Exhibit 4.3
THE FAIRCHILD CORPORATION,
as Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
as Subsidiary Guarantors
10 3/4% Senior Subordinated Notes due 2009
------------------------------
INDENTURE
Dated as of April 20, 1999
------------------------------
THE BANK OF NEW YORK,
as Trustee
CROSS-REFERENCE TABLE
TIA Indenture
SECTION Section
310(a)(1).......................................................... 7.10
(a)(2).......................................................... 7.10
(a)(3).......................................................... N.A.
(a)(4).......................................................... N.A.
(b)....................................................... 7.08; 7.10
(c)............................................................. N.A.
311(a)............................................................. 7.11
(b)............................................................. 7.11
(c)............................................................. N.A.
312(a)............................................................. 2.05
(b)............................................................. 13.03
(c)............................................................. 13.03
313(a)............................................................. 7.06
(b)............................................................. 7.06
(c)............................................................. 13.02
(d)............................................................. 7.06
314(a)............................................................. 4.02;
13.02
314(a)(4).......................................................... 4.12
(b)............................................................. N.A.
(c)(1).......................................................... 13.04
(c)(2).......................................................... 13.04
(c)(3).......................................................... N.A.
(d)............................................................. N.A.
(e)............................................................. 13.05
(f)............................................................. N.A.
315(a)............................................................. 7.01
(b)........................................................7.05; 13.02
(c)............................................................. 7.01
(d)............................................................. 7.01
(e)............................................................. 6.11
316(a)(last sentence).............................................. 13.06
(a)(1)(A)....................................................... 6.05
(a)(1)(B)....................................................... 6.04
2
(a)(2).......................................................... N.A.
(b)............................................................. 6.07
317(a)(1).......................................................... 6.08
(a)(2).......................................................... 6.09
(b)............................................................. 2.04
318(a)............................................................. 13.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS ................................................ 1
SECTION 1.02. OTHER DEFINITIONS .......................................... 27
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT .......... 28
SECTION 1.04. RULES OF CONSTRUCTION ...................................... 29
SECTION 1.05. ONE CLASS OF SECURITIES .................................... 30
ARTICLE II
THE SECURITIES
SECTION 2.01. FORM AND DATING ............................................ 30
SECTION 2.02. EXECUTION AND AUTHENTICATION ............................... 30
SECTION 2.03. REGISTRAR AND PAYING AGENT ................................. 31
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST ........................ 32
SECTION 2.05. SECURITYHOLDER LISTS ....................................... 32
SECTION 2.06. TRANSFER AND EXCHANGE ...................................... 32
SECTION 2.07. REPLACEMENT SECURITIES ..................................... 33
SECTION 2.08. OUTSTANDING SECURITIES ..................................... 34
SECTION 2.09. TEMPORARY SECURITIES ....................................... 34
SECTION 2.10. CANCELLATION ............................................... 34
SECTION 2.11. DEFAULTED INTEREST ......................................... 35
SECTION 2.12. CUSIP NUMBERS .............................................. 35
SECTION 2.13. ISSUANCE OF ADDITIONAL SECURITIES .......................... 35
ARTICLE III
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE ......................................... 36
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED ..................... 36
SECTION 3.03. NOTICE OF REDEMPTION ....................................... 37
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION ............................. 38
i
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE ................................ 38
SECTION 3.06. SECURITIES REDEEMED IN PART ................................ 38
ARTICLE IV
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES ...................................... 38
SECTION 4.02. SEC REPORTS ................................................ 39
SECTION 4.03. LIMITATION ON INDEBTEDNESS ................................. 39
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS .......................... 42
SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES .............................................. 46
SECTION 4.06. LIMITATION ON ASSET DISPOSITIONS ........................... 48
SECTION 4.07. LIMITATION ON AFFILIATE TRANSACTIONS ....................... 51
SECTION 4.08. [INTENTIONALLY OMITTED] .................................... 53
SECTION 4.09. CHANGE OF CONTROL .......................................... 53
SECTION 4.10. LIMITATION ON BUSINESS ACTIVITIES .......................... 55
SECTION 4.11. LIMITATION ON LIENS SECURING SUBORDINATED INDEBTEDNESS ..... 55
SECTION 4.12. COMPLIANCE CERTIFICATE ..................................... 56
SECTION 4.13. MAINTENANCE OF OFFICE OR AGENCY ............................ 56
SECTION 4.14. CORPORATE EXISTENCE ........................................ 56
SECTION 4.15. PAYMENT OF TAXES AND OTHER CLAIMS .......................... 56
SECTION 4.16. MAINTENANCE OF PROPERTIES AND INSURANCE .................... 57
SECTION 4.17. COMPLIANCE WITH LAWS ....................................... 58
SECTION 4.18. FURTHER INSTRUMENTS AND ACTS ............................... 58
SECTION 4.19. FUTURE GUARANTORS .......................................... 58
ARTICLE V
MERGER AND CONSOLIDATION
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS .................. 58
SECTION 5.02. WHEN A SUBSIDIARY GUARANTOR MAY MERGE OR TRANSFER ASSET .... 60
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ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT .......................................... 61
SECTION 6.02. ACCELERATION ............................................... 63
SECTION 6.03. OTHER REMEDIES ............................................. 64
SECTION 6.04. WAIVER OF PAST DEFAULTS .................................... 65
SECTION 6.05. CONTROL BY MAJORITY ........................................ 65
SECTION 6.06. LIMITATION ON SUITS ........................................ 65
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT........................ 66
SECTION 6.08. COLLECTION SUIT BY TRUSTEE ................................. 66
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM ........................... 66
SECTION 6.10. PRIORITIES ................................................. 66
SECTION 6.11. UNDERTAKING FOR COSTS ...................................... 67
SECTION 6.12. WAIVER OF STAY OR EXECUTION LAWS ........................... 67
ARTICLE VII
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE .......................................... 68
SECTION 7.02. RIGHTS OF TRUSTEE .......................................... 69
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE ............................... 70
SECTION 7.04. TRUSTEE'S DISCLAIMER ....................................... 70
SECTION 7.05. NOTICE OF DEFAULTS ......................................... 71
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS .............................. 71
SECTION 7.07. COMPENSATION AND INDEMNITY ................................. 71
SECTION 7.08. REPLACEMENT OF TRUSTEE ..................................... 72
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER ................................ 73
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION .............................. 74
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY .......... 74
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ARTICLE VIII
DISCHARGE DEFEASANCE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE ........... 75
SECTION 8.02. CONDITIONS TO DEFEASANCE ................................... 76
SECTION 8.03. APPLICATION OF TRUST MONEY ................................. 77
SECTION 8.04. REPAYMENT TO COMPANY ....................................... 77
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS ....................... 78
SECTION 8.06. REINSTATEMENT .............................................. 78
ARTICLE IX
AMENDMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS ................................. 78
SECTION 9.02. WITH CONSENT OF HOLDERS .................................... 79
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT ........................ 81
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS .............. 81
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES ...................... 81
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS ................................. 81
ARTICLE X
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE .................................. 82
SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY ...................... 82
SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS ............................ 82
SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES ..................... 84
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER ....................... 84
SECTION 10.06. SUBROGATION ............................................... 84
SECTION 10.07. RELATIVE RIGHTS ........................................... 84
SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY .............. 85
SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT ........................ 85
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE .................. 85
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SECTION 10.11. ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT
OR LIMIT RIGHT TO ACCELERATE ......................................... 85
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED ............................. 85
SECTION 10.13. TRUSTEE ENTITLED TO RELY .................................. 86
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION ....................... 86
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS ......................................................... 86
SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS
ON SUBORDINATION PROVISIONS .......................................... 87
ARTICLE XI
GUARANTEES
SECTION 11.01. UNCONDITIONAL GUARANTEE ................................... 87
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE ..................... 88
SECTION 11.03. SEVERABILITY .............................................. 89
SECTION 11.04. RELEASE OF SUBSIDIARY GUARANTOR FROM THE
SUBSIDIARY GUARANTEE ................................................. 89
SECTION 11.05. LIMITATION ON AMOUNT GUARANTEED; CONTRIBUTION BY
SUBSIDIARY GUARANTORS ................................................ 89
SECTION 11.06. WAIVER OF SUBROGATION ..................................... 91
SECTION 11.07. EXECUTION OF SUBSIDIARY GUARANTEE ......................... 92
SECTION 11.08. WAIVER OF STAY OR EXECUTION LAWS ........................... 92
SECTION 11.09. EFFECTIVENESS OF SUBSIDIARY GUARANTEE ..................... 92
ARTICLE XII
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. AGREEMENT TO SUBORDINATE .................................. 93
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY ...................... 93
SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS ............................ 94
SECTION 12.04. ACCELERATION OF PAYMENT OF SECURITIES ..................... 95
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER ....................... 95
SECTION 12.06. SUBROGATION ............................................... 95
SECTION 12.07. RELATIVE RIGHTS ........................................... 96
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A SUBSIDIARY GUARANTOR 96
v
SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT ....................... 96
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE ................. 97
SECTION 12.11. ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE ................................................. 97
SECTION 12.12. TRUST MONEYS NOT SUBORDINATED ............................ 97
SECTION 12.13. TRUSTEE ENTITLED TO RELY ................................. 97
SECTION 12.14. TRUSTEE TO EFFECTUATE SUBORDINATION....................... 98
SECTION 12.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
OF SUBSIDIARY GUARANTORS ............................................ 98
SECTION 12.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF
SUBSIDIARY GUARANTORS ON SUBORDINATION PROVISIONS ................... 98
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS ............................. 99
SECTION 13.02. NOTICES .................................................. 99
SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS .............. 100
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT ....... 100
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION ............ 100
SECTION 13.06. WHEN SECURITIES DISREGARDED .............................. 101
SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.............. 101
SECTION 13.08. LEGAL HOLIDAYS ........................................... 101
SECTION 13.09. GOVERNING LAW ............................................ 101
SECTION 13.10. NO RECOURSE AGAINST OTHERS ............................... 101
SECTION 13.11. SUCCESSORS ............................................... 102
SECTION 13.12. MULTIPLE ORIGINALS ....................................... 102
SECTION 13.13. TABLE OF CONTENTS; HEADINGS .............................. 102
Rule 144A/Regulation S Appendix
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security or Private Exchange Security
vi
INDENTURE dated as of April 20, 1999, between THE FAIRCHILD
CORPORATION, a Delaware corporation (the "Company"), the subsidiary guarantors
listed on Schedule A hereto (the "Subsidiary Guarantors") and THE BANK OF NEW
YORK, a banking corporation organized and validly existing under the laws of the
State of New York, 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 Initial
Securities, Exchange Securities and Private Exchange Securities (collectively,
the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.01. DEFINITIONS.
-----------
"Additional Assets" means any (1) property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary; (2) Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary; or (3) Capital Stock constituting a minority interest in
any Person that at such time is a Restricted Subsidiary; provided, however, that
any such Restricted Subsidiary described in clauses (2) and (3) is primarily
engaged in Permitted Businesses.
"Additional Securities" means, subject to the Company's compliance
with Section 4.03, an additional aggregate principal amount of $200.0 million of
10 3/4% Senior Subordinated Notes due 2009 issued from time to time after the
Issue Date under the terms of this Indenture (other than pursuant to Section
2.06, 2.07, 2.09, 3.06 4.06 or 4.09 of this Indenture or Section 2.3 or 2.4 of
the Appendix and other than Exchange Securities or Private Exchange Securities
issued pursuant to an exchange offer for other Securities outstanding under this
Indenture).
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any direct or indirect sale, lease,
transfer, conveyance or other disposition (or series of related sales, leases,
transfers, conveyances or dispositions) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any Restricted Subsidiary (including any
disposition by means of a merger, consolidation or similar transaction)
involving an amount in excess of $5.0 million other than
(1) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary;
(2) a disposition of property or assets at fair market value in the
ordinary course of business and consistent with past practices of the
Company or any of its Restricted Subsidiaries, as applicable
(including, without limitation, sales of products to customers,
disposition of excess inventory and dispositions of used, worn-out,
obsolete, damaged or replaced equipment);
(3) the disposition or grant of licenses to third parties in respect of
intellectual property in the ordinary course of business and
consistent with past practices of the Company or any of its Restricted
Subsidiaries, as applicable;
(4) a disposition by the Company or any Subsidiary of assets within 24
months after such assets were directly or indirectly acquired as part
of an acquisition of other properties or assets (including Capital
Stock) (the "Primary Acquisition"), and the proceeds therefrom are
used within 18 months after the date of sale to repay any Indebtedness
Incurred in connection with the Primary Acquisition of such assets;
(5) for purposes of Section 4.06 only, a disposition that constitutes a
Restricted Payment permitted by Section 4.04;
(6) for purposes of Section 4.06 only, a disposition of shares of Capital
Stock, property or other assets by the Company or any Restricted
Subsidiary to any Person as an Investment in such Person, provided
that (i) the Company or such Restricted Subsidiary receives
consideration at the time of such disposition at least equal to the
fair market value of such shares, property or other assets, (ii) such
Investment is a Permitted Investment described under paragraph (9) of
the definition of "Permitted Investment"
2
and (iii) the amount of any consideration in the form of cash or
Temporary Cash Investments shall be treated as Net Cash Proceeds for
purposes of such covenant;
(7) an Asset Disposition that also constitutes a Change of Control;
provided, however, that the Company complies with its obligations
described under Section 4.09;
(8) any disposition of properties or assets that is governed by the
provisions of Section 5.01;
(9) for purposes of Section 4.06 only, any trade, exchange or swap of
properties or assets by the Company or any Restricted Subsidiary with
any other Person; provided, that the fair market value of the assets
or properties traded, exchanged or swapped by the Company or such
Restricted Subsid iary is reasonably equivalent to the fair market
value of the assets or properties received; provided, further,
however, that the amount of any cash payment received by the Company
or any Restricted Subsidiary shall be treated as Net Cash Proceeds for
purposes of such covenant; and
(10) the granting or incurrence of any Lien that does not violate
Section 4.11;
provided, however, that for purposes of the definition of "Consolidated Coverage
Ratio", "Asset Disposition" shall include all such asset dispositions regardless
of amount.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (x) the sum of the
products of the numbers of years from the date of determination to the date of
each successive scheduled principal payment of such Indebtedness or scheduled
redemption multiplied by the amount of such payment by (y) the sum of all such
payments.
"Bank Indebtedness" means any and all Indebtedness and other amounts
payable under or in respect of the New Credit Facility including principal,
premium (if any), interest (including interest accruing at the contract rate
specified in the New Credit Facility (including any rate applicable upon
default) on or after the filing of any petition in bankruptcy, or the
commencement of any similar state, federal or foreign reorganization or
liquidation proceeding, relating to the Company and interest that would accrue
but for the commencement of such proceeding whether or not a claim for post-
filing interest
3
is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or an Assistant Secretary of the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests (including partnership interests) in (however designated) equity of
such Person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
"Capitalized Lease Obligation" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP. The Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Change of Control" means the occurrence of any of the following
events:
(1) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than 40% of the
total voting power of the Voting Stock of the Company; provided,
however, that the Permitted Holders beneficially own (as defined
above), directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of the Company than such
other person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the Board of Directors;
4
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was
approved pursuant to the vote of 66 2/3% of the directors of the
Company 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 then in office; or
(3) the merger or consolidation of the Company with or into another Person
(other than a Permitted Holder) or the merger of another Person with or
into the Company (other than a Permitted Holder), or the sale of all or
substantially all the assets of the Company to another Person (other
than a Permitted Holder), and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and that represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving Person
that represent, immediately after such transaction, at least a majority
of the aggregate voting power of the Voting Stock of the surviving
corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination (the
"Transaction Date") means the ratio of (x) the aggregate amount of EBITDA for
the most recent four consecutive fiscal quarters for which financial statements
are available to (y) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that
(1) if the Company or any Restricted Subsidiary has Incurred any Indebted
ness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the
need to calcu-
5
late the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
or both, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (a) such
Indebtedness as if such Indebtedness had been Incurred on the first day
of such period and (b) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of
such period;
(2) if the Company or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning
of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness
Incurred under any revolving credit facility unless such Indebtedness
has been permanently repaid and has not been replaced) on the date of
the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such
period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period and as if the Company or
such Restricted Subsid iary has not earned the interest income actually
earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge
such Indebtedness;
(3) if since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period or increased by an amount equal to the
EBITDA (if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for
such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale);
6
(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a calculation
to be made hereunder, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period; and
(5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company
or any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition or any Investment requiring an
adjustment pursuant to clause (3) or (4) above if made by the Company
or a Restricted Subsidiary during such period, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro
forma effect thereto as if such Asset Disposition, Investment or
acquisition of assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
Investment or an acquisition of assets, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be determined in good faith by a responsible financial or accounting
officer of the Company. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any Interest
Rate Protection Agreement applicable to such Indebtedness if such Interest Rate
Protection Agreement has a remaining term as at the date of determination in
excess of 12 months). For purposes of this definition, whenever pro forma
effect is to be given to any Indebtedness Incurred pursuant to a revolving
credit facility the amount outstanding under such Indebtedness shall be equal to
the average of the amount outstanding during the period commencing on the first
day of the first of the four most recent fiscal quarters for which financial
statements are available and ending on the date of determination.
"Consolidated Interest Expense" means, for any period, the sum of
7
(a) total interest expense of the Company and its consolidated Restricted
Subsidiaries, including, to the extent not otherwise included in such interest
expense (without duplication), and to the extent Incurred by the Company or its
Restricted Subsidiaries:
(1) interest expense attributable to Capitalized Lease Obligations;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expense;
(5) accrued interest;
(6) amortization of commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
(7) interest actually paid by the Company or any such Restricted Subsidiary
under any Guarantee of Indebtedness or other obligation of any other
Person;
(8) net costs associated with Hedging Obligations (including amortization
of fees);
(9) amortization of the interest portion of any deferred obligation;
provided, that any accretion of environmental, post-retirement health
insurance or other reserves not in respect of Indebtedness shall not be
included in Consolidated Interest Expense;
(b) Preferred Stock dividends paid during such period in respect of all
Preferred Stock of Restricted Subsidiaries of the Company held by Persons other
than the Company or a Wholly Owned Subsidiary; and
(c) cash contributions to any employee stock ownership plan or other trust for
the benefit of employees to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust to purchase
Capital Stock of the Company.
8
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company, and its consolidated Subsidiaries, provided, however, that there
shall not be included in such Consolidated Net Income
(1) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that (A) the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash that could have been
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (3) below); and (B)
the Company's equity in a net loss of any such Person for such period
shall be included in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(3) for purposes of Section 4.04 only, any net income (or loss) of any
Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of
cash that could have been distributed by such Restricted Subsidiary
(including, but not limited to, amounts that could have been
distributed as a result of an existing waiver of the Payment
Restrictions) during such period to the Company or another Subsidiary
as a dividend or other distribution (subject, in the case of a dividend
to another Subsidiary, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(4) any gain or loss realized upon the sale or other disposition of any
assets of the Company, its consolidated Subsidiaries or any other
Person which is not sold or otherwise disposed of in the ordinary
course of business
9
and any gain or loss realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) any extraordinary gain or loss; and
(6) the non-recurring cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Tangible Assets" means, as of any date of determination,
the total assets, less goodwill and other intangibles (other than patents,
trademarks, copyrights, licenses and other intellectual property) shown on the
balance sheet of the Company and its Restricted Subsidiaries for the most
recently ended fiscal quarter for which financial statements are available,
determined on a consolidated basis in accordance with GAAP.
"Currency Exchange Protection Agreement" means, in respect of any
Person, any foreign exchange contract, currency swap agreement, currency option
or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" means (1) the Bank Indebtedness; and
(2) any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $50
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"Disqualified Stock" of a Person, with respect to any Person, means
any Capital Stock which by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable at the option of the holder)
or upon the
10
happening of any event (1) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise; (2) is convertible or exchangeable at the
option of the holder for Indebtedness or Disqualified Stock; or (3) is
mandatorily redeemable or must be purchased, upon the occurrence of certain
events or otherwise, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Securities and any Preferred Stock of
a Restricted Subsidiary of such Person; provided, however, that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to purchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock if (1) the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the terms applicable to the
Securities under Sections 4.06 and 4.09; and (2) any such requirement only
becomes operative after compliance with such terms applicable to the Securities,
including the purchase of any Securities tendered pursuant thereto.
"EBITDA" for any period means the sum of Consolidated Net Income plus
the following to the extent deducted in calculating such Consolidated Net
Income: (1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries; (2) Consolidated Interest Expense; (3) depreciation
expense and amortization expense of the Company and its consolidated Restricted
Subsidiaries; (4) all other non-cash items of the Company and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent that
it represents an accrual of or reserve for cash expenditures in any future
period reducing Consolidated Net Income) less all non-cash items increasing
Consolidated Net Income; and (5) all bonuses paid to executive officers of the
Company in connection with the KTI Acquisition and severance, rationalization,
product qualification and other non-recurring transition costs incurred in
connection with the KTI Acquisition in each case for such period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than, and the majority of the assets of
which are located outside of, the United States, a State thereof and the
District of Columbia.
"Fully Traded Common Stock" means Capital Stock issued by any
corporation which is listed on either the New York Stock Exchange or the
American
11
Stock Exchange or included for trading privileges in the National Market System
of the National Association of Securities Dealers Automated Quotation System;
provided, however, that (a) either such Capital Stock is freely tradable under
the Securities Act (including pursuant to Rule 145(d)(1) thereunder) upon
issuance or the holder thereof has contractual registration rights that will
permit the sale of such Capital Stock pursuant to an effective registration
statement not later than nine months after issuance to the Company or one of its
Subsidiaries and (b) such Capital Stock is also so listed or included for
trading privileges.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (1) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise); or (2) entered
into for purposes of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include (1) endorsements for
collection or deposit in the ordinary course of business; or (2) obligations,
warranties and indemnities, not with respect to Indebtedness of any Person, that
have been or are undertaken or made in the ordinary course of business or in
connection with any Asset Disposition permitted by Section 4.06 and not for the
benefit of or in favor of an Affiliate of the Company or any of its
Subsidiaries. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Protection Agreement or Currency Exchange
Protection Agreement or other similar agreement or arrangement involving
interest rates, currencies, commodities or otherwise.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
12
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Restricted Subsidiary at the time it becomes a Restricted Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any such premium is then due and
owing) in respect of (A) indebtedness of such Person for money
borrowed; and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is
responsible or liable;
(2) all Capitalized Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property (which purchase price is due more than 180
days after taking title to such property), all conditional sale
obligations of such Person and all obligations of such Person under any
title retention agreement (but excluding trade accounts payable arising
in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing
obligations (other than obligations described in (1) through (3)
above) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if and to
the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock of
such Person (but excluding, in each case, any accrued dividends);
13
(6) all obligations of the type referred to in clauses (1) through (5) of
other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6) of
other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging Obliga
tions of such Person.
For purposes of this definition, the obligation of such person with respect to
the redemption, repayment or repurchase price of any Disqualified Stock that
does not have a fixed redemption, repayment or repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were redeemed, repaid or repurchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that if such Disqualified Stock is not then permitted to be
redeemed, repaid or repurchased, the redemption, repayment or repurchase price
shall be the book value of such Disqualified Stock as reflected in the most
recent financial statements of such Person. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the amount of liability required by GAAP to be accrued or reflected
on the most recently published balance sheet of such Person; provided, however,
that (1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the face amount of such indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP; and (2)
Indebtedness shall not include any liability for federal, state, local or other
taxes.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Interest Rate Protection Agreement" means, in respect of any Person,
any interest rate swap agreement, interest rate option agreement, interest rate
cap
14
agreement, interest rate collar agreement, interest rate floor agreement or
other similar agreement or arrangement designed to protect such Person against
fluctuations in interest rates.
"Investment" by any Person in any other Person means any direct or
indirect advance, loan (other than advances to customers or suppliers in the
ordinary course of business that are recorded as accounts receivable on the
balance sheet of such former Person) or other extension of credit (including by
way of Guarantee or similar arrangement) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such latter
Person that are or would be classified as investments on a balance sheet of such
former Person prepared in accordance with GAAP. In determining the amount of
any Investment in respect of any property or assets other than cash, such
property or asset shall be valued at its fair market value at the time of such
Investment (unless otherwise specified in this definition), as determined in
good faith by the Board of Directors. For purposes of the definition of
"Unrestricted Subsid iary", the definitions of "Restricted Payment" and
"Permitted Investment" and Section 4.04, (1) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (2) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Issue Date" means April 20, 1999.
"KTI Acquisition" means the acquisition by the Company of Kaynar
Technologies Inc., in a cash merger of Kaynar Technologies Inc. with a wholly
owned subsidiary of the Company.
15
"Legal Holiday" means each Saturday, Sunday and each day on which
commercial banking institutions are authorized or required by law to close in
New York City.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means the aggregate
amount of cash or Temporary Cash Investments received in respect of an Asset
Disposition (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form) therefrom,
in each case net of (1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred (including fees and expenses of counsel and
investment bankers), and all Federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability under GAAP as a consequence of
such Asset Disposition; (2) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition; (3) all distributions
and other payments required to be made to minority interest holders in
Restricted Subsidiaries or joint ventures as a result of such Asset
Disposition; and (4) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and including, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Dispositions, all as determined in conformity with GAAP, retained by
the Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, printing costs, underwriters' or placement agents' fees,
discounts or commissions and brokerage stock exchange listing fees, consultant
and other fees actually incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
16
"New Credit Facility" means (1) one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loan or facilities to
the Company, any Restricted Subsidiary, domestic or foreign, or any or all of
such Persons, including the Credit Agreement, among the Company and certain
subsidiaries of the Company, as borrowers, the lenders party thereto and
Salomon Smith Barney Inc. and NationsBanc Montgomery Securities LLC, arrangers
for the lenders, as the same may be amended, modified, restated or supplemented
from time to time, or any other indebtedness referred to in clause (b)(1) of
Section 4.03; and (2) any one or more agreements governing advances, loans or
facilities provided to refund, refinance, replace or renew (including subsequent
or successive refundings, financings, replacements and renewals) Indebtedness
under the agreement or agreements referred to in the foregoing clause (1), as
the same may be amended, modified, restated or supplemented from time to time.
"Offering Circular" means the Offering Circular, dated as of April 15,
1999 relating to the offering of the Securities.
"Officer" means the Chairman of the Board, the President, an Executive
Vice President, a Senior Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President, an Executive Vice President, a Senior Vice President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel reasonably
acceptable to the Trustee, which may be an employee of or counsel for the
Company.
"Permitted Businesses" means (i) the lines of business that the
Company or any of the Restricted Subsidiaries were engaged in on the date of the
Indenture or that are contemplated by the Offering Circular, (ii) the businesses
engaged in by any acquired businesses, provided that a substantial portion of
their business at the time of acquisition was related or ancillary to the
Company's then existing lines of business, (iii) extensions of the businesses
referred to in clauses (i) and (ii), including, without limitation, new products
and services to its markets or new distribution channels, (iv) any other lines
of business or activities that are related or ancillary to the businesses
referred to in clauses (i)-(iii), and (v) unrelated lines of business that
individually are not material to the Company and the Restricted Subsidiaries
taken as a whole.
17
"Permitted Holders" means (i) Jeffrey J. Steiner; (ii) any member of
Jeffrey J. Steiner's immediate family or any of his lineal descendants; (iii)
any trust or estate the principal beneficiaries of which are persons referred to
in clause (i) or (ii); (iv) in the event of the incompetence or death of any of
the persons described in clauses (i) and (ii), such person's estate, executor,
administrator, committee or other personal representative or beneficiaries; and
(v) any Affiliate or associate (as defined in the Exchange Act) of the persons
described in clauses (i), (ii), (iii) and (iv).
"Permitted Investment" means an Investment in
(1) the Company or a Restricted Subsidiary or a Person which will, upon
the making of such Investment, become a Restricted Subsidiary;
(2) another Person, if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted
Subsidiary;
(3) Temporary Cash Investments;
(4) Trade Payables;
(5) loans or advances to officers, directors or employees of the Company
or any of its Restricted Subsidiaries for travel, transportation,
entertainment, and moving and other relocation expenses and other
business expenses that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted
Subsidiary, as the case may be;
(7) stock, obligations or securities received (A) in settlement of debts
created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary; (B) in satisfaction of judgments; or (C) as
consideration in connection with an Asset Disposition permitted under
Section 4.06;
18
(8) Investments deemed to have been made as a result of the acquisition of
a Person that at the time of such acquisition held instruments
constituting Investments that were not acquired in contemplation of
the acquisition of such Person;
(9) Unrestricted Subsidiaries, joint ventures and other Persons, provided
that at the time such Investment is made the net amount of all
Investments made pursuant to this clause (9) after the Issue Date does
not exceed 7.5% of Consolidated Tangible Assets. The net amount of
such Investments as of any date of determination shall be determined
by subtracting (A) the aggregate amount of all payments of interest on
Indebtedness, dividends or repayments of loans or other transfers of
cash or assets received by the Company or a Restricted Subsidiary as a
return of or on such Investment from (B) the aggregate amount of all
such Investments made by the Company and the Restricted Subsidiaries
pursuant to this clause (9); and
(10) the transfer of all of the assets and liabilities of the Optical Disc
Equipment Group business of Fairchild Technologies Optical Disc
Equipment Group GmbH to an Unrestricted Subsidiary.
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases
to which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits or cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
including carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due or being contested in good faith by appropriate proceedings; or
other Liens arising out of judgments or awards against such Person with respect
to which such Person shall then be proceeding with an appeal or other
proceedings for review; (c) Liens for taxes, assessments or other governmental
charges not yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided appropriate reserves
have been taken on the books of the Com pany; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the request of and for the
account of such Person in the ordinary course of its business; provided,
however, that such letters of credit do not constitute Indebtedness; (e) Liens
19
securing an Interest Rate Protection Agreement so long as the related
Indebtedness is, and is permitted to be under the Indenture, secured by a Lien
on the same property securing the Interest Rate Protection Agreement; (f) Liens
for the purpose of securing the payment (or the refinancing of the payment) of
all or a part of any purchase money Indebtedness relating to assets or property
acquired or constructed in the ordinary course of business provided that (x) the
aggregate principal amount of Indebtedness secured by such Liens shall not
exceed the cost of the assets or property so acquired or constructed and (y)
such Liens shall not encumber any other assets or property of the Company or any
Restricted Subsidiary other than such Assets or property and assets affixed or
appurtenant thereto; and (g) Liens arising from precautionary Uniform Commercial
Code financing statement filings regarding operating leases entered into by the
Company and its Subsidiaries in the ordinary course of business.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Plans" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Company or any Subsidiary, or any successor thereof and "Plan" shall
have a correlative meaning.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering
of Capital Stock (other than Disqualified Stock) of the Company pursuant to an
effective registration statement under the Securities Act.
20
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
Incurred in compliance with the Indenture (including Indebtedness of the Company
that refinances Indebtedness of any Restricted Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness; provided, however, that
(1) the Refinancing Indebtedness has Stated Maturity no earlier than any
Stated Maturity of the Indebtedness being refinanced;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being refi nanced; and
(3) such Refinancing Indebtedness is Incurred in an aggregate princi pal
amount (or if issued with original issue discount, an aggre gate
issue price) that is equal to or less than the sum of (x) the
aggregate principal amount (or if issued with original issue discount,
the aggregate accreted value) of the Indebtedness being refinanced
(including, with respect to both the Refinancing Indebtedness and the
Indebtedness being refinanced, amounts then outstanding and amounts
available thereunder) plus (y) unpaid interest, prepayment penalties,
redemption or repurchase premiums, defeasance costs, fees, expenses
and other amounts owing with respect thereto, plus reasonable
financing fees and other reasonable out-of-pocket expenses incurred in
connection therewith;
provided further, however, that (i) Refinancing Indebtedness shall not include
Indebtedness of a Restricted Subsidiary that refinances Indebtedness of the
Company and (ii) clauses (1) and (2) above will not apply to any Indebtedness
that refinances Indebted ness Incurred pursuant to the New Credit Facility.
"Registration Rights Agreement" means the Registration Rights Agree
ment dated April 15, 1999, between the Company, the Subsidiary Guarantors and
Credit Suisse First Boston Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation,
21
Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC and
Warburg Dillon Read LLC.
"Representative" means the trustee, agent or other representative (if
any) for an issue of Senior Indebtedness.
"Restricted Payment" with respect to any Person means
(1) the declaration or payment of any dividends or any other distributions
of any sort in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving such Person) or
similar payment to the direct or indirect holders of its Capital Stock
(other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock, Capital Stock or assets of a
Restricted Subsidiary) and dividends or distributions payable solely to
the Company or a Restricted Subsidiary, and other pro rata dividends
or other distributions made by a Subsidiary that is not a Wholly Owned
Subsidiary to minority stockholders (or owners of an equivalent
interest in the case of a Subsidiary that is an entity other than a
corporation));
(2) the purchase, redemption or other acquisition or retirement for value
of any Capital Stock of the Company held by any Person or of any
Capital Stock of any Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of
any option to exchange any Capital Stock (other than into Capital Stock
of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated
Obligations (other than the purchase, repurchase, or other acquisition
of Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in
each case due within one year of the date of acquisition); or
(4) the making of any Investment in any Person (other than Permitted
Investment).
22
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or any
Subsidiary Guarantor secured by a Lien.
"Securities" means the Initial Securities, the Exchange Securities and
the Private Exchange Securities, treated as a single class of securities, as
amended or supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means with respect to the Company or any
Subsidiary Guarantor (1) all Bank Indebtedness; and (2) all other Indebtedness
of the Company or a Subsidiary Guarantor including interest and fees thereon,
whether outstanding on the Issue Date or thereafter issued or Incurred, unless
in the instrument creating or evidencing the same or pursuant to which the same
is outstanding it is provided that such obligations are not superior in right of
payment to the Securities or the applicable Subsidiary Guarantee; provided,
however, that Senior Indebtedness shall not include (1) any liability for
Federal, state, local or other taxes owed or owing by the Company; (2) any Trade
Payables; (3) any Indebtedness, Guarantee or obligation of the Company or a
Subsidiary Guarantor which is subordinate or junior in any respect to any other
Indebtedness, Guarantee or obligation of the Company or such Subsidiary
Guarantor, including any Senior Subordinated Indebtedness and any Subordinated
Obligations; and (4) any obligations with respect to any Capital Stock.
"Senior Subordinated Indebtedness" means the Securities and any other
Indebtedness of the Company or a Subsidiary Guarantor that specifically provides
that such Indebtedness is to rank pari passu with the Securities or the
applicable Subsidiary Guarantee in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company or such Subsidiary Guarantor which is not Senior Indebtedness.
"Significant Subsidiary" means a Restricted Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act and the Exchange Act.
23
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company or a
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
incurred) that is contractually subordinated or junior in right of payment to
the Securities or the applicable Subsidiary Guarantee pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Voting Stock is at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of
such Person or (3) one or more Subsidiaries of such Person. Unless the context
requires otherwise, "Subsidiary" shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities.
"Subsidiary Guarantor" means any Subsidiary of the Company that
Guarantees the Company's Obligations with respect to the Securities.
"Temporary Cash Investments"means any of the following:
(1) investments in U.S. Government Obligations;
(2) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the
laws of the United States of America, any State thereof or any foreign
country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $50 million (or
the Dollar Equivalent thereof) and whose long-term debt is rated "A-"
or higher according to Moody's Investors Service, Inc. (or such
equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities
Act));
24
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in clause
(2) above;
(4) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of
the United States of America or any foreign country recognized by the
United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Rating Services; and
(5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state, common
wealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least
"A" by Standard & Poor's Rating Services or "A" by Moody's Investors
Service, Inc.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
of such Person in connection with the acquisition of goods or services.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bbbb) as in effect on the Issue Date, except as provided in Section 9.03.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
25
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Unrestricted Subsidiary" means
(1) Fairchild Germany, Inc., Fairchild Technologies USA, Inc., Fairchild
Technologies Europe Limited, Fairchild Technologies Korea Limited,
Fairchild Technologies Semiconductor Equipment, Convac France SA,
Snails, Inc., Fairchild CDI SA, MediaDisc SA, Cutek Research, Inc.,
Gobble Gobble, Inc. and Warthog, Inc., which Subsidiaries on the Issue
Date, hold only the Company's Farmingdale, Long Island project, the
interest of the Company in Nacanco Paketleme and substantially all the
business and assets of the Company's technology products unit, plus up
to $5.0 million in cash in the aggregate invested in the Subsidiary
hold ing the Farmingdale, Long Island project;
(2) any Subsidiary of the Company that at the time of determination shall
be or continues to be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and
(3) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary (a "Designation") unless:
(a) a Default shall have occurred and be continuing at the time of or after
giving effect to the Designation;
(b) such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any
other Restricted Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; and
26
(c) either (x) the assets of such Subsidiary do not exceed $1,000 or (y) the
Company would be permitted under the Indenture to make an Investment at the
time of Designation (assuming the effectiveness of such Designation) under
Section 4.04.
The Board of Directors may revoke any designation of a Subsidiary as
an Unrestricted Subsidiary (a "Revocation") if:
(a) no Default shall have occurred and be continuing at the time of such
Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if Incurred at such time,
have been permitted to be Incurred for all purposes of the Indenture and
for all purposes of the Indenture shall be deemed to have been Incurred at
such time.
All Designations and Revocations must be evidenced by resolutions of
the Board of Directors delivered to the Trustee certifying compliance with the
foregoing provisions.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company
all the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. OTHER DEFINITIONS.
-----------------
Term Defined in Section
- ---- ------------------
"Affiliate Transaction"..................................... 4.07(a)
"Bankruptcy Law"............................................ 6.01
"Blockage Notice"........................................... 10.03
"Change of Control Offer"................................... 4.09(b)
"covenant defeasance option"................................ 8.01(b)
"Custodian"................................................. 6.01
"Depositary".......................................... Appendix - 1.1
"Event of Default".......................................... 6.01
27
tee
"Exchange Securities".................................. Appendix - 1.1
"Initial Purchasers"................................... Appendix - 1.1
"Initial Securities"................................... Appendix - 1.1
"legal defeasance option"..................................... 8.01(b)
"Legal Holiday"............................................... 13.08
"Notice of Default"........................................... 6.01
"Offer"....................................................... 4.06(b)
"Offer Amount"............................................. 4.06(c)(2)
"pay the Securities".......................................... 10.03
"Paying Agent"................................................ 2.03
"Payment Blockage Period"..................................... 10.03
"Payment Restrictions"........................................ 4.05
"Private Exchange"..................................... Appendix - 1.1
"Private Exchange Securities".......................... Appendix - 1.1
"Purchase Agreement"................................... Appendix - 1.1
"Purchase Date"........................................ 4.06(c)(1)
"QIB".................................................. Appendix - 1.1
"Registered Exchange Offer"............................ Appendix - 1.1
"Registrar"................................................... 2.03
"Securities Custodian"................................. Appendix - 1.1
"Shelf Registration Statement"......................... Appendix - 1.1
"Successor Company"........................................... 5.01
"Successor Guarantor"......................................... 5.02
"Transfer Restricted Securities"....................... Appendix - 1.1
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This
-------------------------------------------------
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
28
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise
---------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or junior
to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would
be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the maximum
liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred
Stock, whichever is greater;
(9) all references to the date the Securities were originally issued shall
refer to the Issue Date; and
29
(10) all references to any payment of principal, purchase prices in
connection with a purchase of the Securities and interest or any other
amount payable on or with respect to such Securities shall be deemed
to include payment of any additional cash interest pursuant to the
Registration Rights Agreement.
SECTION 1.05. ONE CLASS OF SECURITIES.
-----------------------
The Initial Securities, the Private Exchange Securities, the Exchange
Securities and, if issued in accordance with Section 2.13, the Additional
Securities shall vote and consent together on all matters as one class of
securities and none of the Initial Securities, the Private Exchange Securities,
the Exchange Securities or, if issued in accordance with Section 2.13, the
Additional Securities shall have the right to vote or consent as a separate
class on any matter.
ARTICLE II
THE SECURITIES
--------------
SECTION 2.01. FORM AND DATING. Provisions relating to the Initial
---------------
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix")
which is hereby incorporated in and expressly made part of this Indenture. The
Initial Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A which is hereby incorporated in and
expressly made a part of this Indenture. The Exchange Securities and the Private
Exchange Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in the Appendix and Exhibits A and B are part of the terms of this
Indenture.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign
----------------------------
the Securities for the Company by manual or facsimile signature.
30
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $225
million of 10 3/4% Senior Subordinated Notes due 2009 and, at any time and from
time to time thereafter, the Trustee shall authenticate and deliver Securities
for original issue in an aggregate principal amount specified in such order, in
each case upon a written order of the Company signed by two Officers of the
Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated and, in the case of an issuance of Additional Securities pursuant
to Section 2.13 after the Issue Date, shall certify that such issuance is in
compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain
--------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent and any change in the
address of such agent. If the Company fails to maintain a Registrar or Paying
Agent, the Trustee shall act as such
31
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
-----------------------------------
On or prior to each due date of the principal and interest on any Security, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as
--------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may reasonably request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be issued in
---------------------
registered form without coupons and shall be transferable only upon the
surrender of a Security for registration of transfer. When a Security is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the
requirements of Section 8-401(1) of the Uniform Commercial Code are met. When
Securities are presented to the Registrar or a co-registrar with a request to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-
32
registrar's request. The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or any Securities for a period of
15 days before the mailing of a notice of redemption of Securities to be
redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture shall evidence the same debt and shall be entitled to
the same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among a participant in the
Depositary or beneficial owners of interests in any Global Security) other than
as are expressly required by, and to do so if and when expressly required by the
terms of this Indenture.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is
----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Company and the Trustee. If required by
the Trustee or the Com pany, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a Security.
33
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any
----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. Except as set forth in Section 13.06, a Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
out standing unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the entire amount of their principal and all accrued and unpaid
interest on any Securities are considered paid under Section 4.01 on the date
such amounts are due, such Securities shall cease to be outstanding under this
Indenture and interest on such Securities shall cease to accrue from and after
such date.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until definitive Securities are
--------------------
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. CANCELLATION. The Company at any time may deliver
------------
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel in
accordance with its customary practice all Securities surrendered for
registration of transfer,
34
exchange, payment or cancellation. The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a payment
------------------
of interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful at the rate per annum
borne by the Securities) in any lawful manner. The Company may pay the defaulted
interest to the persons who are Securityholders on a subsequent special record
date. The Company shall fix or cause to be fixed any such special record date
and payment date to the satisfaction of the Trustee and shall promptly mail to
each Securityholder a notice within 10 days of fixing or causing to be fixed
such special record date that states the special record date (which shall not be
more than 20 days from the interest payment date applicable thereto), the
payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Securities may
-------------
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
--------
however, that any such notice may state that no representation is made as to the
- -------
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
will promptly notify the Trustee of any change in CUSIP numbers.
SECTION 2.13. ISSUANCE OF ADDITIONAL SECURITIES. The Company shall be
---------------------------------
entitled, subject to its compliance with Section 4.03, to issue Additional
Securities under this Indenture which shall have identical terms as the Initial
Securities issued on the Issue Date, other than with respect to the date of
issuance, issue price and amount of interest payable on the first payment date
applicable thereto (and, if such Additional Securities shall be issued in the
form of Exchange Securities, other than with respect to transfer restrictions).
The Initial Securities issued on the Issue Date, any Additional Securities and
all Exchange Securities or Private Exchange Securities issued in exchange
therefor shall be treated as a single class of securities for all purposes under
this Indenture.
With respect to any Additional Securities, the Company shall set forth
in a resolution of the Board of Directors and an Officers' Certificate, a copy
of each which shall be delivered to the Trustee, the following information:
35
(1) the aggregate principal amount of such Additional Securities to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number of such Additional
Securities and the amount of interest payable on the first payment date
applicable thereto; provided, however, that no Additional Securities
-------- -------
may be issued at a price that would cause such Additional Securities to
have "original issue discount" within the meaning of Section 1273 of
the Code; and
(3) whether such Additional Securities shall be transfer restricted
securities and issued in the form of Initial Securities or shall be
issued in the form of Exchange Securities as set forth in the Appendix.
ARTICLE III
REDEMPTION
----------
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem
------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
shall occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption shall comply with the conditions herein.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than
--------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed in accordance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed, or if the
Securities are not so listed, on a pro rata basis, by lot or by a method as the
Trustee in its sole discretion shall deem to be fair and appropriate. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000.
36
Securities and portions of them the Trustee selects shall be in amounts of
$1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more
--------------------
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address, which notice shall also be given
to the Trustee.
The notice shall identify the Securities (including CUSIP numbers) to
be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption payment or
the Paying Agent is prohibited from making such payment pursuant to the
terms of this Indenture, interest on Securities (or portions thereof)
called for redemption ceases to accrue on and after the redemption
date; and
(7) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of redemp-
tion in the Company's name and at the Company's expense. In such event, the
Company shall provide the Trustee with the information required by this Section.
37
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
----
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to the
---------------------------
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to
the Trustee for cancellation.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
---------------------------
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
---------
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly pay
---------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate, in each case, to the extent lawful.
38
SECTION 4.02. SEC REPORTS. Whether or not subject to the reporting
-----------
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC (unless such filing is not permitted under the Exchange Act) within
the time periods specified in the SEC's rules and regulations and provide the
Trustee and the Securityholders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections and
make such information available to securities analysts and prospective investors
upon request. The Company also shall comply with the other provisions of TIA
(S) 314(a).
Delivery of such SEC reports and information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company will not,
--------------------------
and will not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness; provided, however, that the Company or any Restricted
Subsidiary may Incur Indebtedness if, on the date of such Incurrence and after
giving effect thereto on a pro forma basis, the Consolidated Coverage Ratio
would be equal to or greater than 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Company and the Restricted
Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by the Company or any Restricted Subsidiary
pursuant to the New Credit Facility; provided, however, that, after
giving effect to any such Incurrence, the aggregate principal amount of
such Indebtedness then outstanding does not exceed the greater of (x)
$375 million and (y) an amount equal to the sum of (i) 80% of the
consolidated book value of the net accounts receivable that are owned
by the Company or any of its Restricted Subsidiaries as of the most
recently ended fiscal quarter for which financial statements are
available, plus (ii) 60% of the consolidated book value of the
inventory owned by the Company or any of its Restricted Subsidiaries as
of such date, all as calculated on a consolidated basis and in
accordance with GAAP;
39
(2) Indebtedness Incurred by any Foreign Restricted Subsidiary; provided,
however, that, after giving effect to any such Incurrence, the
aggregate principal amount of such Indebtedness then outstanding does
not exceed $50 million;
(3) Indebtedness owed to and held by the Company or any Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or
transfer of any Capital Stock which results in any such Restricted Sub-
sidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness and (B) if the Company is the
obligor on such Indebted ness, the payment of such Indebtedness is
expressly subordinate to the prior payment in full in cash of all
obligations with respect to the Securities;
(4) the Securities and the Exchange Securities (other than Additional
Securities) and the Subsidiary Guarantees (other than in respect of
Additional Securities);
(5) Indebtedness (other than the Indebtedness described in clauses (1),
(2), (3) or (4) above) outstanding on the Issue Date;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
to paragraph (a) above or pursuant to clause (4) or (5) of this
covenant, or this clause (6); provided, however, that if such
Refinancing Indebtedness directly or indirectly Refinances Indebtedness
of a Restricted Subsidiary, such Refinancing Indebtedness shall be
Incurred only by such Restricted Subsidiary;
(7) Hedging Obligations directly related to Indebtedness permitted to be
Incurred by the Company pursuant to the Indenture;
(8) Indebtedness, including Capitalized Lease Obligations and purchase
money Indebtedness, Incurred by the Company or its Restricted Subsid-
iaries to finance the acquisition of tangible assets (or of any Person
owning tangible assets) or other capital expenditures, and Indebtedness
Incurred by the Company or its Restricted Subsidiaries to Refinance
such Capitalized Lease Obligations and purchase money Indebtedness, in
40
an aggregate outstanding principal amount which, when added together
with the amount of Indebtedness Incurred pursuant to this clause (8)
and then outstanding, does not exceed $35 million at any time;
(9) Indebtedness arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from guarantees
or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in each case incurred in connection with
the acquisition or disposition of any business or assets or
subsidiaries of the Company permitted by this Indenture;
(10)Indebtedness in respect of performance bonds, bankers' acceptance and
surety or appeal bonds provided by the Company or any of its Restricted
Subsidiaries in the ordinary course of business;
(11)any Guarantee by: (x) the Company of Indebtedness or other obligations
of any of the Restricted Subsidiaries and (y) any Subsidiary Guarantor
of Indebtedness or other obligations of the Company; provided, that in
each case such Indebtedness is incurred in accordance with the terms of
this Indenture; and
(12)Indebtedness of the Company in an aggregate principal amount which,
together with all other Indebtedness of the Company outstanding on the
date of such Incurrence (other than Indebtedness permitted by clauses
(1) through (11) above or paragraph (a) above), does not exceed $35
million.
(c) Notwithstanding the foregoing, the Company or any Restricted Subsidiary
shall not Incur any Indebtedness pursuant to the foregoing paragraph (b) if the
proceeds thereof are used, directly or indirectly, to refinance any Subordinated
Obligations, unless such Indebtedness shall be subordinated to the Securities to
at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (1) in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described above, the Company, in its sole discretion, will
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of the above clauses and (2) an item of
Indebtedness may be divided and classified under more than one of the types of
Indebtedness described above.
41
(e) Notwithstanding Sections 4.03(a) and 4.03(b), the Company shall not Incur
any Indebtedness if such Indebtedness is contractually subordinate or junior in
right of payment in any respect to any Senior Indebtedness, unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness.
(f) Notwithstanding Sections 4.03(a) and 4.03(b), no Subsidiary Guarantor shall
Incur any Indebtedness if such Indebtedness is contractually subordinate or
junior in right of payment in any respect to any Senior Indebtedness, unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company
-----------------------------------------------
will not, and will not permit any Restricted Subsidiary, directly or indirectly,
to make a Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result there-
from);
(2) the Company is not able to Incur an additional $1.00 of Indebtedness
pursuant to Section 4.03(a) after giving pro forma effect to such
Restricted Payment; or
(3) the aggregate amount of such Restricted Payment and all other Re-
stricted Payments made since the Issue Date would exceed the sum of
(without duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal quarter
in which the Issue Date occurs to the end of the most recent fiscal quarter
prior to the date of such Restricted Payment for which consolidated
income statements of the Company are available (or, in case such
Consolidated Net Income is a deficit, less 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds and the fair market
value of any securities or property (as determined by the Board of
Directors in good faith) received by the Company from the issuance or
42
sale of its Capital Stock (other than Disqualified Stock) subsequent
to the Issue Date and on or prior to the date of such Restricted
Payment (other than an issuance or sale to a Subsidiary of the Company
or an issuance or sale to an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the
benefit of their employees if the cash used by such plan or trust to
purchase such Capital Stock was borrowed, directly or indirectly, from
the Company or a Restricted Subsidiary); plus
(C) the amount by which the Indebtedness of the Company or any
Restricted Subsidiary is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date and on or prior to the date of such Restricted
Payment of any Indebtedness of the Company or any Restricted Subsidiary
convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the fair value of
any other property, distributed by the Company or any Restricted Subsidiary
upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the net reduction in
Investments in Unrestricted Subsidiaries made after the Issue Date and
Investments made after the Issue Date in other Persons constituting a Re-
stricted Payment resulting from dividends, repayments of loans or advances
or other transfers of assets, in each case to the Company or any Restricted
Subsidiary from such Unrestricted Subsidiaries or other Persons or received
by the Company or any Restricted Subsidiary from the disposition of such
Investment and (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
an Unrestricted Subsidiary (other than Unrestricted Subsidiaries referred
to in clause (1) of the definition thereof, except to the extent of
Investments made in such Unrestricted Subsidiaries after the Issue Date)
at the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary or such other Person at the time such other Person becomes a
Restricted Subsidiary; provided, however, that the foregoing sum shall not
exceed the aggregate amount of Investments previously made (and treated as
a Restricted Payment) by the Company or any Restricted Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
43
(1) any acquisition of any Capital Stock of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other
than Capital Stock issued or sold to a Subsidiary of the Company) or
options, warrants or other rights to purchase such Capital Stock;
provided, however, that (A) such acquisition shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from Section 4.03(a)(3)(B) to
the extent utilized to acquire any Capital Stock of the Company;
(2) any purchase, repurchase, redemption, defeasance or acquisition or
retirement of Subordinated Obligations made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company) or options, warrants or
other rights to purchase such Capital Stock or Subordinated
Obligations; provided, however, that (A) such purchase, repurchase,
redemption, defeasance or acquisition or retirement shall be excluded
in the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale shall be excluded from Section
4.04(a)(3)(B) above to the extent utilized to purchase, repurchase,
redeem, defease, acquire or retire Subordinated Obligations;
(3) any purchase or redemption of Subordinated Obligations made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred pursuant
to Section 4.03; provided, however, that such Indebtedness (A) shall
have a Stated Maturity not less than the Stated Maturity of the
Subordinated Obligations being purchased or redeemed and (B) shall have
an Average Life not less than the remaining Average Life of the
Subordinated Obligations being purchased or redeemed; provided further,
however, that such purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(4) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided,
44
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(5) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividend would have complied with this
covenant; provided, however, that the declaration, but not the payment,
of such dividend shall be included in the calculation of the amount of
Restricted Payments;
(6) so long as no Default shall have occurred and be continuing (or result
therefrom), payments with respect to employee or director stock
options, stock incentive plans or restricted stock plans of the Company
or any Restricted Subsidiary, including any redemption, repurchase,
acquisition, cancellation or other retirement for value of shares of
Capital Stock of the Company, restricted stock, options on any such
shares or similar securities held by directors, officers or employees
or former directors, officers or employees or by any Plan upon death,
disability, retirement or termination of employment of any such person
pursuant to the terms of any such Plan, any employment agreement or any
other agreement under which such shares or related rights were issued
or acquired; provided, however, that the amount of any such payment for
any 12-month period shall not exceed $1 million; provided, further,
however, that the amount of such Investments shall be excluded in the
calculation of Restricted Payments;
(7) so long as no Default shall have occurred and be continuing (or result
therefrom), any purchase or defeasance of Subordinated Obligations upon
a Change of Control or an Asset Disposition to the extent required by
the indenture or other agreement or instrument pursuant to which such
Subordinated Obligations were issued, but only if the Company (A) in
the case of a Change of Control, has first complied with its obliga-
tions under Section 4.09, or (B) in the case of an Asset Disposition,
has complied with its obligations under Section 4.06;
(8) any purchase, repurchase, redemption, defeasance or acquisition or
retirement of Disqualified Stock made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Disqualified Stock of
the Company (other than Disqualified Stock issued or sold to a
Subsidiary of
45
the Company) ("Refinancing Disqualified Stock"); provided, however,
that:
(A) the Refinancing Disqualified Stock does not mature or become
mandatorily redeemable or subject to purchase pursuant to a sinking
fund obligation, upon the occurrence of certain events or otherwise
earlier than the Disqualified Capital Stock being purchased,
repurchased, redeemed, defeased or acquired;
(B) the amount of all obligations with respect to the redemp
tion, repayment or other repurchase of such Refinancing Disqualified
Stock does not exceed the amount of all obligations with respect to
the redemption, repayment or other repurchase of the Disqualified
Capital Stock being purchased, repurchased, redeemed, defeased or
acquired (calculated in each case in accordance with the definition of
"Indebted ness"); and
(C) if the Disqualified Stock being purchased, repurchased,
redeemed, defeased, acquired or retired is issued by a Restricted
Subsidiary, such Refinancing Disqualified Stock shall be issued only
by such Restricted Subsidiary; or
(9) so long as no Default shall have occurred and be continuing (or result
therefrom), Restricted Payments in an aggregate amount not to exceed
$50 million; provided, however, that the amount of such Restricted
Payments shall be included in the calculation of Restricted Payments.
SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
-------------------------------------------------
RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any
- -----------------------
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness or other obligations owed to the Company or a Restricted
Subsidiary, (b) make any loans or advances to the Company or any Restricted
Subsidiary or (c) transfer any of its property or assets to the Company or any
Restricted Subsidiary (collectively "Payment Restrictions"), except:
46
(1) any Payment Restriction imposed by or pursuant to the New Credit
Facility, the Indenture, the Securities and any agreement in effect at
or entered into on the Issue Date;
(2) any Payment Restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary became
a Subsidiary of, or was acquired by, the Company) and outstanding on
such date;
(3) any Payment Restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred
to in Section 4.05(1) or (2) or this clause (3) or contained in any
amendment to an agreement referred to in Section 4.05(1) or (2) or this
clause (3); provided, however, that the Payment Restrictions with
respect to such Restricted Subsidiary contained in any such refinancing
agreement or amendment are no less favorable to the holders of the
Securities than those with respect to such Restricted Subsidiary
contained in such predecessor agreements;
(4) any Payment Restrictions imposed by purchase money Indebtedness for
property acquired in the ordinary course of business that only impose
limitations upon the property acquired or proceeds therefrom;
(5) in the case of Section 4.03(c) above, any encumbrance or Payment
Restriction consisting of (i) customary non-assignment provisions in
leases governing leasehold interests to the extent such provisions
restrict the transfer of the lease or the property leased thereunder
and (ii) customary non-assignment provisions of any contract or
licensing agreement;
(6) any Payment Restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of
all or any material portion of the Capital Stock or assets of such
Restricted Subsidiary;
47
(7) any Payment Restriction imposed by the terms of Indebtedness permitted
to be incurred by a Foreign Restricted Subsidiary pursuant to Section
4.03(b)(2); and
(8) any Payment Restriction imposed by applicable law or governmental
regulation.
SECTION 4.06. LIMITATION ON ASSET DISPOSITIONS. (a) The Company will
--------------------------------
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless
(1) the Company or such Restricted Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value
(including as to the value of all non-cash consideration) of the shares
and assets subject to such Asset Disposition (and if the total proceeds
of such sale is greater than $7 million, such transaction shall have
been approved by the Board of Directors);
(2) at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash or Fully Traded
Common Stock; provided, however, that to the extent that any Fully
Traded Common Stock is received pursuant to such Asset Disposition and
required to satisfy the 75% requirement of this subsection 4.06(a)(2),
the fair market value of such Fully Traded Common Stock as of the date
of disposition shall be treated as Net Available Cash for all purposes
of this Section 4.06; and
(3)an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be)
(A) first, to the extent the Company or such Restricted Subsid-
iary elects (or is required by the terms of any Senior Indebtedness) to
prepay, repay or purchase Senior Indebtedness (other than any Preferred
and Disqualified Stock) (in each case other than Indebtedness owed to
the Company or an Affiliate of the Company) within 270 days from the
later of the date of such Asset Disposition or the receipt of such Net
Available Cash; provided, however, that if such prepaid, repaid or
purchased Senior Indebtedness was Incurred pursuant to a revolver or
48
similar arrangement that makes credit available, the commitment there-
fore is permanently reduced by such amount;
(B) second, to the extent of the balance of such Net Available
Cash after application in accordance with clause (A), to the extent the
Company or such Restricted Subsidiary elects, to acquire Additional
Assets within 270 days from the later of such Asset Disposition or the
receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and (B), to make
an offer to the holders of the Securities (and, to the extent required
by the instrument governing such Indebtedness, to holders of other
Senior Subordinated Indebtedness designated by the Company) to purchase
Securities (and such other Senior Subordinated Indebtedness) pursuant
to and subject to the conditions contained in this Indenture; and
(D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and (C), for
any purpose not prohibited by the terms of this Indenture.
For the purposes of this Section 4.06, the following shall be deemed
to be cash: (x) the assumption of Indebtedness of the Company (other than
Preferred Stock and Subordinated Obligations of the Company) or any Restricted
Subsidiary and the release of the Company or such Restricted Subsidiary from all
liability with respect to such Indebtedness in connection with such Asset
Disposition, provided, that the amount of such Indebtedness shall not be deemed
to be cash for the purpose of the term "Net Available Cash;" and (y) securities
received by the Company or any Restricted Subsidiary from the transferee that
are converted by the Company or such Restricted Subsidiary into cash within 90
days or are guaranteed (by means of a letter of credit or otherwise) by an
institution specified in the definition of "Temporary Cash Investments."
(b) In the event of an Asset Disposition that requires the purchase of the
Securities (and other Senior Subordinated Indebtedness) pursuant to Section
4.06(a)(3)(C) above, the Company shall purchase Securities tendered pursuant to
an offer (the "Offer") by the Company for the Securities (and other Senior
Subordinated Indebtedness) at a purchase price of 100% of their principal amount
(without premium) plus accrued but unpaid interest (or, in respect of such other
Senior Subordinated Indebtedness, such lesser
49
price, if any, as may be provided for by the terms of such Senior Subordinated
Indebt edness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of Securities (and any other Senior Subordinated Indebtedness)
tendered pursuant to such Offer is less than the Net Available Cash allotted to
the purchase thereof, the Company will be entitled to apply the remaining Net
Available Cash in accordance with Section 4.06(a)(3)(D) above. The Company shall
not be required to make such an Offer to purchase Securities (and other Senior
Subordinated Indebtedness) pursuant to this Section 4.06 if the Net Available
Cash available therefor (after application of Net Available Cash in accordance
with Section 4.06(a)(3)(A) and (B)) is less than $20 million (which lesser
amount shall be carried forward for purposes of determining whether such an
Offer is required with respect to any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company becomes
obli gated to make an Offer, the Company shall be obligated to deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as hereinafter described in the event
the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes shall enable such
Holders to make an informed decision (which at a minimum shall include (i) the
most recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports) and (ii) if material, appropriate pro forma
financial information).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with Section 4.06(a).
(3) Holders shall be entitled to withdraw their election to have a
Security purchased if the Trustee or the Company receives not later than one
Business
50
Day prior to the Purchase Date, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. If at the expiration of the period for
which the Offer remains open the aggregate principal amount of Securities (and
any other Senior Subordinated Indebtedness included in the Offer) surrendered by
holders thereof exceeds the Offer Amount, the Company shall select the
Securities and the other Senior Subordinated Indebtedness to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities and the other Senior Subordinated Indebtedness
in denominations of $1,000, or integral multiples thereof, shall be purchased).
(d) The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of the Securities pursuant to this covenant. To
the extent that the provisions of any securities laws or regulations conflict
with provisions of this covenant, the Company will comply with the applicable
securities laws and regulations under this clause by virtue thereof.
SECTION 4.07. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company
------------------------------------
will not, and will not permit any Restricted Subsidiary to enter into or permit
to exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any Affiliate of the Company (an "Affiliate Transaction") unless
(1) the Affiliate Transaction is made in (A) good faith and (B) on terms
which are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be;
(2) if such Affiliate Transaction involves an amount in excess of $5
million, the terms of the Affiliate Transaction are set forth in
writing and a majority of the non-employee directors of the Company
disinterested with respect to such Affiliate Transactions have
determined in good faith that the criteria set forth in subsection
4.07(a)(1)(B) are satisfied and have approved the relevant Affiliate
Transaction as evidenced by a Board Resolution; and
(3) if such Affiliate Transaction involves an amount in excess of $15 mil-
lion, the Board of Directors shall also have received a written opinion
51
from an investment banking firm, an accounting firm or an appraisal
firm of national prominence, with experience in evaluating the terms
and conditions of such type of business or transactions that is not an
Affiliate of the Company to the effect that such Affiliate Transaction
is fair from a financial point of view, to the Company and its
Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) shall not prohibit:
(1) any Permitted Investment and any Restricted Payment permitted to be
paid pursuant to Section 4.04;
(2) any issuance of securities, or other payments, awards, or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the disinterested members of the Board of Directors;
(3) the payment of reasonable fees to directors of the Company and its
Restricted Subsidiaries (including, without limitation, customary
directors' fees, indemnification and similar arrangements, consulting
fees and incentive arrangements);
(4) the grant of stock options or similar rights to employees and directors
of the Company pursuant to plans approved by the disinterested members
of the Board of Directors;
(5) transactions in the ordinary course of business (including expense
advances and reimbursements) between the Company or any of its
Restricted Subsidiaries, on the one hand, and any employee thereof, on
the other hand;
(6) the granting and performance of registration rights for shares of
Capital Stock of the Company under a written registration rights
agreement approved by a majority of directors of the Company that are
disinterested with respect to such transactions;
(7) transactions with Affiliates solely in their capacity as holders of
Indebtedness or Capital Stock of the Company or any of its
Subsidiaries where such Affiliates are treated no more favorably than
holders of such Indebtedness or such Capital Stock generally;
52
(8) transactions with or among the Company and a Restricted Subsidiary or
between or among Restricted Subsidiaries;
(9) transactions undertaken pursuant to any arrangements in existence on
and publicly disclosed on or prior to the Issue Date, as such
arrangements may be amended or restated, renewed, extended, refinanced,
refunded or replaced from time to time; provided that such amendment or
restatement, renewal, extension, refinancing, refunding or replacement
shall be on terms and conditions that are no less favorable to the Com-
pany or any of its Restricted Subsidiaries, which, if determined by a
majority of the disinterested members of the Board of Directors shall
be conclusive; and
(10)the repurchase of Capital Stock of the Company from directors, officers
or employees of the Company or any Subsidiary permitted by Section
4.04.
SECTION 4.08. [INTENTIONALLY OMITTED]
---------------------
SECTION 4.09. CHANGE OF CONTROL. (a) Upon the occurrence of a Change
-----------------
of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest on the relevant interest payment date), in
accordance with the terms provided in Section 4.09(b). In the event that at the
time of such Change of Control the terms of the Senior Indebtedness of the
Company restrict or prohibit the purchase of Securities pursuant to this
Section, then prior to the mailing of the notice to Holders provided for in
Section 4.09(b) below but in any event within 30 days following any Change of
Control, the Company shall (1) repay in full all such Senior Indebtedness or
offer to repay in full all such Senior Indebtedness and repay such Senior
Indebtedness of each lender who has accepted such offer or (2) obtain the
requisite consent under the agreements governing such Senior Indebtedness to
permit the purchase of the Securities as provided for in Section 4.09(b).
(b) Within 30 days following any Change of Control, unless notice of redemption
of the Securities has been given pursuant to Section 3.03, the Company shall
mail a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
53
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date
to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income,
cash flow and capitalization, after giving effect to such Change of
Control);
(3) the repurchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company and reasonably acceptable to
the Trustee, consistent with this Section, that a Holder must follow in
order to have its Securities purchased.
(c) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date, a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under this
Section shall be delivered to the Trustee for cancellation, and the Company
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the Company shall
not be required to make a Change of Control Offer following a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Section
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
54
(f) The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.10. LIMITATION ON BUSINESS ACTIVITIES.
---------------------------------
The Company will not, and will not permit any Restricted Subsidiary to, engage
in any business other than Permitted Businesses.
SECTION 4.11. LIMITATION ON LIENS SECURING SUBORDINATED INDEBTEDNESS.
-------------------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary to, create,
Incur, assume or suffer to exist any Liens of any kind (other than Permitted
Liens) upon any of their respective assets or properties now owned or acquired
after the date of this Indenture or any income or profits therefrom securing (i)
any Indebtedness of the Company or a Restricted Subsidiary which is
contractually subordinated to any other Indebtedness of the Company or such
Restricted Subsidiary, as the case may be, unless the Securities or the relevant
Subsidiary Guarantee, as the case may be, are equally and ratably secured for so
long as such Indebtedness is so secured; provided that, if such Indebtedness
which is expressly by its terms subordinate or junior in right of payment to any
other Indebtedness of the Company or a Restricted Subsidiary is expressly
subordinate or junior to the Securities or the relevant Subsidiary Guarantee, as
the case may be, then the Lien securing such subordinated or junior Indebtedness
shall be subordinate and junior to the Lien securing the Securities or the
relevant Subsidiary Guarantee, as the case may be, with the same relative
priority as such subordinated or junior Indebtedness shall have with respect to
the Securities or the relevant Subsidiary Guarantee, as the case may be or (ii)
any assumption, guarantee or other liability of the Company or any Restricted
Subsidiary in respect of any Indebtedness of the Company or a Restricted
Subsidiary which is contractually subordinated to any other Indebtedness of the
Company or such Restricted Subsidiary, as the case may be, unless the Securities
or the relevant Subsidiary Guarantee, as the case may be, are equally and
ratably secured for so long as such assumption, guarantee or other liability is
so secured; provided that, if such subordinated Indebtedness which is
contractually subordinated to any other Indebtedness of the Company or a
Restricted Subsidiary is expressly by its terms subordinate or junior to the
Securities or the relevant Subsidiary Guarantee, as the case may be, then the
Lien securing
55
the assumption, guarantee or other liability of such Subsidiary shall be
subordinate and junior to the Lien securing the Securities or the relevant
Subsidiary Guarantee, as the case may be, with the same relative priority as
such subordinated or junior Indebtedness shall have with respect to the
Securities or the relevant Subsidiary Guarantee, as the case may be.
SECTION 4.12. COMPLIANCE CERTIFICATE. The Company shall deliver to
----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signers of which shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with TIA (S) 314(a)(4).
SECTION 4.13. MAINTENANCE OF OFFICE OR AGENCY.
-------------------------------
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13.02.
SECTION 4.14. CORPORATE EXISTENCE.
-------------------
Except as otherwise permitted by Article V, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each of them (as the same may be amended
from time to time) and the material rights (charter and statutory) and
franchises of the Company and each such Restricted Subsidiary; provided,
however, that neither the Company nor any Restricted Subsidiary shall be
required to preserve any right or franchise, or the corporate, partnership or
other existence of any Restricted Subsidiary, if the Board of Directors of the
Company shall reasonably determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole.
SECTION 4.15. PAYMENT OF TAXES AND OTHER CLAIMS.
---------------------------------
56
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Restricted
Subsidiaries or properties of it or any of its Restricted Subsidiaries and (ii)
all lawful claims for labor, materials and supplies that, if unpaid, might by
law become a Lien upon the property of it or any of its Restricted Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently conducted for which
reserves, to the extent required under and in accordance with GAAP, have been
taken.
SECTION 4.16. MAINTENANCE OF PROPERTIES AND INSURANCE.
----------------------------------------
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its material properties in good working order and
condition (subject to ordinary wear and tear) and make all necessary repairs,
renewals, replace ments, additions, betterments and improvements thereto and
actively conduct and carry on its business; provided, however, that nothing in
this Section 4.16 shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is, in the reasonable good faith judgment of
the Company or the Restricted Subsidiary, as the case may be, desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole.
(b) The Company shall provide or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including reasonably appropriate
self-insurance consistent with past practice or the practice of companies
similarly situated in the industry) against loss or damage of the kinds that, in
the good faith judgment of the Board of Directors of the Company, are adequate
and appropriate for the conduct of the business of the Company and such
Restricted Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall
be customary, in the reasonable good faith judgment of the Board of Directors of
the Company, for companies similarly situated in the industry.
57
SECTION 4.17. COMPLIANCE WITH LAWS.
--------------------
The Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Restricted Subsidiaries, taken
as a whole.
SECTION 4.18. FURTHER INSTRUMENTS AND ACTS. Upon request of the
----------------------------
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.19. FUTURE GUARANTORS. The Company will not permit any
-----------------
Restricted Subsidiary that is not a Subsidiary Guarantor to Guarantee any other
Indebtedness of the Company or any Subsidiary Guarantor unless such Restricted
Subsidiary simultaneously executes a supplemental indenture to this Indenture
provid ing for the Guarantee of the payment of the Securities by such
Restricted Subsidiary, which Guarantee of the payment of the Securities shall be
subordinated to the Guarantee of such other Indebtedness to the same extent as
the Securities or the Subsidiary Guarantees, as applicable, are subordinated to
such other Indebtedness. Such Restricted Subsidiary shall be deemed released
from its obligations under the Guarantee of the payment of the Securities at any
such time that such Restricted Subsidiary is released from all of its
obligations under its Guarantee of such other Indebtedness unless such release
results from the payment under such Guarantee of other Indebtedness.
ARTICLE V
MERGER AND CONSOLIDATION
------------------------
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. The Company
-----------------------------------------
will not consolidate with or merge with or into, or convey, transfer or lease,
in one transaction or a series of transactions, all or substantially all its
58
assets (determined on a consolidated basis for the Company and its Restricted
Subsidiaries) to, any other Person, unless:
(1) the resulting, surviving or transferee Person, if other than the
Company (the "Successor Company"), shall be organized and
existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Securities and this
Indenture (and the Subsidiary Guarantees shall be confirmed as
applying to such Person's obligations);
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the
Company or the Successor Company, as applicable, or any
Subsidiary as a result of such transaction as having been
Incurred by the Company or the Successor Company or such
Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental inden
ture (if any) comply with this Indenture.
Nothing contained in clause (3) of this Section 5.01 shall prohibit
(i) any Restricted Subsidiary from consolidating with, merging with or into, or
transferring all or part of its properties and assets to the Company or (ii) the
Company from merging with an Affiliate for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits; provided,
however, that in connection with any such merger, consolidation or asset
transfer no consideration, other than common stock in the Successor Company or
the Company shall be issued or distributed.
59
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
SECTION 5.02. WHEN A SUBSIDIARY GUARANTOR MAY MERGE OR TRANSFER
-------------------------------------------------
ASSETS. The Company will not permit any Subsidiary Guarantor to consolidate with
or merge with or into, or convey, transfer or lease, in one transaction or a
series of transactions, all or substantially all its assets to, any other
Person, unless:
(1) the resulting, surviving or transferee Person (if not such
Subsidiary Guarantor) (the "Successor Guarantor"), shall be
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by executing a Subsidiary Guarantee, all the
obligations of such Subsidiary, if any, under its Subsidiary
Guarantee;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as
having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the Company
would be able to Incur an additional $1.00 of Indebtedness
pursuant to Section 4.03(a); and
(4) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such Subsidiary Guarantee, if any,
complies with the Indenture.
The provisions of clauses (1), (2) and (3) of this Section 5.02 shall
not apply to any one or more transactions which constitute an Asset Disposition
if the Company has complied with the applicable provisions of Section 4.06
above.
60
The Successor Guarantor shall succeed to, and be substituted for, and
may exercise every right and power of, such Subsidiary Guarantor under this
Indenture, and the predecessor Subsidiary Guarantor, in the case of a
conveyance, transfer or lease, shall be released from the obligations of this
Indenture, the Securities and its Subsidiary Guarantee, including the obligation
to pay the principal of and interest on the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
---------------------
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
-----------------
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon acceleration or other
wise, whether or not such payment shall be prohibited by Article
X or (ii) fails to purchase Securities when required pursuant to
this Indenture or the Securities, whether or not such purchase
shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.01 or Section 5.02;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.09, 4.10 or 4.19 (other than a failure to purchase
Securities when required under Section 4.06 or 4.09) and such
failure continues for 30 days after receipt of the notice
specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues
for 60 days after receipt of the notice specified below;
61
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated
exceeds $10 million;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsid-
iary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of $10
million is entered against the Company or a Significant
62
Subsidiary, remains outstanding for a period of 60 days
following the entry of such judgment or decree and is not
discharged, waived or stayed within 20 days after the notice
specified below; or
(10) any Subsidiary Guarantee by a Significant Subsidiary ceases to
be in full force and effect or becomes unenforceable or invalid
or is declared null and void (other than in accordance with the
terms of the Subsidiary Guarantee) or any Subsidiary Guarantor
that is a Significant Subsidiary denies or disaffirms its
obligations under its Subsidiary Guarantee.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
------------------
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clauses (4), (5), (6), (7) and (8) (with respect to a
Significant Subsidiary) or (9) is not an Event of Default until the Trustee or
the holders of at least 25% in principal amount of the outstanding Securities
notify the Company in writing of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (4),
(5) or (9), its status and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an
------------
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company
63
and the Trustee, may declare the principal of and accrued but unpaid interest on
all the Securities to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs
and is continuing, the principal of and interest on all the Securities shall
ipso facto become and be immediately due and payable without any declaration or
- ---- -----
other act on the part of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
Notwithstanding the foregoing, in the event of a declaration of
acceleration in respect of the Securities because an Event of Default
specified in Section 6.01 (6) above shall have occurred and be continuing, such
declaration of acceleration of the Securities and such Event of Default shall be
automatically annulled and rescinded and be of no further effect if the
Indebtedness that is the subject of such Event of Default has been discharged or
paid in full or such Event of Default shall have been cured or waived by the
holders of such Indebtedness and if such Indebtedness has been accelerated,
then the holders thereof have rescinded their declaration of acceleration in
respect of such Indebtedness and written notice of such discharge, cure or
waiver and rescis sion, as the case may be, shall have been given to the
Trustee within 30 days after such declaration of acceleration in respect of the
Securities by the Company in an Officers' Certificate or by the requisite
holders of such Indebtedness or a trustee, fiduciary or agent for such holders
or other evidence satisfactory to the Trustee of such events is provided to the
Trustee and no other Event of Default shall have occurred which has not been
cured or waived during such 30-day period.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or
64
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in
-----------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended, without, in each case, the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in
-------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to security or
indemnification reasonably satisfactory to it against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to
--------------------
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an Event of
Default is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
65
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default
--------------------------
specified in Section 6.01(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 for the whole amount then due and owing (together with interest on any
unpaid interest at the rate per annum borne by the Securities to the extent
lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents 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, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
----------
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
66
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the extent
required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
FOURTH: the balance, if any, to the Company.
The Trustee, upon written notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section. At
least 15 days before such record date, the Company shall mail to each
Securityholder and the Trustee a notice that states the record date, the payment
date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
---------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, 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 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXECUTION LAWS. The Company (to the
--------------------------------
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
execution law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
67
ARTICLE VII
TRUSTEE
-------
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture and no implied covenants
or obligations shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Trustee, 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 wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by
it pursu ant to Section 6.05.
68
(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 shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) All money received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) Subject to Section 7.01 hereof,
-----------------
the Trustee may conclusively 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. But the Trustee, in its
reasonable discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
69
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be deemed to have notice of any Default or
Event of Default, except in the case of an Event of Default under Section
6.01(1) and (2) if the Trustee is acting as the Paying Agent, unless and until a
Trust Officer of the Trustee receives written notice from the Company or any
Holder at the principal corporate trust office of the Trustee that such Default
or Event of Default has occurred.
(g) The rights, protections, immunities and benefits given to the
Trustee, including its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and to each
agent, custodian and other Person employed to act hereunder.
(h) The Trustee shall not be required to give any note, bond or
surety in respect of the execution of the trusts and powers under this
Indenture.
(i) The permissive rights of the Trustee to take any action enumer-
ated in this Indenture shall not be construed as a duty to take such action.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities or any money paid to the Company or upon
the Company's direction under any provision of this Indenture, and it shall not
be responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
70
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is
------------------
continuing and if it is actually known to the Trustee, the Trustee shall mail to
each Securityholder notice of the Default within 90 days after it occurs. Except
in the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is not opposed to the interests of Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
-----------------------------
practicable after each May 15 beginning with the May 15 following the date of
the first issuance of Securities under this Indenture, and in any event prior to
August 15 in each year, the Trustee shall mail to each Securityholder a brief
report dated as of May 15 that complies with TIA (S) 313(a). The Trustee also
shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to
--------------------------
the Trustee from time to time such compensation as shall be agreed in writing
between the Company and the Trustee for its services. The Trustee's compensa
tion 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 and advances incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee and any predecessor Trustee against any and all
loss, damage, claim, liability or expense (including attorneys' fees) incurred
by it in connection with the acceptance or administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim (whether asserted by the Company, any Holder or any other
Person) for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee may have separate counsel and the Company
shall pay the 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.
71
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own wilful
misconduct, negligence or bad faith. The Trustee in its capacity as Registrar
and Paying Agent and the officers, directors, shareholders, agents and employees
of the Trustee, acting in any capacity hereunder, shall have the full benefit of
the foregoing indemnity as well as all other benefits, rights and privileges
accorded to the Trustee in this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Indenture shall not be
subordinated to any other indebtedness of the Company, and the Securities shall
be subordinate to the Trustee's rights to receive such payment.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any
----------------------
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for
72
any reason (the Trustee in such event being referred to herein as the retiring
Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the expense of the
Company, 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.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
--------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force
73
which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
-----------------------------
times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50.0 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
-------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
74
ARTICLE VII
DISCHARGE DEFEASANCE
--------------------
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. (a)
------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.09, 4.10, 4.11, 4.15, 4.16 and 4.19 (and any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Securities) and the operation of Sections 6.01(3),
6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) and the
limitations contained in Sections 5.01(3) and 5.02(3) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(3), 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but,
in the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Sections
5.01(3) and 5.02(3). If the Company exercises its legal defeasance option or
its covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations under its Subsidiary Guarantee.
75
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article VIII of the Indenture and in the Appendix shall survive until the
Securities have been paid in full. Thereafter, the Company's obligations in
Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may exercise its
------------------------
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal of and inter-
est on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion
that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment shall provide cash at such times and
in such amounts as shall be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 91 days pass after the deposit is made and during the 91-day period no
Default specified in Sections 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other agreement
binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel to the effect
that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the
Com-
76
pany has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture
there has been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Securityholders shall not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and shall be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders shall not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and shall
be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this
Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements satisfac-
tory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in
--------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S. Govern
ment Obligations through the Paying Agent and in accordance with this Indenture
to the payment of principal of and interest on the Securities. Money and
securities so held in trust are not subject to Article X.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent
--------------------
shall promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
77
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors and all liability of the Trustee or
Paying Agent with respect to such money shall thereupon cease.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall
------------------------------------
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
-------- -------
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS AND WAIVERS
----------------------
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee
--------------------------
may amend or supplement this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in place of
certificated Securities; provided, however, that the uncertificated
-------- -------
Securi-
78
ties are issued in registered form for purposes of Section
163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X that would limit or terminate the bene
fits available to any holder of Senior Indebtedness of the Company or
any Subsidiary Guarantor (or Representatives therefor) under Article X;
(5) to add guarantees with respect to the Securities, or to secure the
Securities;
(6) to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company;
(7) to comply with any requirements of the SEC in order to effect, or main-
tain the qualification of, this Indenture under the TIA; or
(8) to make any change that does not adversely affect in any material
respect the legal rights under this Indenture of any such
Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article X of any holder of Senior Indebtedness of the
Company or any Subsidiary Guarantor then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company and the Trustee
-----------------------
may amend or waive this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected
thereby, an amendment or waiver may not (with respect to any Securities held by
a non-consenting Holder):
79
(1) reduce the principal amount of Securities whose Holders must consent to
an amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security;
(3) reduce the principal of or extend the Stated Maturity of any Security;
(4) reduce the amount payable upon the redemption of any Security or change
the time at which any Security may be redeemed in accordance with
Article III;
(5) make any change to the terms of Article X (including related defini
tions) that would adversely affect the Holders of Securities;
(6) make any Security payable in money other than that stated in the
Security;
(7) make any change in Section 6.04 or 6.07 or this second sentence of
Section 9.02; or
(8) make any change in any Subsidiary Guarantee that would adversely affect
the Holders in any material respect.
It shall not be necessary for the consent of the Holders under this
Section or Section 9.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance
thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article X of any holder of Senior Indebtedness of the
Company or any Subsidiary Guarantor then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
80
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to
-----------------------------------
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation (inform and substance reasonably acceptable to the Company) on the
Security regarding the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any
--------------------------
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall
81
receive indemnity reasonably satisfactory to it, and (subject to Section 7.01)
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
ARTICLE X
SUBORDINATION
-------------
SECTION 10.01 AGREEMENT TO SUBORDINATE. The Company agrees, and each
------------------------
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article X, to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of such Senior Indebtedness. The Securities shall in all respects
rank pari passu with all other Senior Subordinated Indebtedness of the Company
---- -----
and only Indebtedness which is Senior Indebtedness shall rank senior to the
Securities in accordance with the provisions set forth herein. All provisions of
this Article X shall be subject to Section 10.12.
SECTION 10.02 LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment
------------------------------------
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive payment in
full of such Senior Indebtedness before Securityholders shall be
entitled to receive any payment of principal of or interest on the
Securities; and
(2) until such Senior Indebtedness is paid in full, any payment or
distribution to which Securityholders would be entitled but for this
Article X shall be made to holders of such Senior Indebtedness as their
interests may appear, except that Securityholders may receive shares of
Capital Stock and any debt securities that are subordinated to such
Senior Indebtedness to at least the same extent as the Securities.
SECTION 10.03 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not pay
------------------------------
the principal of or interest on the Securities or make any deposit
82
pursuant to Section 8.01 and may not repurchase, redeem or otherwise retire any
Securities (collectively, "pay the Securities") if (1) any Designated Senior
Indebtedness is not paid when due or (2) any other default on Designated Senior
Indebtedness occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has been rescinded or (y)
such Designated Senior Indebtedness has been paid in full; provided, however,
-------- -------
that the Company may pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of such Designated Senior Indebtedness. During the continuance of
any default (other than a default described in clause (1) or (2) of the
preceding sentence) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated either immediately without
further notice (except such notice as may be required to effect such
acceleration) or after the expira tion of any applicable grace periods, the
Company may not pay the Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Company and the Trustee of written notice (a
"Blockage Notice") of such default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (1) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice, (2) because the default giving rise to
such Blockage Notice is cured, waived or otherwise no longer continuing or (3)
because such Designated Senior Indebtedness has been discharged or repaid in
full). Notwithstanding the provisions described in the immediately preceding
sentence (but subject to the provisions contained in the first sentence of this
Section), unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, the Company may resume payments on the
Securities after termination of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period. For purposes of this Section, no default or event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Designated
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.
83
SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES. If payment of
--------------------------------------
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration. The Trustee shall give notice of
such acceleration, of which it has actual knowledge, to all holders of
Designated Senior Indebtedness. Prior to the Trustee's giving such notice, the
Company shall notify the Trustee of the name and address of any such holder of
Designated Senior Indebtedness.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
-----------------------------------
is made to Securityholders that because of this Article X should not have been
made to them, the Securityholders 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 and the Trustee shall not be liable to any holders of
Senior Indebtedness with respect thereto. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article X and no
implied covenants or obligations with respect to holders of Senior Indebtedness
shall be read into this Indenture against the Trustee.
SECTION 10.06. SUBROGATION. After all Senior Indebtedness is paid in
-----------
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. A distribution made under
this Article X to holders of such Senior Indebtedness which otherwise would have
been made to Securityholders is not, as between the Company and Securityholders,
a payment by the Company on such Senior Indebtedness.
SECTION 10.07. RELATIVE RIGHTS. This Article X defines the relative
---------------
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation of
the Company, which is absolute and unconditional, to pay principal of
and interest on the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to
Securityholders.
84
SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right
--------------------------------------------
of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
----------------------------------
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article X. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
--------
however, that, if an issue of Senior Indebtedness has a Representative, only the
- -------
Representative may give the notice.
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. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of such Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
-----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11. ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
---------------------------------------------------
RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Securities by
- -------------------
reason of any provision in this Article X shall not be construed as preventing
the occurrence of a Default. Nothing in this Article X shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or
85
the proceeds of U.S. Government Obligations held in trust under Article VIII by
the Trustee for the payment of principal of and interest on the Securities shall
not be subordinated to the prior payment of any Senior Indebtedness or subject
to the restrictions set forth in this Article X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness or any other creditor of the Company.
SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
------------------------
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (1) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (2) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the
Securityholders or (3) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of such Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article X. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article X, the Trustee may request such Person to furnish
evidence to the satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article X, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
-----------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
-------------------------------------------
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Senior Indebtedness and shall not be liable to any such holders if it
86
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article X or otherwise.
SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
----------------------------------------------
SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security
- ------------------------
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
GUARANTEES
SECTION 11.01 UNCONDITIONAL GUARANTEE. Each of the Subsidiary
-----------------------
Guarantors hereby unconditionally jointly and severally guarantees (such
guarantee to be referred to herein as the "Subsidiary Guarantee") to each Holder
of a Security authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, that: (i) the principal of and interest on the
Securities will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise and interest on
the overdue principal, if any, and interest on any interest, to the extent
lawful, of the Securities and all other obligations of the Company to the
Holders or the Trustee under the Indenture or the Securities will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, subject to any applicable grace period, whether at stated maturity, by
acceleration or otherwise.
Each Subsidiary Guarantor further agrees that, as between such Subsid-
iary Guarantor on one hand, and the Holders and the Trustee on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article VI for the purposes of the Subsidiary Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in
87
Article VI, such obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of the
Subsidiary Guaranty.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, 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, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each of the Subsidiary Guarantors hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that the Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
in the Subsidiary Guarantee. If any Securityholder or the Trustee is required by
any court or otherwise to return to the Company, any Subsidiary Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Company or any Subsidiary Guarantor, any amount paid by the Company or
such Subsidiary Guarantor to the Trustee or such Securityholder, the Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each of the Subsidiary Guarantors hereby agrees that, in the
event of default in the payment of principal (or premium, if any) or interest on
such Securities, whether at their Stated Maturity, by acceleration, called for
redemption, purchase or otherwise, legal proceedings may be instituted by the
Trustee on behalf of, or by, the Holder of such Securities, subject to the terms
and conditions set forth in this Indenture, directly against each of the
Subsidiary Guarantors to enforce the Subsidiary Guarantee without first
proceeding against the Company. Each Subsidiary Guarantor agrees that if, after
the occurrence and during the continuance of an Event of Default, the Trustee or
any Holders are prevented by applicable law from exercising their respective
rights to accelerate the maturity of the Securities, to collect interest on the
Securities, or to enforce any other right or remedy with respect to the
Securities, the Subsidiary Guarantors agree to pay to the Trustee for the
account of the Holders, upon demand therefor, the amount that would otherwise
have been due and payable had such rights and remedies been permitted to be
exercised by the Trustee or any of the Holders.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE. The obligations
--------------------------------------
of each Subsidiary Guarantor to the Holders of the Securities and to the Trustee
pursuant to the Subsidiary Guarantee and this Indenture are expressly
88
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness of such Subsidiary Guarantor, to the extent and in the
manner provided in Article XII.
SECTION 11.03. SEVERABILITY. In case any provision of the Subsidiary
------------
Guarantee shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.04. RELEASE OF SUBSIDIARY GUARANTOR FROM THE SUBSIDIARY
---------------------------------------------------
GUARANTEE. Upon the sale or disposition (whether by merger, stock purchase,
- ---------
asset sale or otherwise) of a Subsidiary Guarantor (or all of its assets) to an
entity which is not the Company or a Subsidiary or Affiliate of the Company and
which sale or disposition is otherwise in compliance with the terms of this
Indenture or pursuant to a foreclosure on the capital stock of such Subsidiary
Guarantor in accordance with the New Credit Facility, such Subsidiary
Guarantor shall be deemed released from all obligations under this Article XI
without any further action required on the part of the Trustee or any Holder.
In the event that the Company designates a Restricted Subsidiary as an
Unrestricted Subsidiary, subject to and in compliance with the terms and
provisions of this Indenture, such Subsidiary shall be deemed released from all
obligations under this Article XI without any further action required on the
part of the Trustee or any Holder.
The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section 11.04.
SECTION 11.05. LIMITATION ON AMOUNT GUARANTEED; CONTRIBUTION BY
------------------------------------------------
SUBSIDIARY GUARANTORS.
- ---------------------
(a) Anything contained in this Indenture or the Subsidiary Guaranty to the
contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter
defined) is determined by a court of competent jurisdiction to be applicable to
the obligations of any Subsidiary Guarantor under the Subsidiary Guarantee,
such obligations of such Subsidiary Guarantor under the Subsidiary Guarantee
shall be limited to a maximum aggregate amount equal to the largest amount that
would not render its obligations under the Subsidiary Guarantee subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving effect
to all other liabilities of such Subsidiary Guarantor, contingent or other-
89
wise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Subsidiary Guarantor (x) in respect
of intercompany Indebtedness to the Company or other Affiliates of the Company
to the extent that such Indebtedness would be discharged in an amount equal to
the amount paid by such Subsidiary Guarantor under the Subsidiary Guaranty and
(y) under any Guarantee of Subordinated Indebtedness which Guarantee contains a
limitation as to maximum amount similar to that set forth in this subsection
11.05(a), pursuant to which the liability of such Subsidiary Guarantor under the
Subsidiary Guarantee is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement, indemnification or contribution of
such Subsidiary Guarantor pursuant to applicable law or pursuant to the terms of
any agreement (including without limitation any such right of contribution under
subsection 11.05(b)).
(b) The Subsidiary Guarantors together desire to allocate among themselves in a
fair and equitable manner, their obligations arising under the Subsidiary
Guarantee. Accordingly, if any payment or distribution is made on any date by
any Subsidiary Guarantor under the Subsidiary Guarantee (a "Funding Subsidiary
Guarantor") that exceeds its Fair Share (as defined below) as of such date, that
Funding Subsidiary Guarantor shall be entitled to a contribution from each of
the other Subsidiary Guarantors in the amount of such other Subsidiary
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Subsidiary Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Subsidiary Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Subsidiary Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all Subsidiary Guaran
tors, multiplied by (ii) the aggregate amount paid or distributed on or before
---------- --
such date by all Funding Subsidiary Guarantors under the Subsidiary Guarantee in
respect of the obligations guarantied. "Fair Share Shortfall" means, with
respect to a Subsidiary Guarantor as of any date of determination, the excess,
if any, of the Fair Share of such Subsidiary Guarantor over the Aggregate
Payments of such Subsidiary Guarantor. "Adjusted Maximum Amount" means, with
respect to a Subsidiary Guarantor as of any date of determination, the maximum
aggregate amount of the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee, determined as of such date in accordance with subsection
11.05(a); provided that, solely for purposes of calculating the Adjusted Maximum
--------
Amount with respect to any Subsidiary Guarantor for purposes of this subsection
11.05(b), any assets or liabilities of such Subsidiary Guarantor arising
90
by virtue of any rights to subrogation, reimbursement or indemnification or any
rights to or obligations of contribution hereunder shall not be considered as
assets or liabilities of such Subsidiary Guarantor. "Aggregate Payments" means,
with respect to a Subsidiary Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Subsidiary Guarantor in respect of the
Subsidiary Guarantee (including, without limitation, in respect of this
subsection 11.05(b) minus (ii) the aggregate amount of all payments received on
-----
or before such date by such Subsidiary Guarantor from the other Subsidiary
Guarantors as contributions under this subsection 11.05(b)). The amounts payable
as contributions hereunder shall be determined as of the date on which the
related payment or distribution is made by the applicable Funding Subsidiary
Guarantor. The allocation among Subsidiary Guarantors of their obligations as
set forth in this subsection 11.05(b) shall not be construed in any way to limit
the liability of any Subsidiary Guarantor under this Indenture or under the
Subsidiary Guaranty.
SECTION 11.06. WAIVER OF SUBROGATION. Until payment in full is made
---------------------
of the Securities and all other obligations of the Company to the Holders or the
Trustee hereunder and under the Securities, each Subsidiary Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforce ment of such Subsidiary Guarantor's obligations under the Subsidiary
Guarantee and this Indenture, 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 any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Subsidiary
Guarantor 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
such Subsidiary Guarantor 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.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.06 is knowingly made in contemplation of
such benefits.
91
SECTION 11.07 EXECUTION OF SUBSIDIARY GUARANTEE. To evidence its
---------------------------------
guarantee to the Securityholders set forth in this Article XI, each Subsidiary
Guarantor hereby agrees to execute the Subsidiary Guarantee in substantially the
form included in Exhibits A and Exhibit B, which shall be endorsed on such
Security ordered to be authenticated and delivered by the Trustee. Each
Subsidiary Guarantor hereby agrees that the Subsidiary Guarantee set forth in
this Article XI shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of the Subsidiary Guarantee. The
Subsidiary Guarantee shall be signed on behalf of each Subsidiary Guarantor by
one Officer of such Subsidiary Guarantor (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) prior to the
authentication of the Security on which it is endorsed, and the delivery of such
Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Subsidiary Guarantee on behalf of such Subsidiary
Guarantor. Such signatures upon the Subsidiary Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guaran tee, and in case any such Officer who shall
have signed the Subsidiary Guarantee shall cease to be such officer before the
Security on which the Subsidiary Guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed the Subsidiary Guarantee had not ceased to be such
Officer of such Subsidiary Guarantor.
SECTION 11.08 WAIVER OF STAY OR EXECUTION LAWS. Each Subsidiary
--------------------------------
Guarantor jointly and severally (to the extent it may lawfully do so) shall not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or execution law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and (to the extent that it may lawfully do so) each
Subsidiary Guarantor hereby expressly waives all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 11.09. EFFECTIVENESS OF SUBSIDIARY GUARANTEE. The Subsidiary
--------------------------------------
Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Company for liquidation or
reorganization, should the Company become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any significant
92
part of the Company's assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Securities, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee on the Securities, whether as a "voidable preference," "fraudulent
transfer," or otherwise, all as though such a payment or performance had not
been made. If any payments, or any part thereof, is rescinded, reduced, restored
or returned, the Securities shall, to the fullest extent permitted by law, be
reinstituted and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
ARTICLE XII
SUBORDINATION OF GUARANTEE OBLIGATIONS
--------------------------------------
SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Subsid iary Guarantor
------------------------
agrees, and each Securityholder by accepting a Security agrees, that any payment
of obligations by each Subsidiary Guarantor in respect of the Subsidiary
Guarantee (its "Subsidiary Guarantee Obligations") is subordinated in right of
payment, to the extent and in the manner provided in this Article XII, to the
prior payment of all Senior Indebtedness of such Subsidiary Guarantor and that
the subordination is for the benefit of and enforceable by the holders of such
Subsidiary Guarantor's Senior Indebtedness. The Subsidiary Guarantee Obligations
shall in all respects rank pari passu with all other Senior Subordinated
---- -----
Indebtedness of such Subsidiary Guarantors and only Indebtedness which is Senior
Indebtedness of such Subsidiary Guarantors shall rank senior to the Subsidiary
Guarantee Obligations in accordance with the provisions set forth herein.
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment
------------------------------------
or distribution of the assets of any Subsidiary Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Subsidiary Guarantor or its
property:
(1) holders of such Subsidiary Guarantor's Senior Indebtedness shall be
entitled to receive payment in full of such Senior Indebtedness before
Securityholders shall be entitled to receive any payment with respect
to the Subsidiary Guarantee; and
93
(2) until such Subsidiary Guarantor's Senior Indebtedness is paid in full,
any payment with respect to the Subsidiary Guarantee to which
Securityholders would be entitled but for this Article XII shall be
made to holders of such Senior Indebtedness as their interests may
appear, except that Securityholders may receive shares of Capital Stock
and any debt securities that are subordinated to such Subsidiary
Guarantor's Senior Indebtedness to at least the same extent as the
Subsidiary Guarantee.
SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS. A Subsidiary Guarantor
------------------------------
may not make any payment with respect to its Subsidiary Guarantee Obligations or
make any deposit pursuant to Section 8.01 (collectively, "pay the Subsidiary
Guarantee") if (1) any of such Subsidiary Guarantor's Designated Senior
Indebtedness is not paid when due or (2) any other default on such Subsidiary
Guarantor's Designated Senior Indebtedness occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Designated Senior Indebtedness has
been paid in full; provided, however, that the Subsidiary Guarantor may pay the
-------- -------
Subsidiary Guarantee without regard to the foregoing if such Subsidiary
Guarantor and the Trustee receive written notice approving such payment from the
Representative of such Designated Senior Indebtedness guaranteed by such
Subsidiary Guarantor. During the continuance of any default (other than a
default described in clause (1) or (2) of the preceding sentence) with respect
to any Subsidiary Guarantor's Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated either immediately without further
notice (except such notice as may be required to effect such acceleration) or
after the expiration of any applicable grace periods, the Subsidiary Guarantor
may not pay the Subsidiary Guarantee for a period (a "Payment Blockage
Period") commencing upon the receipt by such Subsidiary Guarantor and the
Trustee of written notice (a "Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness guaranteed by such
Subsidiary Guarantor specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (1) by written notice to the Trustee and such Subsidiary Guarantor
from the Person or Persons who gave such Blockage Notice, (2) because the
default giving rise to such Blockage Notice is cured, waived or otherwise no
longer continuing or (3) because such Designated Senior Indebtedness has been
discharged or repaid in full). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such Subsidiary
Guarantor's Designated Senior Indebtedness or the Repre-
94
sentative of such holders shall have accelerated the maturity of such Subsidiary
Guarantor's Designated Senior Indebtedness, the Subsidiary Guarantor may resume
payments on the Subsidiary Guarantee after termination of such Payment Blockage
Period. Not more than one Blockage Notice may be given in any consecutive 360-
day period, irrespective of the number of defaults with respect to such
Subsidiary Guarantor's Designated Senior Indebtedness during such period. For
purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Subsidiary Guarantor's Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Block age Period by the Representative of such
Subsidiary Guarantor's Designated 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 12.04. ACCELERATION OF PAYMENT OF SECURITIES. If payment of a
-------------------------------------
Subsidiary Guarantee is accelerated because of an Event of Default, such
Subsidiary Guarantor or the Trustee shall promptly notify the holders of such
Subsidiary Guarantor's Designated Senior Indebtedness (or their Representatives)
of the acceleration. The Trustee shall give notice of such acceleration, of
which it has actual knowledge, to all holders of such Subsidiary Guarantor's
Designated Senior Indebtedness. Prior to the Trustee's giving such notice, the
Company shall notify the Trustee of the name and address of any such holder of
Designated Senior Indebtedness.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
-----------------------------------
is made to Securityholders that because of this Article XII should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of such Subsidiary Guarantor's Senior Indebtedness and pay it
over to them as their interests may appear, and the Trustee shall not be liable
to any holders of such Subsidiary Guarantor's Senior Indebtedness. With respect
to the holders of such Subsidiary Guarantor's Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article XII and no implied covenants or
obligations with respect to holders of such Subsidiary Guarantor's Senior
Indebtedness shall be read into this Indenture against the Trustee.
SECTION 12.06. SUBROGATION. After a Subsidiary Guarantor's Senior
-----------
Indebtedness is paid in full and until the Subsidiary Guarantees are paid in
full, Securityholders shall be subrogated to the rights of holders of such
Senior Indebtedness
95
to receive distributions applicable to such Subsidiary Guarantor's Senior
Indebtedness. A distribution made under this Article XII to holders of such
Subsidiary Guarantor's Senior Indebtedness which otherwise would have been made
to Securityholders is not, as between such Subsidiary Guarantor and
Securityholders, a payment by such Subsidiary Guarantor on such Senior
Indebtedness.
SECTION 12.07. RELATIVE RIGHTS. This Article XII defines the relative
---------------
rights of Securityholders and holders of a Subsidiary Guarantor's Senior
Indebtedness. Nothing in this Indenture shall:
(1) impair, as between such Subsidiary Guarantor and Securityholders, the
obligation of such Subsidiary Guarantor, which is absolute and uncondi
tional, to pay the Subsidiary Guarantee Obligations in accordance with
their terms; or
(2) prevent the Trustee or any Securityholder from exercising its available
remedies upon a Default, subject to the rights of holders of a
Subsidiary Guarantor's Senior Indebtedness to receive distributions
otherwise payable to Securityholders.
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A SUBSIDIARY
-------------------------------------------------
GUARANTOR. No right of any holder of a Subsidiary Guarantor's Senior
- ---------
Indebtedness to enforce the subordination of the Indebtedness evidenced by the
Subsidiary Guarantees shall be impaired by any act or failure to act by such
Subsidiary Guarantor or by its failure to comply with this Indenture.
SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
----------------------------------
Section 12.03, the Trustee or Paying Agent may continue to make payments in
respect of a Subsidiary Guarantee and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article XII. Such Subsidiary Guarantor, the Registrar or co-
registrar, the Paying Agent, a Representative or a holder of such Subsidiary
Guarantor's Senior Indebtedness may give the notice; provided, however, that, if
-------- -------
an issue of a Subsidiary Guarantor's Senior Indebtedness has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold a
Subsidiary Guarantor's Senior Indebtedness with the same rights it would have if
it were not
96
Trustee. The Registrar and co-registrar, the Paying Agent and any
agent of any Subsid iary Guarantor may do the same with like rights. The
Trustee shall be entitled to all the rights set forth in this Article XII with
respect to any Subsidiary Guarantor's Senior Indebtedness which may at any time
be held by it, to the same extent as any other holder of such Subsidiary
Guarantor's Senior Indebtedness; and nothing in Article VII shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article XII shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
-----------------------------------------
distribution is to be made or a notice given to holders of a Subsidiary
Guarantor's Senior Indebtedness, the distribution may be made and the notice
given to their Representative (if any).
SECTION 12.11. ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
-----------------------------------------------------
RIGHT TO ACCELERATE. The failure to make a payment relating to the Subsidiary
- -------------------
Guarantee Obligations by reason of any provision in this Article XII shall not
be construed as preventing the occurrence of a Default. Nothing in this Article
XII shall have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
SECTION 12.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Subsidiary Guarantor's Senior
Indebtedness or subject to the restrictions set forth in this Article XII, and
none of the Securityholders shall be obligated to pay over any such amount to
such Subsidiary Guarantor or any holder of such Subsidiary Guarantor's Senior
Indebtedness or any other creditor of such Subsidiary Guarantor.
SECTION 12.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
------------------------
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (1) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (2) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the
Securityholders or (3) upon the Representatives for the holders of each
Subsidiary Guarantor's Senior Indebtedness for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders
of such Subsidiary Guarantor Senior Indebtedness and other Indebted-
97
ness of any Subsidiary Guarantor's, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII. In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person as
a holder of a Subsidiary Guarantor's Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XII, the Trustee may request
such Person to furnish evidence to the satisfaction of the Trustee as to the
amount of such Subsidiary Guarantor's Senior Indebtedness held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article XII, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article XII.
SECTION 12.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
-----------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of any
Subsidiary Guarantor's Senior Indebtedness as provided in this Article XII and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
-------------------------------------------
INDEBTEDNESS OF SUBSIDIARY GUARANTORS. The Trustee shall not be deemed to owe
- -------------------------------------
any fiduciary duty to the holders of any Subsidiary Guarantor's Senior
Indebtedness and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Securityholders or any Subsidiary Guarantor or any
other Person, money or assets to which any holders of such Subsidiary
Guarantor's Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise.
SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBT EDNESS OF
----------------------------------------------
SUBSIDIARY GUARANTORS ON SUBORDINATION PROVISIONS. Each Securityholder by
- -------------------------------------------------
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Subsidiary Guarantor's 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 such 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.
98
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If any provision of this
----------------------------
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. NOTICES. Any notice or communication shall be in
-------
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any Subsidiary Guarantor:
The Fairchild Corporation
45025 Aviation Drive
Suite 400
Dulles, Virginia 20166
Attention: General Counsel
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Attention: James J. Clark, Esq.
if to the Trustee:
The Bank of New York
Highwoods Center
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration
99
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
-------------------------------------------
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Subsidiary Guarantors, the Trustee, the Registrar
and anyone else shall have the protection of TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of such counsel, all such
condi tions precedent have been complied with.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
---------------------------------------------
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investi gation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express
an
100
informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with; provided, however,
-------- -------
that with respect to matters of fact any such Opinion of Counsel may be
based on reliance upon an Officers' Certificate and as to matters of
fact any such Opinion of Counsel or Officers' Certificate may be based
on reliance upon certificates of public officials.
SECTION 13.06. WHEN SECURITIES DISREGARDED. In determin ing whether
---------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
--------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a
--------------
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. This Indenture and the Securities (and
-------------
the Subsidiary Guarantees relating thereto) shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. A director, officer,
--------------------------
employee or stockholder, as such, of the Company or any Subsidiary Guarantor
101
shall not have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 13.11. SUCCESSORS. All agreements of the Company and the
----------
Subsidiary Guarantors in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number of
------------------
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of contents,
---------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
102
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE FAIRCHILD CORPORATION,
by /s/ Donald E. Miller
----------------------------
Name:
Title:
A10 INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
CAMLOC HOLDINGS INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
FAIRCHILD DATA CORPORATION
by /s/ Donald E. Miller
----------------------------
Name:
Title:
FAIRCHILD FASTENERS CORP.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
FAIRCHILD FRANCE, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
FAIRCHILD HOLDING CORP.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
FAIRCHILD RETIREE MEDICAL SERVICES, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
MAIROLL, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
MEOW, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
QUACK QUACK, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
RECYCLING INVESTMENTS, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
RECYCLING INVESTMENTS II, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
RHI HOLDINGS, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
SIMMONDS MECAERO FASTENERS, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
SPECIAL-T FASTENERS, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
SUCHOMIMOUS TERENSIS, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
VSI HOLDINGS, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
BANNER AEROSPACE, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
BANNER AEROSPACE SERVICES, INC.
by /s/ Donald E. Miller
--------------------------
Name:
Title:
BANNER AEROSPACE-SINGAPORE, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
BAR DE, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
D A C INTERNATIONAL, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
DALLAS AEROSPACE, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
GEORGETOWN JET CENTER, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
MATRIX AVIATION, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
NASAM INCORPORATED
by /s/ Donald E. Miller
---------------------------
Name:
Title:
PB HERNDON AEROSPACE, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
PROFESSIONAL AIRCRAFT ACCESSORIES, INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
PROFESSIONAL AVIATION ASSOCIATES, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
M&M MACHINE & TOOL CO.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
MARCLIFF CORPORATION
by /s/ Donald E. Miller
----------------------------
Name:
Title:
MARSON CREATIVE FASTENER, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
RECOIL AUSTRALIA HOLDINGS, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
RECOIL HOLDINGS, INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
RECOIL INC.
by /s/ Donald E. Miller
----------------------------
Name:
Title:
KAYNAR TECHNOLOGIES INC.
by /s/ Donald E. Miller
---------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by /s/ John H. Speichert
----------------------------
Name:
Title:
SCHEDULE A
Guarantors
----------
A10 Inc.
Camloc Holdings Inc.
Fairchild Data Corporation
Fairchild Fasteners Corp.
Fairchild France, Inc.
Fairchild Holding Corp.
Fairchild Retiree Medical Services, Inc.
Kaynar Technologies Inc.
Mairoll, Inc.
Meow, Inc.
Quack Quack, Inc.
Recycling Investments, Inc.
Recycling Investments II, Inc.
RHI Holdings, Inc.
Simmonds Mecaero Fasteners, Inc.
Special-T Fasteners, Inc. (f/k/a Bow Wow, Inc.)
Suchomimous Terensis, Inc. (f/k/a Oink Oink, Inc.)
VSI Holdings, Inc.
Banner Aerospace, Inc.
Banner Aerospace Services, Inc.
Banner Aerospace-Singapore, Inc.
BAR DE, Inc.
D A C International, Inc.
Dallas Aerospace, Inc.
Georgetown Jet Center, Inc.
Matrix Aviation, Inc.
Nasam Incorporated
PB Herndon Aerospace, Inc.
Professional Aircraft Accessories, Inc.
Professional Aviation Associates, Inc.
M&M Machine & Tool Co.
Marcliff Corporation
Marson Creative Fastener, Inc.
Recoil Australia Holdings, Inc.
Recoil Holdings, Inc.
Recoil Inc.
112
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT
TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE
TRANSACTIONS IN RELIANCE ON REGULATION S
PROVISIONS RELATING TO INITIAL SECURITIES,
------------------------------------------
PRIVATE EXCHANGE SECURITIES
---------------------------
AND EXCHANGE SECURITIES
-----------------------
1. Definitions.
-----------
1.1 Definitions.
-----------
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depositary" means The Depository Trust Company, its nominees and
their respective successors and assigns.
"Exchange Securities" means (i) the 10 3/4% Senior Subordinated Notes
due 2009 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to a Registration Rights Agreement and (ii) Additional
Securities, if any, issued in the form of 10 3/4% Senior Subordinated Notes due
2009 pursuant to a registration statement filed with the SEC under the
Securities Act.
"Initial Purchasers" means (i) with respect to the Initial Securities
issued on the Issue Date, Credit Suisse First Boston Corporation and Donaldson,
Lufkin & Jenrette Securities Corporation, Salomon Smith Barney Inc., NationsBanc
Montgomery Securities LLC, and Warburg Dillon Read LLC and (ii) with respect to
each issuance of Additional Securities, the Persons purchasing such Additional
Securities under the related Purchase Agreement.
"Initial Securities" means (i) $225,000,000 principal amount of 10
3/4% Senior Subordinated Notes due 2009, issued on the Issue Date and (ii)
Additional Securities, if any, issued in the form of 10 3/4% Senior Subordinated
Notes due 2009 in a transaction exempt from the registration requirements of the
Securities Act.
Ap-1
"Private Exchange" means the offer by the Company, pursuant to a
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means the 10 3/4% Senior Subordinated
Private Exchange Notes due 2009, if any, to be issued pursuant to this Indenture
to the Initial Purchasers in a Private Exchange.
"Purchase Agreement" means (i) with respect to the Initial Securities
issued on the Issue Date, the Purchase Agreement dated April 15, 1999, among the
Company and the initial purchasers named therein and (ii) with respect to each
issuance of Additional Securities, the purchase agreement or underwriting
agreement among the Company and the Persons purchasing such Additional
Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration Rights Agreement, to certain Holders of Initial Securities to
issue and deliver to such Holders, in exchange for such Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Rights Agreement" means (i) with respect to the Initial
Securities issued on the Issue Date, the Registration Rights Agreement dated
April 15, 1999 among the Company and the initial purchasers named therein, and
(ii) with respect to each issuance of Additional Securities issued in a
transaction exempt from the registration requirements of the Securities Act, the
registration rights agreement, if any, among the Company and the Persons
purchasing such Additional Securities under the related Purchase Agreement.
"Securities" means the Initial Securities, the Exchange Securities and
the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.
Ap-2
"Shelf Registration Statement" means the shelf registration statement
issued by the Company, in connection with the offer and sale of Initial
Securities, Exchange Securities, or Private Exchange Securities, pursuant to a
Registration Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.3(b) hereto.
1.2 Other Definitions
-----------------
Term Defined in Section:
---- ------------------
"Agent Members".............................. 2.1(b)
"Global Security"............................ 2.1(a)
"Regulation S"............................... 2.1(a)
"Rule 144A".................................. 2.1(a)
2. The Securities.
--------------
2.1 Form and Dating.
---------------
On the Issue Date, $225,000,000 of the Initial Securities are being
offered and sold by the Company pursuant to the Purchase Agreement.
(a) Global Securities. Initial Securities offered and sold to a QIB
-----------------
in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance
on Regulation S under the Securities Act ("Regulation S"), in each case as
provided in the Purchase Agreement, and Additional Securities, if any, issued in
the form of Exchange Securities, shall be issued initially in the form of one or
more permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Initial Securities or Additional
Securities, as applicable, represented thereby with the Trustee as custodian for
the Depositary (or with such other custodian as the Depositary may direct), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.
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(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
---------------------
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (b)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this Section 2.1
-----------------------
or Section 2.3 or 2.4 of this Appendix, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) On the
--------------
Issue Date, $225,000,000 million 10 3/4% Senior Subordinated Notes due 2009, (2)
any Additional Securities for original issue in an aggregate principal amount
specified in the written order of the Company pursuant to Section 2.02 of the
Indenture and (3) Exchange Securities or Private Exchange Securities for issue
in a Registered Exchange Offer or a Private Exchange, respectively, in exchange
for a like principal amount of Initial Securities in each case upon a written
order of the Company signed by two Officers. Such order shall specify the
amount of the Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated and whether the Securities are to be
Initial Securities, Exchange Securities or Private Exchange Securities, in the
case of an issuance of Additional Securities pursuant to Section 2.13 of the
Indenture, shall certify, among other things that such issuance is in compliance
with Section 4.03 of the Indenture.
Ap-4
2.3 Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Securities.
------------------------------------------
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depositary therefor. A
transferor of a beneficial interest in a Global Security shall deliver to
the Registrar a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in the Global
Security. The Registrar shall, in accordance with such instructions
instruct the Depositary to credit to the account of the Person specified in
such instructions a beneficial interest in the Global Security and to debit
the account of the Person making the transfer the beneficial interest in
the Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4 of this Appendix), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 of this
Appendix or Section 2.09 of this Indenture, prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be exchanged
only in accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Securities intended to
ensure that such transfers comply with Rule 144A or Regulation S, as the
case may be) and such other procedures as may from time to time be adopted
by the Company.
(b) Legend.
------
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Security certificate evidencing Initial Securities and
Private Exchange Securities (and all Securities issued in exchange therefor
or in substitution thereof,
Ap-5
other than Exchange Securities) shall bear a legend in substantially the
following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS
HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(i) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, the Registrar
shall permit the Holder thereof to exchange such Transfer Restricted
Security for a certificated Security that does not bear the legend set
forth above and rescind any restriction on the transfer of such Transfer
Restricted Security, if the Holder certifies in writing to the
Ap-6
Registrar that its request for such exchange was made in reliance on Rule
144 (such certification to be in the form set forth on the reverse of the
Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Securities or Private
Exchange Securities, as the case may be, all requirements pertaining to
legends on such Initial Securities or such Private Exchange Securities will
cease to apply, but the requirements requiring such Initial Securities or
such Private Exchange Securities issued to certain Holders be issued in
global form will continue to apply, and Initial Securities or Private
Exchange Securities in global form without legends will be available to the
transferee of the Holder of such Initial Securities or Private Exchange
Securities upon exchange of such transferring Holder's Initial Securities
or Private Exchange Securities or directions to transfer such Holder's
interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
continue to apply and Initial Securities in global form with the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders of such Initial Securities that do not exchange their Initial
Securities, and Exchange Securities in global form without the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders that exchange such Initial Securities in such Registered Exchange
Offer.
(v) Upon the consummation of a Private Exchange with respect to
the Initial Securities pursuant to which Holders of such Initial Securities
are offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
still apply, and Private Exchange Securities in global form with the
restricted securities legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.
(c) Cancellation or Adjustment of Global Security. At such time as
---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
certificated Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to the Depositary for cancellation or retained and canceled by
the Trustee. At any time prior
Ap-7
to such cancellation, if any beneficial interest in a Global Security is
exchanged for certificated Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect
to such Global Security, by the Trustee or the Securities Custodian, to reflect
such reduction.
(d) Obligations with Respect to Transfers and Exchanges of Securities.
-----------------------------------------------------------------
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities and Global Securities at the Registrar's or any co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 4.06, 4.09 and Section 9.06 of
this Indenture).
(iii) The Registrar or any co-registrar shall not be required to
register the transfer of or exchange of (a) any certificated Security
selected for redemption in whole or in part pursuant to Article III of this
Indenture, except the unredeemed portion of any certificated Security being
redeemed in part, or (b) any Security for a period beginning 15 days before
the mailing of a notice of an offer to repurchase or redeem Securities or
15 days before an Interest Payment Date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the person in whose name a Security
is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
Ap-8
(e) No Obligation of the Trustee.
----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or other Person with respect to the accuracy of the records of
the Depositary or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the Holders and
all payments to be made to Holders under the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be
the Depositary or its nominee in the case of a Global Security). The
rights of beneficial owners in any Global Security shall be exercised only
through the Depositary subject to the applicable rules and procedures of
the Depositary. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depositary with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Certificated Securities.
-----------------------
(a) A Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security and a successor depositary is not appointed by the Company within 90
days of such notice or if at any time such Depositary ceases to be a "clearing
agency" registered under the Exchange Act, or (ii)
Ap-9
an Event of Default has occurred and is continuing or (iii) the Company, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Trustee, to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate principal amount of
certificated Securities of authorized denominations. Any portion of a Global
Security transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 and any integral multiple thereof
and registered in such names as the Depositary shall direct. Any certificated
Initial Security delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.3(b), bear the restricted
securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events specified
in Section 2.4(a) above, the Company will promptly make available to the Trustee
a reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
Ap-10
EXHIBIT 1
TO RULE 144A/REGULATION S
APPENDIX
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THIS
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANS ACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
Ap-11
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 UNDER THE
SECURITIES ACT, (iii) PURSUANT TO AN EXEMP TION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
Ap-12
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
Amount of decrease Amount of increase
in Principal Amount in Principal Amount Principal Amount of this Global Signature of authorized
of this Global Secu- of this Global Secu- Security following such decrease officer of Trustee or Se-
Date of Exchange rity rity or increase curities Custodian
- ---------------------------------------------------------------------------------------------------------------------------------
Ap-13
EXHIBIT A
---------
FORM OF INITIAL SECURITY
------------------------
CUSIP No.:
THE FAIRCHILD CORPORATION
10 3/4% SENIOR SUBORDINATED NOTE DUE 2009
No. $
THE FAIRCHILD CORPORATION, a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
_______ or registered assigns, the principal sum of
Dollars, on April 15, 2009.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
THE FAIRCHILD CORPORATION
By:--------------------------
Name:
Title:
By:--------------------------
Name:
Dated: ____________ Title:
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Certificate of Authentication
This is one of the 10 3/4% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK
_______________________
as Trustee
Dated: ____________ By:_________________________________
Authorized Signatory
A-2
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10 3/4% Senior Subordinated Note due 2009
1. INTEREST
--------
The Fairchild Corporation, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above[; provided, however,
-------- -------
that if a Registration Default (as defined in the Registration Rights Agreement)
occurs, interest will accrue on this Security at a rate of 0.50% per annum from
and including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured,
calculated on the principal amount of this Security as of the date on which such
interest is payable; provided, however, that (i) no holder of Securities who is
-------- -------
not entitled to the benefits of a Shelf Registration Statement shall be entitled
to receive additional interest by reason of a Registration Default that pertains
to a Shelf Registration Statement; and (ii) no holder of Securities constituting
an unsold allotment from the original sale of the Securities or any other holder
of Securities who is entitled to the benefits of a Shelf Registration Statement
shall be entitled to receive additional interest by reason of a Registration
Default that pertains to a Registered Exchange Offer. Such interest is payable
in addition to any other interest payable from time to time with respect to this
Security]/1/. The Company will pay interest semiannually on April 15 and October
15 of each year. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
April 20, 1999 [date of issuance of any Additional Securities]. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities, and
it shall pay interest on overdue installments of interest at the same rate, in
each case, to the extent lawful.
2. METHOD OF PAYMENT
-----------------
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the April 1 or October 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Payments in respect of the Securities represented by
- -----------------------------
/1/ To be included in the Initial Securities issued on the Issue Date and, to
the extent applicable, any Additional Securities issued in the form of
Initial Securities.
A-3
a Global Security (including principal, premium and interest) will be made by
wire transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
-------- -------
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
--------------------------
Initially, The Bank of New York, a banking corporation organized and
validly existing under the laws of the State of New York, as Trustee
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Restricted Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. INDENTURE
---------
The Company issued the Securities under an Indenture dated as of April
20, 1999 ("Indenture"), among the Company, the Subsidiary Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company.
Payment on each Security is guaranteed on a senior subordinated basis by the
Subsidiary Guarantors pursuant to Article XI of the Indenture. To the extent of
any conflict between the terms of the Securities and the Indenture, the
applicable terms of the Indenture shall govern. The Company shall be entitled,
subject to its compliance with Section 4.03 of the Indenture, to issue
Additional Securities pursuant to Section 2.13 of the Indenture. The Initial
Securities issued on the Issue Date, any Additional Securities and all Exchange
Securities or Private Exchange Securities issued pursuant to the Indenture will
be treated as a single class for all purposes under the Indenture. The Indenture
contains certain covenants that, among other things, will limit the ability of
the Company and certain of its subsidiaries to (i) incur additional
indebtedness, (ii) pay dividends or distributions on, or redeem or repurchase,
the Company's capital stock, (iii) make investments, (iv) engage in transactions
with affiliates, (v) create liens on the Company's assets to secure certain
debt, (vi) transfer or sell assets, (vii) guarantee indebtedness, (viii) make
dividend or other payments, (ix) consolidate,
A-4
merge or transfer all or substantially all of the Company's assets and the
assets of its subsidiaries and (x) engage in unrelated business. These
covenants, however, are subject to important exceptions and qualifications.
5. OPTIONAL REDEMPTION
-------------------
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to April 15, 2004. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest thereon, if any, to the applicable redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date):
if redeemed during the 12-month period beginning April 15,
Period Percentage
------ ----------
2004........................................................ 105.375%
2005........................................................ 103.583
2006........................................................ 101.792
2007 and thereafter......................................... 100.000
In addition, prior to April 15, 2002, the Company may at its option on
one or more occasions redeem up to 35% of the aggregate original principal
amount of the Securities (including the original principal amount of any
Additional Securities) at a redemption price of 110.750% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more Public Equity Offerings; provided that
--------
(1) at least 65% of the original aggregate principal amount of Securities
(including the original principal amount of any Additional Securities)
remains outstanding immediately after the occurrence of each such
redemption (other than Securities held, directly or indirectly, by the
Company or its Affiliates); and
(2) each such redemption occurs within 60 days after the date of the
related Public Equity Offering.
6. NOTICE OF REDEMPTION
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the
A-5
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. PUT PROVISIONS
--------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Company to repurchase all or
any part of the Securities of such Holder at a repurchase price equal to 101% of
the principal amount of the Securities to be repurchased plus accrued interest
to the date of repurchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date) as provided in, and subject to the terms of, the Indenture.
8. SUBORDINATION
-------------
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. PERSONS DEEMED OWNERS
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
11. UNCLAIMED MONEY
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment,
A-6
Holders entitled to the money must look only to the Company and not to the
Trustee for payment.
12. DISCHARGE AND DEFEASANCE
------------------------
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. AMENDMENT, WAIVER
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any requirement of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect in any material respect the rights of any Securityholder.
14. DEFAULTS AND REMEDIES
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon acceleration or otherwise, or failure by the Company to
purchase Securities when required; (iii) failure by the Company to comply with
other agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company or any Significant Subsidiary if the amount accelerated (or so unpaid)
exceeds $10 million; (v) certain events of bankruptcy or insolvency with respect
to the Company and the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $10 million; and (vii) any denial
or disaffirmation of obligations by a Subsidiary Guarantor that is a Significant
Subsidiary or any Subsidiary Guarantee by such a Subsidiary Guarantor is not in
full force or is unenforceable (other than in accordance with the terms of the
Subsidiary Guarantee). If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities may
declare
A-7
all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the 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 the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
--------------------------
A director, officer, employee or stockholder, as such, of the Company,
the Subsidiary Guarantor or the Trustee shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
17. AUTHENTICATION
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. 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 rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
A-8
19. CUSIP NUMBERS
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
[20. REGISTRATION RIGHTS
-------------------
Pursuant to the Registration Rights Agreement (as defined in the
Indenture), the Company will be obligated to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for the Company's 10 3/4% Senior Subordinated Notes due 2009 in
the form of Exchange Securities, which shall have been registered under the
Securities Act, or the Company's 10 3/4% Senior Subordinated Private Exchange
Notes due 2009 (the "Private Exchange Securities"), in each case in like
principal amount and having terms substantially identical in all material
respects to the Initial Securities. The Holders of the Initial Securities shall
be entitled to receive certain additional interest payments if such exchange
offer is not consummated and upon certain other conditions, all pursuant to and
in accordance with the terms of the Registration Rights Agreement. Each Holder
of a Security, by acceptance hereof, acknowledges and agrees to the provisions
of the Registration Rights Agreement, including the obligations of the Holders
with respect to a registration and the indemnification of the Company to the
extent provided therein.]/2/
21. GOVERNING LAW.
-------------
THIS SECURITY (AND THE SUBSIDIARY GUARANTEE RELATING THERETO) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
The Company will furnish to any securityholder upon written request
and without charge to the security holder a copy of the indenture which has in
it the text of this security in larger type. Requests may be made to:
- --------------------------
/2/ To be included in the Initial Securities issued on the Issue Date and, to
the extent applicable, any Additional Securities issued in the form of
Initial Securities.
A-9
The Fairchild Corporation
45025 Aviation Drive, Suite 400
Dulles, Virginia 20166
Attention: General Counsel
A-10
[FORM OF NOTATION ON SECURITY RELATING TO SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
The undersigned subsidiary guarantors (collectively, the "Subsidiary
Guarantors"), have each jointly and severally unconditionally guaranteed on a
senior subordinated basis (such guarantee by each Subsidiary Guarantor being
referred to herein as the "Subsidiary Guarantee") (i) the due and punctual
payment of the principal of and interest on the Securities, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, the
due and punctual payment of interest on the overdue principal and interest, if
any, on the Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article XI of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Securities or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, subject to any applicable grace period, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the Holders of
Securities and to the Trustee pursuant to the Subsidiary Guarantee and the
Indenture are expressly set forth and are senior subordinated obligations of
each Subsidiary Guarantor, to the extent and in the manner provided, in Articles
XI and XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Subsidiary Guarantee therein made.
No stockholder, officer, director, employee or incorporator, as such,
past, present or future, of each Subsidiary Guarantor shall have any liability
under the Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
A-11
A10 INC.
by ---------------------------------
Name:
Title:
CAMLOC HOLDINGS INC.
by ---------------------------------
Name:
Title:
FAIRCHILD DATA CORPORATION
by ---------------------------------
Name:
Title:
FAIRCHILD FASTENERS CORP.
by ---------------------------------
Name:
Title:
FAIRCHILD FRANCE, INC.
by ---------------------------------
Name:
Title:
A-12
FAIRCHILD HOLDING CORP.
by ---------------------------------
Name:
Title:
FAIRCHILD RETIREE MEDICAL SERVICES, INC.
by ---------------------------------
Name:
Title:
MAIROLL, INC.
by ---------------------------------
Name:
Title:
MEOW, INC.
by ---------------------------------
Name:
Title:
QUACK QUACK, INC.
by ---------------------------------
Name:
Title:
A-13
RECYCLING INVESTMENTS, INC.
by ---------------------------------
Name:
Title:
RECYCLING INVESTMENTS II, INC.
by ---------------------------------
Name:
Title:
RHI HOLDINGS, INC.
by ---------------------------------
Name:
Title:
SIMMONDS MECAERO FASTENERS, INC.
by ---------------------------------
Name:
Title:
SPECIAL-T FASTENERS, INC.
by ---------------------------------
Name:
Title:
A-14
SUCHOMIMOUS TERENSIS, INC.
by ---------------------------------
Name:
Title:
VSI HOLDINGS, INC.
by ---------------------------------
Name:
Title:
BANNER AEROSPACE, INC.
by ---------------------------------
Name:
Title:
BANNER AEROSPACE SERVICES, INC.
by ---------------------------------
Name:
Title:
BANNER AEROSPACE-SINGAPORE, INC.
by ---------------------------------
Name:
Title:
A-15
BAR DE, INC.
by ---------------------------------
Name:
Title:
D A C INTERNATIONAL, INC.
by ---------------------------------
Name:
Title:
DALLAS AEROSPACE, INC.
by ---------------------------------
Name:
Title:
GEORGETOWN JET CENTER, INC.
by ---------------------------------
Name:
Title:
MATRIX AVIATION, INC.
by ---------------------------------
Name:
Title:
A-16
NASAM INCORPORATED
by ---------------------------------
Name:
Title:
PB HERNDON AEROSPACE, INC.
by ---------------------------------
Name:
Title:
PROFESSIONAL AIRCRAFT ACCESSORIES, INC.
by ---------------------------------
Name:
Title:
PROFESSIONAL AVIATION ASSOCIATES, INC.
by ---------------------------------
Name:
Title:
M&M MACHINE & TOOL CO.
by ______________________________________________
Name:
Title:
A-17
MARCLIFF CORPORATION
by ______________________________________________
Name:
Title:
MARSON CREATIVE FASTENER, INC.
by ______________________________________________
Name:
Title:
RECOIL AUSTRALIA HOLDINGS, INC.
by ______________________________________________
Name:
Title:
RECOIL HOLDINGS, INC.
by ______________________________________________
Name:
Title:
RECOIL INC.
by ______________________________________________
Name:
Title:
A-18
KAYNAR TECHNOLOGIES INC.
by ______________________________________________
Name:
Title:
A-19
-----------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
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 Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A,
A-20
in each case pursuant to and
in compliance with Rule 144A under the Securities Act of 1933; or
(4) [ ] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 903 or Rule 904 under the Securities Act of 1933; or
(5) [ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box
-------- -------
(4) or (5) is checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act.
________________________________
Signature
Signature Guarantee:
________________________________ ________________________________
Signature must be guaranteed Signature
A-21
---------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: _____________________ _________________________________________
NOTICE: To be executed by an executive
officer
A-22
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount
in principal amount: $_______________
Date: _________________ Your Signature: _____________________________
(Sign exactly as your name
appears on the other side of this
Security.)
Signature Guarantee: ___________________________________________
(Signature must be guaranteed)
A-23
EXHIBIT B
---------
FORM OF EXCHANGE SECURITY AND PRIVATE EXCHANGE SECURITY
-------------------------------------------------------
CUSIP No.:
THE FAIRCHILD CORPORATION
10 3/4% SENIOR SUBORDINATED [PRIVATE EXCHANGE] NOTE DUE 2009
No. ______ $__________
THE FAIRCHILD CORPORATION, a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
_____________________ or registered assigns, the principal sum of _____________
Dollars, on April 15, 2009.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
THE FAIRCHILD CORPORATION
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Dated: ________________ Title:
B-1
Certificate of Authentication
This is one of the 10 3/4% Senior Subordinated [Private Exchange]
Notes due 2009 referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK
___________________________
as Trustee
Dated: __________________________ By:______________________________
Authorized Signatory
[If the Security is to be issued in global form add the Global Securities Legend
from Exhibit 1 to the Appendix and the attachment from such Exhibit 1 captioned
"[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL SECURITY".]
[If the Security is a Private Exchange Security issued in a Private Exchange to
an Initial Purchaser holding an unsold portion of its initial allotment, add the
restricted securities legend from Exhibit 1 to Appendix A and replace the
Assignment Form with that included in Exhibit A.]
B-2
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
10 3/4% Senior Subordinated Note due 2009
1. INTEREST
--------
The Fairchild Corporation, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above [; provided, however,
-------- -------
that if a Registration Default (as defined in the Registration Rights Agreement)
occurs, interest will accrue on this Security at a rate of 0.50% per annum from
and including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured,
calculated on the principal amount of this Security as of the date on which such
interest is payable; provided, however, that (i) no holder of Securities who is
-------- -------
not entitled to the benefits of a Shelf Registration Statement shall be entitled
to receive additional interest by reason of a Registration Default that pertains
to a Shelf Registration Statement; and (ii) no holder of Securities constituting
an unsold allotment from the original sale of the Securities or any other holder
of Securities who is entitled to the benefits of a Shelf Registration Statement
shall be entitled to receive additional interest by reason of a Registration
Default that pertains to a Registered Exchange Offer. Such interest is payable
in addition to any other interest payable from time to time with respect to this
Security]/1/. The Company will pay interest semiannually on April 15 and
October 15 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from April 20, 1999 [date of issuance of any Additional Securities]. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at the rate borne by the
Securities, and it shall pay interest on overdue installments of interest at the
same rate to the extent lawful.
2. METHOD OF PAYMENT
-----------------
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the April 1 or October 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
- ---------------------------
/1/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange
Offer has been consummated nor a Shelf Registration Statement has been
declared effective in accordance with the Registration Rights Agreement.
B-3
money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of Securities
(including principal, premium and interest) will be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof or,
if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
3. PAYING AGENT AND REGISTRAR
--------------------------
Initially, The Bank of New York, a banking corporation organized and
validly existing under the laws of the State of New York, as Trustee
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Restricted Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. INDENTURE
---------
The Company issued the Securities under an Indenture dated as of April
20, 1999 ("Indenture"), among the Company, the Subsidiary Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
------
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company.
Payment on each Security is guaranteed on a senior subordinated basis by the
Subsidiary Guarantors pursuant to Article XI of the Indenture. To the extent of
any conflict between the terms of the Securities and the Indenture, the
applicable terms of the Indenture shall govern. The Company shall be entitled,
subject to its compliance with Section 4.03 of the Indenture, to issue
Additional Securities pursuant to Section 2.13 of the Indenture. The Initial
Securities issued on the Issue Date, any Additional Securities and all Exchange
Securities or Private Exchange Securities issued pursuant to the Indenture will
be treated as a single class for all purposes under the Indenture. The Indenture
contains certain covenants that, among other things will limit the ability of
the Company and certain of its subsidiaries to (i) incur additional
indebtedness, (ii) pay dividends or distributions on, or redeem or repurchase,
the Company's capital stock, (iii) make investments, (iv) engage in transactions
with affiliates, (v) create liens on the Company's assets to secure certain
debt, (vi) transfer or sell assets, (vii) guarantee indebtedness, (viii) make
dividend or other payments, (ix) consolidate, merge or transfer all or
substantially all of the Company's assets and the assets of its subsidiaries and
(x) engage in unrelated business. These covenants, however, are subject to
important exceptions and qualifications.
B-4
5. OPTIONAL REDEMPTION
-------------------
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to April 15, 2004. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest thereon, if any, to the applicable redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date):
if redeemed during the 12-month period beginning April 15,
Period Percentage
- ------ ----------
2004.................................... 105.375%
2005.................................... 103.583
2006.................................... 101.792
2007 and thereafter..................... 100.000
In addition, prior to April 15, 2002, the Company may at its option on
one or more occasions redeem up to 35% of the aggregate original principal
amount of the Securities (including the original principal amount of any
Additional Securities) at a redemption price of 110.750% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more Public Equity Offerings; provided, that
--------
(1) at least 65% of the original aggregate principal amount of Securities
(including the original principal amount of any Additional Securities)
remains outstanding immediately after the occurrence of each such
redemption (other than Securities held, directly or indirectly, by the
Company or its Affiliates); and
(2) each such redemption occurs within 60 days after the date of the
related Public Equity Offering.
6. NOTICE OF REDEMPTION
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
B-5
7. PUT PROVISIONS
--------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Company to repurchase all or
any part of the Securities of such Holder at a repurchase price equal to 101% of
the principal amount of the Securities to be repurchased plus accrued interest
to the date of repurchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date) as provided in, and subject to the terms of, the Indenture.
8. SUBORDINATION
-------------
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
---------------------------------
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. PERSONS DEEMED OWNERS
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
11. UNCLAIMED MONEY
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
------------------------
B-6
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. AMENDMENT, WAIVER
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any requirement of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect in any material respect the rights of any Securityholder.
14. DEFAULTS AND REMEDIES
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon acceleration or otherwise, or failure by the Company to
purchase Securities when required; (iii) failure by the Company to comply with
other agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company or any Significant Subsidiary if the amount accelerated (or so unpaid)
exceeds $10 million; (v) certain events of bankruptcy or insolvency with respect
to the Company and the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $10 million and (vii) any denial
or disaffirmation of obligations by a Subsidiary Guarantor that is a Significant
Subsidiary or any Subsidiary Guarantee by such a Subsidiary Guarantor is not in
full force or is unenforceable (other than in accordance with the terms of the
Subsidiary Guarantee). If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities may
declare all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities
B-7
unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the 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 the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
--------------------------
A director, officer, employee or stockholder, as such, of the Company,
any Subsidiary Guarantor or the Trustee shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
17. AUTHENTICATION
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. 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 rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP NUMBERS
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers
B-8
either as printed on the Securities or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed
thereon.
[20. REGISTRATION RIGHTS
-------------------
Pursuant to the Registration Rights Agreement (as defined in the
Indenture), the Company will have certain obligations to the Holders of the
Exchange Securities and the Private Exchange Securities. The Holders of the
Exchange Securities and the Private Exchange Securities shall be entitled to
receive certain additional interest payments upon certain conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement. Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.]/2/
21. GOVERNING LAW
-------------
THIS SECURITY (AND THE SUBSIDIARY GUARANTEE RELATING THERETO) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the security holder a copy of the indenture which has in
it the text of this security in larger type. Requests may be made to:
The Fairchild Corporation
45025 Aviation Drive, Suite 400
Dulles, Virginia 20166
Attention: General Counsel
- --------------------------
/2/ To be included if applicable.
B-9
[FORM OF NOTATION ON SECURITY RELATING TO SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
The undersigned subsidiary guarantors (collectively, the "Subsidiary
Guarantors"), have each jointly and severally unconditionally guaranteed on a
senior subordinated basis (such guarantee by each Subsidiary Guarantor being
referred to herein as the "Subsidiary Guarantee") (i) the due and punctual
payment of the principal of and interest on the Securities, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, the
due and punctual payment of interest on the overdue principal and interest, if
any, on the Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article XI of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Securities or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, subject to any applicable grace period, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the Holders of
Securities and to the Trustee pursuant to the Subsidiary Guarantee and the
Indenture are expressly set forth and are senior subordinated obligations of
each Subsidiary Guarantor, to the extent and in the manner provided, in Articles
XI and XII of the Indenture, and reference is hereby made to such Indenture for
the precise terms of the Subsidiary Guarantee therein made.
No stockholder, officer, director, employee or incorporator, as such,
past, present or future, of each Subsidiary Guarantor shall have any liability
under the Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
B-10
A10 INC.
by ______________________________________________
Name:
Title:
CAMLOC HOLDINGS INC.
by ______________________________________________
Name:
Title:
FAIRCHILD DATA CORPORATION
by ______________________________________________
Name:
Title:
FAIRCHILD FASTENERS CORP.
by ______________________________________________
Name:
Title:
FAIRCHILD FRANCE, INC.
by ______________________________________________
Name:
Title:
B-11
FAIRCHILD HOLDING CORP.
by ______________________________________________
Name:
Title:
FAIRCHILD RETIREE MEDICAL SERVICES, INC.
by ______________________________________________
Name:
Title:
MAIROLL, INC.
by ______________________________________________
Name:
Title:
MEOW, INC.
by ______________________________________________
Name:
Title:
QUACK QUACK, INC.
by ______________________________________________
Name:
Title:
B-12
RECYCLING INVESTMENTS, INC.
by ______________________________________________
Name:
Title:
RECYCLING INVESTMENTS II, INC.
by ______________________________________________
Name:
Title:
RHI HOLDINGS, INC.
by ______________________________________________
Name:
Title:
SIMMONDS MECAERO FASTENERS, INC.
by ______________________________________________
Name:
Title:
SPECIAL-T FASTENERS, INC.
by ______________________________________________
Name:
Title:
B-13
SUCHOMIMOUS TERENSIS, INC.
by ______________________________________________
Name:
Title:
VSI HOLDINGS, INC.
by ______________________________________________
Name:
Title:
BANNER AEROSPACE, INC.
by ______________________________________________
Name:
Title:
BANNER AEROSPACE SERVICES, INC.
by ______________________________________________
Name:
Title:
BANNER AEROSPACE-SINGAPORE, INC.
by ______________________________________________
Name:
Title:
B-14
BAR DE, INC.
by ______________________________________________
Name:
Title:
D A C INTERNATIONAL, INC.
by ______________________________________________
Name:
Title:
DALLAS AEROSPACE, INC.
by ______________________________________________
Name:
Title:
GEORGETOWN JET CENTER, INC.
by ______________________________________________
Name:
Title:
MATRIX AVIATION, INC.
by ______________________________________________
Name:
Title:
B-15
NASAM INCORPORATED
by ______________________________________________
Name:
Title:
PB HERNDON AEROSPACE, INC.
by ______________________________________________
Name:
Title:
PROFESSIONAL AIRCRAFT ACCESSORIES, INC.
by ______________________________________________
Name:
Title:
PROFESSIONAL AVIATION ASSOCIATES, INC.
by ______________________________________________
Name:
Title:
M&M MACHINE & TOOL CO.
by ______________________________________________
Name:
Title:
B-16
MARCLIFF CORPORATION
by ______________________________________________
Name:
Title:
MARSON CREATIVE FASTENER, INC.
by ______________________________________________
Name:
Title:
RECOIL AUSTRALIA HOLDINGS, INC.
by ______________________________________________
Name:
Title:
RECOIL HOLDINGS, INC.
by ______________________________________________
Name:
Title:
RECOIL INC.
by ______________________________________________
Name:
Title:
B-17
KAYNAR TECHNOLOGIES INC.
by ______________________________________________
Name:
Title:
B-18
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
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 Security.
B-19
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this security purchased by the company
pursuant to section 4.06 or 4.09 of the indenture, check the box: [ ]
If you want to elect to have only part of this security purchased by
the company pursuant to section 4.06 or 4.09 of the indenture, state the amount:
$____________
Date: _____________________ Your Signature: _______________________
(Sign exactly as your name
appears on the other side of the
Security)
Signature Guarantee: __________________________________________
(Signature must be guaranteed by a member firm of
the New York stock exchange or a commercial
bank or trust company)
B-20