor, the Guarantor
Subsidiaries or any other obligor, as the case may be, shall furnish to the
Trustee:
(a) an Officers, Certificate stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(b) an opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 13.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
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(2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such
Person, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied
with.
Section 13.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its. functions.
Section 13.7. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in the State of New Jersey or New York are not required to
be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 13.8. Counterparts.
This Indenture may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
Section 13.9. Variable Provisions.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Chief Financial Officer, the Treasurer, the Secretary, the
Director of Finance, any Assistant Treasurer or any Assistant Secretary of the
Company, the Guarantor or a subsidiary thereof, as the context may indicate.
The Company initially appoints the Trustee as Paying Agent,
Registrar and authenticating agent.
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The first certificate pursuant to Section 4.3 shall be for the
first fiscal year of each of the Company and the Guarantor ending on or after
the date of this Indenture.
The reporting date for Section 7.6 is May 15 of each year.
The first reporting date is May 15, 1994.
The Trustee shall always have a combined capital and surplus
(including subordinated capital notes) of at least $25,000,000 as set forth in
its most recent published annual report of condition.
The Company's address is:
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Attention: Michael P. Sherman
General Counsel
The Trustee's address is:
First Trust Center
180 East Fifth Street
P.O. Box 64111
St. Paul, Minnesota 55164
Attention: Frank P. Leslie III
Section 13.10. Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE
AND THE SECURITIES AND THE GUARANTY, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
Section 13.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, the Guarantor or any of their
subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 13.12. Successors.
All agreements of the Company and the Guarantor in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
Section 13.13. Severability.
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In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 13.14. 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 costs and expenses (including attorneys' fees for the
Company, the Trustee and the Holders of the Securities) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification
of the Indenture and the Securities and printing this Indenture and the
Securities. In connection with any such qualification of this Indenture under
the TIA, the Trustee shall be entitled to receive from the Company any such
officers' Certificates, opinions of Counsel or other documentation as it may
reasonably request.
Section 13.15. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 13.16. Consent to Jurisdiction and Service of
Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR THE
GUARANTOR OR WITH RESPECT TO THIS INDENTURE, THE GUARANTY, ANY SECURITY OR ANY
OTHER DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE BOROUGH OF MANHATTAN, THE STATE OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY AND THE GUARANTOR
ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS INDENTURE, THE GUARANTY, ANY SECURITY OR ANY OTHER
DOCUMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. EACH OF THE
COMPANY, THE GUARANTOR AND THE GUARANTOR SUBSIDIARIES IRREVOCABLY DESIGNATES
AND APPOINTS CT CORPORATION SYSTEM, OR ANY OTHER ADDRESS IN THE STATE OF NEW
YORK COMMUNICATED BY CT CORPORATION SYSTEM TO THE TRUSTEE, AS ITS AGENT TO
RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSONS TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE COMPANY, THE
GUARANTOR AND THE GUARANTOR SUBSIDIARIES IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR
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CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED IN SECTION
13.10 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. EACH OF THE COMPANY, THE GUARANTOR, THE GUARANTOR SUBSIDIARIES AND
THE TRUSTEE IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH JURISDICTION. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO BRING PROCEEDINGS AGAINST THE
COMPANY, THE GUARANTOR OR THE GUARANTOR SUBSIDIARIES IN THE COURTS OF ANY OTHER
JURISDICTION.
Section 13.17. Waiver of Jury Trial.
EACH OF THE COMPANY, THE GUARANTOR AND THE TRUSTEE AND EACH
SECURITYHOLDER BY ACCEPTANCE OF A SECURITY HEREBY WAIVES ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS INDENTURE, THE GUARANTY OR ANY SECURITY OR ANY OTHER DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of the transactions contemplated by this Indenture and the other
Documents, including without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. The Company,
the Guarantor, the Guarantor Subsidiaries and the Trustee and each
Securityholder by acceptance of a Security each acknowledge that this waiver is
a material inducement to enter into a business relationship, that each has
already relied on the waiver in entering into this Indenture, the Guaranty and
the other Documents and in issuing and purchasing the Securities and that each
will continue to rely on the waiver in their related future dealings. The
Company, the Guarantor, the Guarantor Subsidiaries and the Trustee and each
Securityholder by acceptance of a Security further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS INDENTURE OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES. IN THE EVENT OF
LITIGATION, THIS INDENTURE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[signature page follows]
-85-
91
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
THE HANOVER COMPANIES
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
THE HORN & HARDART COMPANY
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
HANOVER DIRECT FULFILLMENT, INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
BRAWN OF CALIFORNIA, INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
92
D.M. ADVERTISING, INC.
BY /S/
---------------------------
Attest:
/S/
- ----------------------------- (SEAL)
GUMP'S BY MAIL, INC.
By /S/
Attest: ---------------------------
/S/
- ----------------------------- (SEAL)
GUMP'S HOLDINGS, INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
HANOVER DIRECT MAIL MARKETING, INC.
By /S/
Attest: ----------------------------
/S/
- ----------------------------- (SEAL)
93
HANOVER LIST MANAGEMENT INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
HANOVER SYNDICATION CORP.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
H.I.M. INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
LEAVITT ADVERTISING AGENCY, INC.
By /S/
Attest: ----------------------------
/S/
- ------------------------------ (SEAL)
94
RING RESPONSE LTD.
By /S/
Attest: ------------------------------
/S/
- ------------------------------ (SEAL)
YORK FULFILLMENT COMPANY, INC.
By /S/
Attest: ------------------------------
/S/
- ------------------------------ (SEAL)
FIRST TRUST NATIONAL
ASSOCIATION, as Trustee
By /S/
Attest: -----------------------------
/S/
- ------------------------------
95
The undersigned, pursuant to Article 5 of this Indenture, agrees that
it hereby assumes the due and punctual payment of the principal of and premium,
if any, and interest on all the Securities and the performance and observance
of every covenant of this Indenture and the other Documents on the part of the
Company and the Guarantor to be performed or observed, such assumption being
effective upon consummation of the Reorganization (as defined herein).
HANOVER DIRECT, INC.,
a Delaware corporation
By /S/
---------------------------------
Attest:
/S/
- --------------------------------- (SEAL)
96
EXHIBIT A-1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
PPN _____________
(Face of Series A Security)
No.
$
THE HANOVER COMPANIES
promises to pay to
or registered assigns,
the principal sum of Dollars on August 1, 1998
9.25% SENIOR SUBORDINATED NOTE
SERIES A
Interest Payment Dates: July 1, October 1,
January 1 and April 1
Record Dates: June 15, September 15,
December 15 and March 15
Dated:
THE HANOVER COMPANIES
By
-------------------------------
By
-------------------------------
Authenticated: (SEAL)
First Trust National OR (Authenticating Agent's name)
Association
By By
-------------------------- -------------------------------
Authorized Signature Authorized Signature
A1-1
97
(Back of Series A Security)
THE HANOVER COMPANIES
9.25% Senior Subordinated Note due August 1 1998,
Series A
1. Interest and Maturity.
(a) The Hanover Companies, a Nevada corporation (the
"Company," which term includes any successor corporation under the Indenture
referred to herein), hereby promises to pay interest (computed on the basis
of a 360-day year of twelve 30-day months) on the principal amount of this
Series A Security at a rate of 9.25% per annum from the date hereof. The
Company will pay interest quarterly on July 1, October 1, January 1 and April 1
of each year commencing on October 1, 1993, until said principal shall have
become due and payable, and to pay interest (so computed) at the rate of 12.25%
per annum on any overdue principal and prepayment charge and, to the extent
permitted by applicable law, on any interest overdue (without regard to any
applicable grace period), until the same shall be paid.
(b) Notwithstanding anything to the contrary in the
foregoing, the Company also promises to pay in cash any interest required by
Section 3(b) of the Registration Rights Agreement dated as of August 17,
1993, as required thereunder.
2. Method of Payment. The Company will pay interest on
the Series A Securities (except defaulted interest) to the persons who are
registered holders of Series A Securities (each, a "Holder") at the close of
business on the record date for the next Interest Payment Date even though
Series A Securities are cancelled after the record date and on or before the
Interest Payment Date. Holders must surrender Series A Securities to a Paying
Agent to collect principal payments. The Company will pay principal and
interest or premium, if any, and any other amounts owing under the Securities
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay principal
and interest or premium, if any, and any other moneys owing under the
Securities by wire transfer of immediately available funds in such money. It
may mail an interest check to a Holder's registered address. Upon written
request of a Holder of non-Restricted Series A Securities in aggregate
principal amount equal to at least $1,000,000, the Company shall make payment
of principal or interest or premium, if any, by wire transfer of immediately
available funds to the wire address specified in such notice.
A1-2
98
3. Paying Agent and Registrar. The Trustee will initially
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Securityholder. Subject
to the approval in writing of a majority of Holders in principal amount of
the then outstanding Securities (which approval shall be revocable at any
time), the Company may act in any such capacity.
4. Indenture. The Company issued the Series A Securities
under an Indenture dated as of August 17, 1993 (the "Indenture") among the
Company, The Horn & Hardart Company, a Nevada corporation (the "Guarantor"),
certain subsidiaries of the Company and the Trustee. The terms of the Series
A Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section
Section 77aaa-77bbbb) as in effect on the date of the Indenture. The Series A
Securities are subject to, and qualified by, all such terms, certain of which
are summarized herein, and Securityholders are referred to the Indenture and
such Act for a statement of such terms. The Series A Securities are general
obligations of the Company limited to $20,000,000 in aggregate principal amount
and are subordinated to Senior Indebtedness to the extent set forth in the
Indenture.
5. Optional Redemption. The Company, at its option, may
redeem the Securities in whole or from time to time in part in each case at the
greater of (a) 100% of the outstanding principal amount, plus accrued interest
and other amounts then due and owing on the Securities to the redemption date,
or (b) the present value of the scheduled principal and interest payments due
on such Security, computed using a discount rate equal to the Treasury Rate,
plus accrued interest and other amounts then due and owing on the Securities.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available at least two business
days prior to the date fixed for prepayment (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the then remaining average life of the Securities;
provided, that if the average life of the Securities is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the average life of the Securities is less than one year,
the weekly average yield on actually traded United States Treasury
A1-3
99
securities adjusted to a constant maturity of one year shall be used.
6. Mandatory Redemption. The Company shall redeem
$6,000,000 (or such lesser amount as provided below) principal amount of the
Securities on February 15, 1994 or the Extended Date (as defined below), unless
prior to such date the Company has (i) established or acquired the New
Distribution Facility and loaned $6,000,000 principal amount of the Securities
to the Distribution Facility Subsidiary for the establishment or acquisition
of, or to make improvements to, or capital expenditures, including but not
limited to computer systems (including, without limitation, hardware and
software) and distribution equipment, in connection with, assets for the New
Distribution Facility, (ii) acquired the Pledged Note in an aggregate principal
amount of $6,000,000 and (iii) entered into the Security and Pledge Agreement
and delivered to the Trustee the Pledged Note duly endorsed in blank. The
"Extended Date" shall mean April 15, 1994 if prior to or on February 15, 1994
the Company has entered into a written agreement to acquire the New
Distribution Facility. Notwithstanding the foregoing, as long as the Company
has otherwise satisfied clauses (i) through (iii) of this Paragraph 6 except
that with respect to clause (i) the Company used less than $6,000,000 (the
"Expended Amount") in connection with the New Distribution Facility and with
respect to clause (ii) the Company acquired the Pledged Note in an aggregate
principal amount equal to the Expended Amount, the Company shall be required to
redeem an amount equal to the difference between $6,000,000 and the Expended
Amount, unless such amount is less than $1,000,000 in which case no redemption
pursuant to this paragraph 6 shall be required. Any such redemption under this
Paragraph 6 shall be made at 100% of the principal amount thereof, plus accrued
interest on such principal amount to the date of redemption.
7. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. In the event of a redemption of less than all of the
Securities, the Securities will be chosen for redemption by the Trustee,
generally pro rata or by lot. On and after the redemption date, interest
ceases to accrue on Securities or portions of them called for redemption.
If this Security is redeemed subsequent to a record date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest will be paid to the person in
whose name this Security is registered at the close of business on such record
date.
A1-4
100
8. Denominations, Transfer, Exchange. The Series A
Securities are in registered form without coupons in denominations of $1,000
and integral multiples of $1,000. The transfer of Series A Securities may be
registered, and Series A Securities may be exchanged, as provided in the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not exchange
or register the transfer of any Series A Security or portion of a Series A
Security selected for redemption. Also, it need not exchange or register the
transfer of any Series A Securities for a period of 15 days before a selection
of Series A Securities to be redeemed.
9. Persons Deemed Owners. The registered holder of a
Series A Security may be treated as its owner for all purposes.
10. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities and the other Documents may be amended with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Securities, and any existing default may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding
Securities. Without the consent of any Securityholder, the Indenture, the
Securities or the other Documents may be amended, among other things, to cure
any ambiguity, defect or inconsistency, to provide for assumption of the
Company's or the Guarantor's obligations to Securityholders or to make any
change that does not adversely affect the rights of any Securityholder.
11. Defaults and Remedies. If an Event of Default (as set
forth in the Indenture) occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Securities may
declare all the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable immediately
without further action or notice. Securityholders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or
the Securities. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish quarterly and annual compliance
certificates to the Trustee.
12. Trustee Dealings with Company. First Trust National
Association, the Trustee under the Indenture, in its
A1-5
101
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
13. Change in Control. If there is a Change in Control
(as defined in the Indenture), then the Company shall commence an offer to
repurchase all of the outstanding Securities upon the terms set forth in the
Indenture.
14. Subordination. The indebtedness evidenced by the
Securities is, to the extent and in the manner provided in the Indenture,
expressly subordinate in right of prior payment in full of all existing and
future senior indebtedness as set forth in the Indenture and the Subordination
Agreement (as defined in the Indenture), and this Security is issued subject to
the provisions of the Indenture and the Subordination Agreement with respect to
such subordination. Each holder of this Security, by accepting the same,
covenants and agrees to and shall be bound by such provisions and authorizes
and directs the Trustee to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination so provided and appoints the
Trustee as attorney-in fact for any and all such purposes.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company or the Guarantor shall not
have any liability for any obligations of the Company or the Guarantor under
the Series A Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Securityholder by
accepting a Series A Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Series A
Securities.
16. Authentication. This Series A Security 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 Securityholder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. Request may be made to:
THE HANOVER COMPANIES
A1-6
102
1500 Harbor Boulevard
Weekhawken, New Jersey 07087
Attn: Chief Financial Officer
A1-7
103
ASSIGNMENT FORM
To assign this Series A Security, fill in the form below:
(I) or (we) assign and transfer this Series A Security 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
Security 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 other side of this Series A Security)
Signature Guarantee
A1-8
104
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Series A Security purchased
by the Company pursuant to Section 4.13 or Section 4.28 of the Indenture, check
the appropriate box: [ ] Section 4.13 [ ] Section 4.28
If you want to elect to have only part of this Series A
Security purchased by the Company pursuant to Section 4.13 or Section 4.28 of
the Indenture, state the amount (which must be $1,000 or an integral multiple
of $1,000): $_________________
Date: ___________ Your Signature: ____________________________
___________________________________________
(Sign exactly as your name appears on the other side of this Series A Security)
Signature Guarantee
A1-9
105
EXHIBIT A-2
(Face of Series B Security)
No.
$
THE HANOVER COMPANIES
promises to pay to
or registered assigns,
the principal sum of Dollars on August 1, 1998
9.25% SENIOR SUBORDINATED NOTE
SERIES B
Interest Payment Dates: July 1, October 1,
January 1 and April 1
Record Dates: June 15, September 15,
December 15 and March 15
Dated:
THE HANOVER COMPANIES
By _______________________________
By _______________________________
Authenticated: (SEAL)
First Trust National OR (Authenticating Agent's name)
Association
By ___________________________ By __________________________
Authorized Signature Authorized Signature
A2-1
106
(Back of Series B Security)
THE HANOVER COMPANIES
9.25% Senior Subordinated Note due August 1, 1998,
Series B
1. Interest and Maturity.
(a) The Hanover Companies, a Nevada corporation
(the "Company," which term includes any successor corporation under the
Indenture referred to herein), hereby promises to pay interest (computed on the
basis of a 360-day year of twelve 30-day months) on the principal amount of
this Series B Security at a rate of 9.25% per annum from the date hereof. The
Company will pay interest quarterly on July 1, October 1, January 1 and April 1
of each year commencing on October 1, 1993, until said principal shall have
become due and payable, and to pay interest (so computed) at the rate of 12.25%
per annum on any overdue principal and prepayment charge and, to the extent
permitted by applicable law, on any interest overdue (without regard to any
applicable grace period), until the same shall be paid.
(b) Notwithstanding anything to the contrary in the
foregoing, the Company also promises to pay in cash any interest required by
Section 3(b) of the Registration Rights Agreement dated as of August 17, 1993,
as required thereunder.
2. Method of Payment. The Company will pay interest on
the Series B Securities (except defaulted interest) to the persons who are
registered holders of Series B Securities (each, a "Holder") at the close of
business on the record date for the next Interest Payment Date even though
Series B Securities are cancelled after the record date and on or before the
Interest Payment Date. Holders must surrender Series B Securities to a Paying
Agent to collect principal payments. The Company will pay principal and
interest or premium, if any, and other amounts owing under the Securities in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay principal
and interest or premium, if any, and other amounts owing under the Securities
by wire transfer of immediately available funds in such money. It may mail an
interest check to a Holder's registered address. Upon written request of a
Holder of non-Restricted Series B Securities in aggregate principal amount
equal to at least $1,000,000, the Company shall make payment of principal or
interest or premium, if any, by wire transfer of immediately available funds to
the wire address specified in such notice.
A2-2
107
3. Paying Agent and Registrar. The Trustee will initially
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Securityholder. Subject
to the approval in writing of a majority of Holders in principal amount of the
then outstanding Securities (which approval shall be revocable at any time),
the Company may act in any such capacity.
4. Indenture. The Company issued the Series B
Securities under an Indenture dated as of August 17, 1993 (the "Indenture")
among the Company, The Horn & Hardart Company, a Nevada corporation (the
"Guarantor"), certain subsidiaries of the Company and the Trustee. The terms
of the Series B Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code Section Section 77aaa-77bbbb) as in effect on the date of the Indenture.
The Series B Securities are subject to, and qualified by, all such terms,
certain of which are summarized herein, and Securityholders are referred to the
Indenture and such Act for a statement of such terms. The Series B Securities
are general obligations of the Company limited to $20,000,000 in aggregate
principal amount.
5. Optional Redemption. The Company, at its option, may
redeem the Securities in whole or from time to time in part in each case at the
greater of (a) 100% of the outstanding principal amount, plus accrued interest
and other amounts then due and owing on the Securities to the redemption date,
or (b) the present value of the scheduled principal and interest payments due
on such Security, computed using a discount rate equal to the Treasury Rate,
plus accrued interest and other amounts then due and owing on the Securities.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available at least two business
days prior to the date fixed for prepayment (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the then remaining average life of the Securities;
provided, that if the average life of the Securities is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the average life of the Securities is less than one year,
the weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
A2-3
108
6. Mandatory Redemption. The Company shall redeem
$6,000,000 (or such lesser amount as provided below) principal amount of the
Securities on February 15, 1994 or the Extended Date (as defined below), unless
prior to such date the Company has (i) established or acquired the New
Distribution Facility and loaned $6,000,000 principal amount of the Securities
to the Distribution Facility Subsidiary for the establishment or acquisition
of, or to make improvements to, or capital expenditures, including but not
limited to computer systems (including, without limitation, hardware and
software) and distribution equipment, in connection with, assets for the New
Distribution Facility, (ii) acquired the Pledged Note in an aggregate principal
amount of $6,000,000 and (iii) entered into the Security and Pledge Agreement
and delivered to the Trustee the Pledged Note duly endorsed in blank. The
"Extended Date" shall mean April 15, 1994 if prior to or on February 15, 1994
the Company has entered into a written agreement to acquire the New
Distribution Facility. Notwithstanding the foregoing, as long as the Company
has otherwise satisfied clauses (i) through (iii) of this Paragraph 6 except
that with respect to clause (i) the Company used less than $6,000,000 (the
"Expended Amount") in connection with the New Distribution Facility and with
respect to clause (ii) the Company acquired the Pledged Note in an aggregate
principal amount equal to the Expended Amount, the Company shall be required to
redeem an amount equal to the difference between $6,000,000 and the Expended
Amount, unless such amount is less than $1,000,000 in which case no redemption
pursuant to this paragraph 6 shall be required. Any such redemption under this
Paragraph 6 shall be made at 100% of the principal amount thereof, plus accrued
interest on such principal amount to the date of redemption.
7. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. In the event of a redemption of less than all of the
Securities, the Securities will be chosen for redemption by the Trustee,
generally pro rata or by lot. On and after the redemption date, interest
ceases to accrue on Securities or portions of them called for redemption.
If this Security is redeemed subsequent to a record date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest will be paid to the person in
whose name this Security is registered at the close of business on such record
date.
8. Denominations, Transfer, Exchange. The Series B
Securities are in registered form without coupons in denominations of $1,000
and integral multiples of $1,000. The
A2-4
109
transfer of Series B Securities may be registered, and Series B Securities may
be exchanged, as provided in the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the transfer of any
Series B Security or portion of a Series B Security selected for redemption.
Also, it need not exchange or register the transfer of any Series B Securities
for a period of 15 days before a selection of Series B Securities to be
redeemed.
9. Persons Deemed Owners. The registered holder of a
Series A Security may be treated as its owner for all purposes.
10. Amendments and Waivers. Subject to certain
exceptions, the Indenture, the Securities and the other Documents may be
amended with the consent of the Holders of at least a majority in principal
amount of the then outstanding Securities, and any existing default may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Securities. Without the consent of any Securityholder, the
Indenture, the Securities or the other Documents may be amended, among other
things, to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's or the Guarantor's obligations to Securityholders
or to make any change that does not adversely affect the rights of any
Securityholder.
11. Defaults and Remedies. If an Event of Default (as
set forth in the Indenture) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Securities
may declare all the Securities to be due and payable immediately, except that
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable immediately
without further action or notice. Securityholders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or
the Securities. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish quarterly and annual compliance
certificates to the Trustee.
12. Trustee Dealings with Company. First Trust National
Association, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its
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Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee.
13. Change in Control. If there is a Change in Control
(as defined in the Indenture), then the Company shall commence an offer to
repurchase all of the outstanding Securities upon the terms set forth in the
Indenture.
14. Subordination. The indebtedness evidenced by the
Securities is, to the extent and in the manner provided in the Indenture,
expressly subordinate in right of prior payment in full of all existing and
future senior indebtedness as set forth in the Indenture and the Subordination
Agreement (as defined in the Indenture), and this Security is issued subject to
the provisions of the Indenture and the Subordination Agreement with respect to
such subordination. Each holder of this Security, by accepting the same,
covenants and agrees to and shall be bound by such provisions and authorizes
and directs the Trustee to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination so provided and appoints the
Trustee as attorney-in fact for any and all such purposes.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company or the Guarantor shall not
have any liability for any obligations of the Company or the Guarantor under
the Series B Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Securityholder by
accepting a Series B Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Series B
Securities.
16. Authentication. This Series B Security 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 Securityholder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. Request may be made to:
THE HANOVER COMPANIES
1500 Harbor Boulevard
Weekhawken, New Jersey 07087
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Attn: Chief Financial Officer
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ASSIGNMENT FORM
To assign this Series B Security, fill in the form below:
(I) or (we) assign and transfer this Series B Security 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
Security 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 other side of this
Series B Security)
Signature Guarantee
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Series B Security purchased
by the Company pursuant to Section 4.13 or Section 4.28 of the Indenture, check
the appropriate box: [ ] Section 4.13 [ ] Section 4.13
If you want to elect to have only part of this Series B
Security purchased by the Company pursuant to Section 4.13 or Section 4.28 of
the Indenture, state the amount (which must be $1,000 or an integral multiple
of $1,000): $_________________
Date: ___________ Your Signature: ____________________________
___________________________________________
(Sign exactly as your name appears on the other side of this Series B Security)
Signature Guarantee
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EXHIBIT B
FORM OF GUARANTY
[THE GUARANTY IS INCLUDED IN THIS
BINDER AS A SEPARATE DOCUMENT]
115
EXHIBIT C
SUBORDINATION AGREEMENT
[THE SUBORDINATION AGREEMENT IS
INCLUDED IN THIS BINDER AS A
SEPERATE DOCUMENT]
116
Exhibit D
SECURITY AND PLEDGE AGREEMENT
This SECURITY AND PLEDGE AGREEMENT, dated as of [_______] __,
199[_] (this "Agreement"), is between THE HANOVER COMPANIES, a Nevada
corporation (the "Pledgor"), and First Trust National Association, a national
association, as trustee for the holders of the Notes, as defined below (the
"Trustee").
RECITALS
a. The Pledgor, The Horn & Hardart Company, a Nevada
corporation (the "Guarantor"), and certain subsidiaries of the Pledgor
(collectively, the "Guarantor Subsidiaries" and together with the Guarantor,
the "Guarantors") have entered into that certain Purchase Agreement, dated as
of August 17, 1993 (the "Purchase Agreement"), with the Purchaser (as defined
in the Purchase Agreement), and that certain Indenture, dated as of August 17,
1993 (the "Indenture"), with the Trustee. The Guarantors have agreed to enter
into that certain Guaranty attached to the Indenture as Exhibit B (the
"Guaranty").
b. The Purchase Agreement and Indenture provided for the
issuance by the Company of its 9.25% Senior Subordinated Notes due 1998 in an
aggregate principal amount of $20,000,000 (the "Notes"). Any Person (as
defined below) that holds any of the Notes now or hereafter shall be referred
to herein as a "Noteholder".
c. Prior to or simultaneously with the execution hereof,
the Company shall have used $[__________] principal amount of the Notes to
establish or acquire a new distribution facility which is a wholly owned
subsidiary of the Pledgor (the "Distribution Facility Subsidiary") and the
Distribution Facility Subsidiary shall have issued a promissory note in favor
of the Pledgor (the "Subsidiary Note").
d. To induce the Noteholders to enter into the Purchase
Agreement, and the documents related thereto, and to induce the Trustee to
enter into the Indenture, and the documents related thereto, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor has agreed to pledge and grant a security interest in
the Collateral (as defined below) as security for the Secured Obligations (as
defined below).
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AGREEMENT
Now therefore, in consideration of the above recitals and
other consideration and the mutual covenants hereinafter set forth herein, the
parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used but not
defined herein have the respective meanings ascribed to such terms in the
Indenture. In addition, as used herein:
"Collateral" has the meaning ascribed to such term in Section 3 hereof.
"Documents" means the Purchase Agreement, the Indenture, the
Registration Rights Agreement, the Securities, the Guaranty, the
Collateral Documentation, and all other security agreements,
mortgages, deeds of trust, financing statements, lease assignments,
guaranties and other agreements and instruments, together with any
assignments, endorsements of, exhibits, schedules or other attachments
to all of the foregoing, delivered in connection with the transactions
contemplated hereby or thereby, all as amended, supplemented or
otherwise modified from time to time.
"Guarantor" and "Guarantors" have the meaning ascribed to each
such term in the first Recital hereof.
"Guaranty" has the meaning ascribed to such term in the first
Recital hereof.
"Indenture" has the meaning ascribed to such term in the first
Recital hereof.
"Noteholder" has the meaning ascribed to such term in the
second Recital hereof.
"Notes" has the meaning ascribed to such term in the second
Recital hereof.
"Pledged Note" has the meaning ascribed to such term in
Section 3(a) hereof.
"Proceeds" has the meaning ascribed to such term in Section
4.9 hereof.
"Purchase Agreement" has the meaning ascribed to such term in
the first Recital hereof.
"Secured Obligations" means all obligations of the Pledgor,
the Guarantor and the Guarantor Subsidiaries under
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the Indenture, the Notes, the Purchase Agreement, the Guaranty and the
other Documents.
"Subsidiary Note" has the meaning ascribed to such term in the
third Recital hereof.
"Trustee" has the meaning ascribed to such term in the first
paragraph hereof.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of New York.
Section 2. Representations and Warranties. The Pledgor
represents and warrants to the Noteholders and the Trustee that:
(a) The Pledgor is the sole beneficial owner of the
Collateral and no Lien exists or will exist upon the Collateral at any time
(and no right or option to acquire the same exists in favor of any other
Person), except for the pledge and security interest in favor of the Trustee
for the benefit of the Noteholders created or provided for herein, which pledge
and security interest constitutes a first priority perfected pledge and
security interest in and to all of the Collateral.
(b) The issuance of the Subsidiary Note has been duly
authorized by all necessary corporate action on the part of the Distribution
Facility Subsidiary. The Subsidiary Note constitutes a legally valid and
binding obligation of the Distribution Facility Subsidiary in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally and to
general principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law), and the Subsidiary Note is not nor will
be subject to any contractual restriction, or any restriction under the charter
or by-laws of the Distribution Facility Subsidiary, upon the transfer of such
Subsidiary Note (except for any such restriction contained herein).
Section 3. The Pledge. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Pledgor hereby pledges and grants to
the Trustee, for the benefit of the Noteholders as hereinafter provided, a
security interest in and to all of the Pledgor's right, title and interest in
the following property, whether now owned by the Pledgor or hereafter acquired
and whether now existing or hereafter coming into existence (all being
collectively referred to herein as "Collateral"):
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(a) the Subsidiary Note in the aggregate principal amount
of $[_____________] issued by the Distribution Facility Subsidiary in
favor of the Pledgor (the "Pledged Note");
(b) all securities, moneys or property representing
interest or other payments on the Pledged Note; and
(c) all proceeds of and to any of the property of the
Pledgor described in clauses (a) and (b) above in this Section 3.
Section 4. Further Assurances; Remedies. In furtherance of
the grant of the pledge and security interest pursuant to Section 3 hereof, the
Pledgor hereby agrees with the Trustee as follows:
4.1 Delivery and Other Perfection. The Pledgor shall:
(a) if any of the above-described securities, monies or
property required to be pledged by the Pledgor under clauses (a), (b)
and (c) of Section 3 hereof are received by the Pledgor, forthwith
either (i) transfer and deliver to the Trustee such securities so
received by the Pledgor (together with the certificates for any such
securities duly endorsed in blank or accompanied by undated stock
powers duly executed in blank) all of which thereafter shall be held
by the Trustee, pursuant to the terms of this Agreement, as part of
the Collateral or (ii) take such other action as the Trustee shall
deem necessary or appropriate to duly perfect the Lien created
hereunder in such shares, securities, monies or property referred to
in said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any
financing statements, notices, instruments, documents, agreements or
other papers that may be necessary or desirable (in the judgment of
the Trustee) to create, preserve, perfect or validate the security
interest granted pursuant hereto or to enable the Trustee to exercise
and enforce its rights hereunder with respect to such pledge and
security interest, including, without limitation, causing any or all
of the Collateral to be transferred of record into the name of the
Trustee or its nominee (and the Trustee agrees that if any Collateral
is transferred into its name or the name of its nominee, the Trustee
will thereafter promptly give to the Pledgor copies of any notices and
communications received by it with respect to the Collateral); and
(c) permit representatives of the Trustee, upon
reasonable notice, at any time during normal business hours
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to inspect and make abstracts from its books and records pertaining to
the Collateral, and permit representatives of the Trustee to be
present at the Pledgor's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by the Pledgor with
respect to the Collateral, all in such manner as the Trustee may
require.
4.2 Other Financing Statements and Liens. Except as
otherwise permitted hereunder, without the prior written consent of the
Trustee, the Pledgor shall not file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Collateral in which the
Trustee is not named as the sole secured party.
4.3 Preservation of Rights. The Trustee shall not be
required to take steps necessary to preserve any rights against prior parties
to any of the Collateral.
4.4 Note Collateral.
(a) So long as no Event of Default shall have occurred
and be continuing, the Pledgor shall have the right to exercise all voting,
consensual and other powers in any bankruptcy proceeding pertaining to the
Collateral for all purposes not inconsistent with the terms of this Agreement,
the Purchase Agreement, the Indenture, the Notes or any other instrument or
agreement referred to herein or therein, provided that the Pledgor agrees that
it will not vote the Collateral in any manner that is inconsistent with the
terms of this Agreement, the Purchase Agreement, the Indenture, the Notes or
any such other instrument or agreement; and the Trustee shall execute and
deliver to the Pledgor or cause to be executed and delivered to the Pledgor all
such proxies, powers of attorney, dividend and other orders, and all such
instruments, without recourse, as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the rights and powers which it is
entitled to exercise pursuant to this Section 4.4(a).
(b) The Pledgor shall pay over to the Trustee any
principal or interest payments paid on the Collateral.
(c) If any Event of Default shall have occurred, then so
long as such Event of Default shall continue, and whether or not the Trustee
or any Noteholder exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Purchase
Agreement, the Indenture, the Notes or any other agreement relating to such
Secured Obligations, all interest payments and other
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distributions on the Collateral shall be paid directly to the Trustee and
retained by it as part of the Collateral, subject to the terms of this
Agreement, and, if the Trustee shall so request in writing, the Pledgor agrees
to execute and deliver to the Trustee appropriate additional interest payment,
distribution and other orders and documents to that end, provided that if such
Event of Default is cured, any such distribution theretofore paid to the
Trustee shall, upon request of the Pledgor (except to the extent theretofore
applied to the Secured Obligations) be returned by the Trustee to the Pledgor.
(d) No provision of the Pledged Note may be amended or waived
without the written consent of the Trustee.
4.5 Events of Default, etc. During the period during which
an Event of Default shall have occurred and be continuing:
(a) the Trustee shall have all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Trustee were the sole and absolute owner thereof (and the
Pledgor agrees to take all such action as may be appropriate to give
effect to such right);
(b) the Trustee in its discretion may, in its name or in
the name of the Pledgor or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on of
account or in exchange for any of the Collateral, but shall be under no
obligation to do so; and
(c) the Trustee may, upon 10 business days' prior written
notice to the Pledgor of the time and place, with respect to the
Collateral or any part thereof which shall then be or shall thereafter
come into the possession, custody or control of the Trustee, the
Noteholders or any of their respective agents, sell, lease, assign or
otherwise dispose of all or any part of such Collateral, at such place
or places as the Trustee deems best, and for cash or on credit or for
future delivery (without thereby assuming any credit risk), at public
or private sale, without demand of performance or notice of intention
to effect any such disposition or of time or place thereof (except
such notice as is required above or by applicable statute and cannot
be waived) and the Trustee or any Noteholder or anyone else may
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be the purchaser, lessee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent
permitted by law, at any private sale), and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of the
Pledgor, any such demand, notice or right and equity being hereby
expressly waived and released. The Trustee may, without notice or
publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
4.5 shall be applied in accordance with Section 4.9 hereof.
The Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Trustee may be compelled, with respect to any sale of all
or any part of the Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Trustee than those obtainable through a public sale with
such restrictions, and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Trustee shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the issuer thereof to register it for public
sale.
4.6 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 4.5 hereof are
insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligations, the Pledgor shall remain liable for
any deficiency.
4.7 Removals, Etc. Without at least 30 days' prior written
notice to the Trustee, the Pledgor shall not maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any other place other than at the following address: 1500
Harbor Boulevard, Weehawken, New Jersey 07087.
4.8 Private Sale. The Trustee and the Noteholders shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to
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Section 4.5 hereof conducted in a commercially reasonable manner. The Pledgor
hereby waives any claims against the Trustee or any Noteholder arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Secured Obligations.
4.9 Application of Proceeds. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization
of all or any part of the Collateral pursuant hereto, and any other cash at the
time held by the Trustee under this Section 4, shall be applied by the Trustee:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Trustee and the fees and
expenses of its agents and counsel, and all reasonable expenses, and
advances made or incurred by the Trustee in connection therewith;
Next, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective
amounts thereof then due and owing or as the Noteholders holding the
same may otherwise agree;
Finally, to the payment to the Pledgor, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
As used in this Section 4, "proceeds" of Collateral shall mean cash, securities
and other property realized in respect of, and distributions in kind of, the
Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Pledgor or any issuer of or obligor on
any of the Collateral.
4.10 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Trustee while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default the Trustee is hereby appointed the attorney-in-fact of the Pledgor
for the purpose of carrying out the provisions of this Section 4 and taking any
action and executing any instruments which the Trustee may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Trustee shall be entitled under
this Section 4 to make collections in respect of the Collateral, the Trustee
shall have the right and power to receive, endorse and collect all checks made
payable to the order of the Pledgor representing any dividend, payment, or
other distribution in
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respect of the Collateral or any part thereof and to give full discharge for
the same.
4.11 Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, the Pledgor shall deliver to the Trustee the
Subsidiary Note identified in Section 3(a) hereof.
4.12 Termination. When all Secured Obligations shall have
been paid in full, this Agreement shall terminate, and the Trustee shall
forthwith cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
Pledgor and will execute and deliver such release as the Pledgor shall
reasonably request.
4.13 Expenses. The Pledgor agrees to pay to the Trustee all
reasonable out-of-pocket expenses (including reasonable expenses for legal
services of every kind) of, or incident to, the enforcement of any of the
provisions of this Section 4, or performance by the Trustee of any obligations
of the Pledgor in respect of the Collateral which the Pledgor has failed or
refused to perform, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement in respect of any of the
Collateral, and for the care of the Collateral and defending or asserting
rights and claims of the Trustee in respect thereof, by litigation or otherwise
and all such expenses shall be Secured Obligations to the Trustee secured under
Section 3 hereof.
4.14 Further Assurances. The Pledgor agrees that, from time
to time upon the written request of the Trustee, the Pledgor will execute and
deliver such further documents and do such other acts and things as the Trustee
may reasonably request in order fully to effect the purposes of this Agreement.
4.15 Indemnification. The Pledgor shall indemnify the
Trustee against any loss, liability or expense incurred by it in connection
with the performance of this Agreement and its duties hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except that this Section 4.15 shall not apply to losses, liabilities
or expenses incurred as a result of the gross or wilful misconduct or
negligence of the Trustee. The Trustee shall notify the Pledgor promptly of
any claim for which it may seek indemnity. The Pledgor shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel, and the Pledgor shall pay the reasonable fees and expenses of such
counsel.
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Section 5. Miscellaneous.
5.1 No Waiver. No failure on the part of the Trustee or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Trustee or any
of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
5.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
5.3 Notices. Any notice or communication hereunder shall be
in writing and delivered to the intended recipient at its address or telecopy
number specified pursuant to Section 11.2 of the Indenture.
5.4 Waivers, etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the
Pledgor and the Trustee. Any such amendment or waiver shall be binding upon
the Trustee and each Noteholder, each holder of any of the Secured Obligations
and the Pledgor.
5.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Pledgor, the Trustee, the Noteholders and each holder of any of the Secured
Obligations (provided, however, that the Pledgor shall not assign or transfer
its rights hereunder without the prior written consent of the Trustee).
5.6 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
5.7 Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Trustee and
the Noteholders in order to carry out the intentions of the parties hereto as
nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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5.8 No Limitation. Nothing contained in this Agreement shall
be deemed or interpreted to limit the rights of the Trustee or the Noteholders
under the terms of Article 10 of the Indenture.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
THE HANOVER COMPANIES, a Nevada
corporation
By:_______________________________
Name:
Title:
[Address]
Fax: (___) ___-_____
Attn: _______________
With a copy to:
[Name]
Fax: (___) ___-____
Attn: ________________
_________________________________
a _________ corporation, as Trustee
By:_______________________________
Name:
Title:
[Address]
Fax: (__) ___-____
Attn: ______________
With a copy to:
[Name]
[Address]
Attn: ________________
128
Exhibit E
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED AND SOLD ONLY IF SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE
[Distribution Facility Subsidiary]
DEMAND PROMISSORY NOTE
Dated as of __________, 199__
$[____________]
[Distribution Facility Subsidiary], a __________ corporation
(the "Company"), for value received, promises to pay to The Hanover Companies,
a Nevada corporation or its successors and assigns (the "Lender"), the sum of
[________________] Dollars ($___________.__) upon written demand of the Lender
(such date being herein called the "Demand Date"), and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months) from the date
of this Note on the unpaid balance thereof, at the rate of 9.25% per annum.
The Company will pay interest on July 1, October 1, January 1 and April 1 of
each year commencing on [______________] 1, 1993, until the entire principal
amount shall be paid in full, payable at the Demand Date to the registered
holder thereof, and to pay interest (so computed) at the rate of 12.25% per
annum on any overdue principal and prepayment charge and, to the extent
permitted by applicable law, on any interest overdue (without regard to any
applicable grace period), until the same shall be paid.
Payments of principal and interest on this Note shall be made
by wire transfer in immediately available funds to the account specified by the
registered holder hereof to the Company for such purpose and in such manner and
at such other place as the holder hereof shall designate in writing to the
Company, in lawful money of the United States of America.
This note is subject to the following additional provisions,
terms and conditions:
1. Definitions.
"Bankruptcy Law" has the meaning specified in Section 2 hereof.
129
"Business Day" shall mean a day of the year in which banks are
not required or authorized to close in New York.
"Custodian" has the meaning specified in Section 2 hereof.
"Debt" of any Person as of any date shall mean and include (i)
all indebtedness for money borrowed or evidenced by notes, bonds, debentures or
similar evidences of indebtedness, and (ii) indebtedness representing the
deferred and unpaid purchase price of any property or business (excluding in
any event trade payables incurred in the ordinary course of business and
constituting current liabilities), in the case of each of the foregoing clauses
(i) and (ii) in the principal amount that such indebtedness would be shown on a
balance sheet of such Person prepared as of such date in accordance with GAAP.
"Event of Default" has the meaning specified in Section 2
hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States.
"Indenture" shall mean the Indenture, dated as of August 17,
1993, among the Lender, The Horn & Hardart Company, a Nevada corporation,
certain subsidiaries of the Lender and First Trust National Association, as
Trustee, relating to $20,000,000 in aggregate principal amount of 9.25% Senior
Subordinated Notes due 1998 of the Lender.
"Loan" shall mean the loan being hereunder.
"Note" shall mean this note.
"Officers' Certificate" shall mean a certificate signed by two
Officers or by an Officer.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Security and Pledge Agreement" shall mean the Security and
Pledge Agreement, dated as of the date hereof, between the Lender and First
Trust National Association, as Trustee, pursuant to which the Lender pledged
and granted a security interest in this Note.
2. Events of Default.
An "Event of Default" occurs if any Event of Default under and
as set forth in the Indenture shall occur.
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If an Event of Default shall occur and be continuing, the
holder hereof may declare, by notice in writing given to the Company, the
entire unpaid principal amount of this Note, together with interest accrued
thereon, to be immediately due and payable, in which case this Note shall
become immediately due and payable, both as to principal and interest, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, notwithstanding anything herein.
If any Event of Default shall have occurred and be continuing,
the holder of this Note may proceed to protect and enforce its rights either by
suit in equity or by action at law, or both, whether for specific performance
of any covenant or agreement contained in this Note or in aid of the exercise
of any power granted to the holder of this Note, or the holder of this Note may
proceed to enforce any other legal or equitable right as the holder of such
Note. No remedy is intended to be exclusive and each remedy shall be
cumulative.
If the Company shall default in the payment of principal of or
interest on this Note, it will pay to the holder hereof further amounts, to the
extent lawful, as shall be sufficient to pay the costs and expenses of
collection, including reasonable counsel fees and expenses.
3. Miscellaneous.
(a) Paragraph Headings. The paragraph headings contained
in this Note are for reference purposes only and shall not affect the meaning
or interpretation of this Note.
(b) Notices. Any communications, notices or demand to be
given hereunder, under the Note shall be deemed duly given if delivered or
mailed by certified or registered mail, postage prepaid, return receipt
requested, as follows:
(i) If to the Company, at:
[Name]
[Address]
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(ii) If to the Lender, at:
The Hanover Companies
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Attention: Michael P. Sherman
General Counsel
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or, in each case, at any other address which shall have been furnished to the
person giving such notice by a previous notice hereunder from the person
receiving such notice.
(c) Amendment and Waiver. This Note is pledged as
collateral pursuant to the Security and Pledge Agreement and no provision of
this Note may be amended or waived without the written consent of the Trustee
under the Indenture.
(d) Successors, Assigns and Transferors. The obligations
of the Company under this Note shall be binding upon, and inure to the benefit
of, and be enforceable by, the Company and the holder hereof, and their
respective successors and assigns, whether or not so expressed. Subject to the
holder's compliance with all applicable securities laws, the holder hereof may
transfer this Note at any time to any one or more persons, and at the request
of such holder, the Company shall issue a new Note or Notes registered in the
name or names of such transferees.
(e) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of the date hereinabove first written.
[DISTRIBUTION FACILITY SUBSIDIARY]
By:
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Name:
Title:
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