EXHIBIT 4.1
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RAYOVAC CORPORATION
Issuer
ROV HOLDING, INC.
Guarantor
10 1/4% SENIOR SUBORDINATED NOTES DUE 2006
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INDENTURE
Dated as of October 22, 1996
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Marine Midland Bank
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Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)................................................ 7.10
(a)(2)............................................... 7.10
(a)(3) .............................................. N.A.
(a)(4)............................................... N.A.
(a)(5)............................................... 7.10
(b) ................................................. 7.10
(c) ................................................. N.A.
311 (a) .................................................. 7.11
(b) ................................................. 7.11
(c) ................................................. N.A.
312 (a)................................................... 2.05
(b).................................................. 11.03
(c) ................................................. 11.03
313 (a) .................................................. 7.06
(b)(1) .............................................. 10.03
(b)(2) .............................................. 7.07
(c) ................................................. 7.06;11.02
(d).................................................. 7.06
314 (a) .................................................. 4.03;11.02
(b) ................................................. 10.02
(c)(1) .............................................. 11.04
(c)(2) .............................................. 11.04
(c)(3) .............................................. N.A.
(d).................................................. 10.03, 10.04, 10.05
(e) ................................................ 11.05
(f).................................................. N.A.
315 (a)................................................... 7.01
(b).................................................. 7.05,11.02
(c) ................................................ 7.01
(d).................................................. 7.01
(e).................................................. 6.11
316 (a)(last sentence) ................................... 2.09
(a)(1)(A)............................................ 6.05
(a)(1)(B) ........................................... 6.04
(a)(2) .............................................. N.A.
(b) ................................................. 6.07
(c) ................................................. 2.12
317 (a)(1) ............................................... 6.08
(a)(2)............................................... 6.09
(b) ................................................. 2.04
318 (a)................................................... 11.01
(b).................................................. N.A.
(c).................................................. 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 16
Section 1.04. Rules of Construction....................................... 16
Section 1.05. Business Day Certificate.................................... 17
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................. 17
Section 2.02. Execution and Authentication................................ 17
Section 2.03. Registrar and Paying Agent.................................. 18
Section 2.04. Paying Agent to Hold Money in Trust......................... 18
Section 2.05. Holder Lists................................................ 19
Section 2.06. Transfer and Exchange....................................... 19
Section 2.07. Replacement Notes........................................... 24
Section 2.08. Outstanding Notes........................................... 25
Section 2.09. Treasury Notes.............................................. 25
Section 2.10. Temporary Notes............................................. 25
Section 2.11. Cancellation................................................ 25
Section 2.12. Defaulted Interest.......................................... 26
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.......................................... 26
Section 3.02. Selection of Notes to Be Redeemed........................... 26
Section 3.03. Notice of Redemption........................................ 27
Section 3.04. Effect of Notice of Redemption.............................. 27
Section 3.05. Deposit of Redemption Price................................. 27
Section 3.06. Notes Redeemed in Part...................................... 28
Section 3.07. Optional Redemption......................................... 28
Section 3.08. Mandatory Redemption........................................ 29
Section 3.09. Offer to Purchase by Application of Excess Proceeds......... 29
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................ 31
Section 4.02. Maintenance of Office or Agency............................. 31
Section 4.03. Reports..................................................... 31
Section 4.04. Compliance Certificate...................................... 32
Section 4.05. Taxes....................................................... 33
Section 4.06. Stay, Extension and Usury Laws.............................. 33
Section 4.07. Restricted Payments......................................... 33
Section 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries..................................... 35
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Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock....................................................... 36
Section 4.10. Asset Sales................................................. 37
Section 4.11. Transactions with Affiliates................................ 39
Section 4.12. Liens....................................................... 39
Section 4.13. Corporate Existence......................................... 40
Section 4.14. Offer to Repurchase Upon Change of Control.................. 40
Section 4.15. No Senior Subordinated Debt................................. 41
Section 4.16. Limitations on Guarantees of Company Indebtedness
by Restricted Subsidiaries.................................. 41
Section 4.17. Additional Guarantees....................................... 41
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets................... 42
Section 5.02. Successor Corporation Substituted.......................... 43
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.......................................... 44
Section 6.02. Acceleration............................................... 45
Section 6.03. Other Remedies............................................. 46
Section 6.04. Waiver of Past Defaults.................................... 46
Section 6.05. Control by Majority........................................ 47
Section 6.06. Limitation on Suits........................................ 47
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 47
Section 6.08. Collection Suit by Trustee................................. 48
Section 6.09. Trustee May File Proofs of Claim........................... 48
Section 6.10. Priorities................................................. 48
Section 6.11. Undertaking for Costs...................................... 49
Section 6.12. Restoration of Rights and Remedies......................... 49
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.......................................... 49
Section 7.02. Rights of Trustee.......................................... 50
Section 7.03. Individual Rights of Trustee............................... 51
Section 7.04. Trustee's Disclaimer....................................... 51
Section 7.05. Notice of Defaults......................................... 52
Section 7.06. Reports by Trustee to Holders of the Notes................. 52
Section 7.07. Compensation and Indemnity................................. 52
Section 7.08. Replacement of Trustee..................................... 53
Section 7.09. Successor Trustee by Merger, etc........................... 54
Section 7.10. Eligibility; Disqualification.............................. 54
Section 7.11. Preferential Collection of Claims Against Company.......... 54
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance................................................. 54
Section 8.02. Legal Defeasance and Discharge............................. 54
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Section 8.03. Covenant Defeasance........................................ 55
Section 8.04. Conditions to Legal or Covenant Defeasance................. 55
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.............. 57
Section 8.06. Repayment to Company....................................... 57
Section 8.07. Reinstatement.............................................. 57
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes........................ 58
Section 9.02. With Consent of Holders of Notes........................... 58
Section 9.03. Compliance with Trust Indenture Act........................ 60
Section 9.04. Revocation and Effect of Consents.......................... 60
Section 9.05. Notation on or Exchange of Notes........................... 60
Section 9.06. Trustee to Sign Amendments, etc............................ 60
ARTICLE 10
GUARANTEES
Section 10.01. Guarantee................................................. 61
Section 10.02. Subordination............................................. 62
Section 10.03. Dissolution, Liquidation or Reorganization................ 62
Section 10.04. Default on Senior Debt of the Guarantor................... 63
Section 10.05. Acceleration of Notes..................................... 64
Section 10.06. Subrogation............................................... 64
Section 10.07. Obligations Unconditional................................. 65
Section 10.08. Relative Rights........................................... 65
Section 10.09. Event of Default Preserved................................ 65
Section 10.10. Trustee Duties............................................ 65
Section 10.11. Notice by a Guarantor..................................... 66
Section 10.12. Subordination May Not Be Impaired by Guarantor............ 66
Section 10.13. Reliance Upon Order....................................... 66
Section 10.14. Rights of Trustee and Paying Agent........................ 66
Section 10.15. Authorization to Effect Subordination..................... 66
Section 10.16. Amendments................................................ 67
Section 10.17. Limitation of Guarantor's Liability....................... 67
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate.................................. 67
Section 11.02. No Payment on Notes Under Certain Circumstances........... 68
Section 11.03. Dissolution, Liquidation or Reorganization................ 68
Section 11.04. Subrogation............................................... 70
Section 11.05. Obligations Unconditional................................. 70
Section 11.06. Relative Rights........................................... 70
Section 11.07. Event of Default Preserved................................ 70
Section 11.08. Trustee Duties............................................ 70
Section 11.09. Notice by Company......................................... 71
Section 11.10. Subordination May Not Be Impaired by Company.............. 71
Section 11.11. Reliance Upon Order....................................... 71
Section 11.12. Rights of Trustee and Paying Agent........................ 71
Section 11.13. Authorization to Effect Subordination..................... 71
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ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.............................. 72
Section 12.02. Notices................................................... 72
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes......................................................... 73
Section 12.04. Certificate and Opinion as to Conditions Precedent........ 73
Section 12.05. Statements Required in Certificate or Opinion............. 74
Section 12.06. Rules by Trustee and Agents............................... 74
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders................................ 74
Section 12.08. Governing Law............................................. 74
Section 12.09. No Adverse Interpretation of Other Agreements............. 74
Section 12.10. Successors................................................ 75
Section 12.11. Severability.............................................. 75
Section 12.12. Counterpart Originals..................................... 75
Section 12.13. Table of Contents, Headings, etc.......................... 75
Section 12.14. Further Instruments and Acts.............................. 75
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit A-1 FORM OF NOTATION ON NOTE RELATING TO GUARANTEE
Exhibit B CERTIFICATE OF TRANSFEROR
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INDENTURE dated as of October 22, 1996 among Rayovac Corporation, a
Wisconsin corporation (the "Company"), ROV Holding, Inc., a Delaware corporation
(a "Guarantor") and Marine Midland Bank, as trustee (the "Trustee").
The Company, ROV Holding, Inc. and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the Holders
of the 10 1/4% Senior Subordinated Notes due 2006 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
"Additional Guarantee" means any guarantee of the Company's
obligations under this Indenture and the Notes issued after the date of this
Indenture as described in Sections 4.16 and 4.17 hereof.
"Additional Guarantor" means any Subsidiary of the Company that
guarantees the Company's obligations under this Indenture and the Notes issued
after the date of this Indenture as described in Sections 4.16 and 4.17 hereof.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Bank Agent" means Bank of America National Trust and Savings
Association, in its capacity as administrative agent for the lenders party to
the Credit Agreement, or any successor or successors thereto in such capacity.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"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 any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person
(including, without limitation, membership interests in a limited liability
company).
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or guaranteed by a
government that is a member of the Organization for Economic Cooperation and
Development ("OECD Country") or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America or such OECD
Country, as applicable, is pledged in support thereof) having maturities of not
more than three years from the date of acquisition of such security, (ii)
marketable direct obligations issued by any State of the United States of
America or any local government or other political subdivision thereof rated (at
the time of acquisition of such security) at least AA by Standard & Poor's
Ratings Service, a division of the McGraw-Hill Companies, Inc. ("S&P") or the
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having
maturities of not more than one year from the date of acquisition of such
security, (iii) U.S. dollar denominated time deposits, certificates of deposit
and bankers' acceptances of (a) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250.0 million or (b) any bank
whose short-term commercial paper rating (at the time of acquisition of such
security) by S&P is at least A-1 or the equivalent thereof, in each case with
maturities of not more than six months from the date of acquisition of such
security, (iv) commercial paper and variable rate notes issued by, or guaranteed
by, any industrial or financial company with a short-term commercial paper
rating (at the time of acquisition of such security) of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long-term unsecured debt rating
(at the time of acquisition of such security) of at least AA or the equivalent
thereof by Moody's and in each case maturing within one year after the date of
acquisition of such security and (v) repurchase agreements with any lender under
the Credit Agreement or any primary dealer maturing within one year from the
date of acquisition that are fully collateralized by investment instruments that
would otherwise be Cash Equivalents; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy-Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the following: (i)
(a) any transaction (including a merger or consolidation) the result of which is
that any "person" or "group" (each within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Principals, becomes the
2
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 50% of the total voting power of all Capital Stock
of the Company or a successor entity normally entitled to vote in the election
of directors, managers or trustees, as applicable, calculated on a fully diluted
basis, and (b) as a result of the consummation of such transaction, any "person"
or "group" (each as defined above) becomes the "beneficial owner" (as defined
above), directly or indirectly, of more of the voting stock of the Company than
is at the time "beneficially owned" (as defined above) by the Principals, or
(ii) the first day on which a majority of the members of the Board of Directors
are not Continuing Directors, or (iii) the sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties. For purposes of this definition, any transfer of an Equity
Interest of an entity that was formed for the purpose of acquiring voting stock
of the Company shall be deemed to be a transfer of such percentage of such
voting stock as corresponds to the percentage of the equity of such entity that
has been so transferred.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, without
duplication, (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), (ii) provision for taxes
based on income or profits of such Person and its Restricted Subsidiaries for
such period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, (iii) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and other charges incurred in respect of letters of
credit or bankers' acceptance financings and net payments (if any) pursuant to
Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period and
deferred finance charges) and other non-cash charges of such Person and its
Restricted Subsidiaries for such period (excluding non-cash charges to the
extent that such non-cash charges represent an accrual of or reserve for cash
charges to be incurred in any future period), to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income, including without limitation non-cash charges
recorded in the period ended September 30, 1996 for the write-offs or
write-downs of assets related to (a) the rationalization of manufacturing
operations located in the United Kingdom, and (b) adjustments of Renewal Power
Station inventory valuation, and (v) the following non-recurring expenses
related to the recapitalization of the Company consummated on September 13, 1996
(the "Recapitalization"): (a) up to $2.3 million of debt prepayment penalties
incurred in connection with the prepayment of the Company's Indebtedness
outstanding prior to the Recapitalization; (b) up to $2.2 million of advisory
fees paid to the financial advisor to the Company's shareholders who sold shares
in the Recapitalization; (c) legal and consulting fees incurred in connection
with the Recapitalization of up to $4.2 million; and (d) up to $7.1 million of
compensation expense paid to present and former officers of the Company with
respect to obligations to such present and former
3
officers arising as a result of the Recapitalization, in each case to the extent
that such expenses were paid in cash during the period ended September 30, 1996
(or, in the case of up to $2.0 million of expenses incurred pursuant to clause
(d) above, during the period ended September 30, 1998), and deducted in
computing Consolidated Net Income for such period. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Restricted Subsidiary
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
Company or any of its Wholly Owned Restricted Subsidiaries, (ii) the Net Income
of any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary
shall only be included to the extent of the amount of dividends or distribution
paid to the Company or any of its Wholly Owned Restricted Subsidiaries;
provided, however, that notwithstanding the foregoing, if at least 80% of the
Equity Interests having ordinary voting power (without regard to the occurrence
of any contingency) for the election of directors or other governing body of a
Restricted Subsidiary is owned by the Company directly or indirectly through one
or more of its Wholly Owned Restricted Subsidiaries, all of the Net Income of
such Restricted Subsidiary shall be included, (iii) the Net Income of any
Restricted Subsidiary acquired directly or indirectly by the Company in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, (v) the Net Income of any Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (that has not
been obtained), directly or indirectly, by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders and
(vi) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or
not distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (a) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of this Indenture
in the book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, and (b) all investments as of such date in
unconsolidated Restricted Subsidiaries and in Persons that are not Restricted
Subsidiaries (except, in each case, Permitted Investments), and (c) all
unamortized debt
4
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Consulting Agreements" means (i) the Consulting Agreement dated
September 12, 1996 between the Company and Thomas H. Pyle and (ii) the
Confidentiality, Non-Competition, No Solicitation and No Hire Agreement between
the Company and Thomas H. Pyle, each as in effect on the date of this Indenture
and as amended from time to time in a manner no less favorable, taken as a
whole, to the Company.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of
September 12, 1996, by and among the Company, the lenders party thereto, DLJ
Capital Funding, Inc., as documentation and joint syndication agent, and the
Bank Agent, as amended, supplemented or otherwise modified from time to time.
References to the Credit Agreement shall also include any credit agreement or
agreements entered into by the Company to replace, extend, renew, increase,
refund or refinance all or a portion of the Indebtedness under the Credit
Agreement; provided that the aggregate principal amount of Indebtedness
outstanding or available thereunder will not be increased except to the extent
permitted by Section 4.09 hereof.
"Default" means any event or condition that is or with the passage of
time or the giving of notice or both would, unless cured or waived, be an Event
of Default.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) so long as Senior Bank Debt is
outstanding, the Senior Bank Debt and (ii) thereafter, any other Senior Debt
permitted under this Indenture the principal amount of which is $25.0 million or
more and which has been designated by the Company as "Designated Senior Debt".
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable, mandatorily or at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date on which the Notes are
scheduled to mature.
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"Employment Agreement" means the Employment Agreement dated September
12, 1996 between the Company and David A. Jones, as in effect on the date of
this Indenture and as amended from time to time in a manner no less favorable,
taken as a whole, to the Company.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Notes for New Notes.
"Existing Indebtedness" means (i) Indebtedness of the Company and its
Subsidiaries (other than under the Credit Agreement) in existence on the date of
this Indenture, until such amounts are repaid, and (ii) Indebtedness incurred
after the date of this Indenture pursuant to the following agreements in
aggregate principal amount outstanding not to exceed $7.0 million (or the
equivalent thereof in any foreign currency), as each such agreement is in effect
as of the date of this Indenture and as the same may be amended on terms, taken
as a whole, that are no less favorable to the Company: (a) the Credit Agreement
between Rayovac Europe B.V. and ABN Amro Bank N.V.; (b) the Credit Agreement
between Rayovac (UK), Ltd. and NatWest Bank plc (England); and (c) the Credit
Agreement between Rayovac (UK), Ltd. and NationsBank, N.A.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations, but excluding amortization of deferred
financing fees) and (ii) the consolidated interest expense of such Person and
its Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee is called upon or Lien is
enforced) and (iv) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a person that is a Subsidiary) on any series of
preferred stock of such Person, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
6
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state or territory thereof, or
the District of Columbia.
"GAAP" means generally accepted accounting principles set forth from
time to time 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 agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" of a Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liability of such Person in connection with any
application for a letter of credit or letter of guarantee.
7
"Guarantor" means, collectively, ROV Holding, Inc., a Delaware
corporation, and each Subsidiary of the Company that has executed a Guarantee in
accordance with Sections 4.16 and 4.17 hereof, and their successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without duplication:
(i) all indebtedness of such Person for borrowed money; (ii) all obligations
issued, undertaken or assumed by such Person as the deferred purchase price of
property or services (other than trade payables entered into and accrued
expenses arising in the ordinary course of business on ordinary terms); (iii)
all non-contingent reimbursement or payment obligations with respect to surety
instruments; (iv) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments; (v) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property); (vi) all Capital Lease Obligations of such Person; (vii) all
indebtedness referred to in clauses (i) through (vi) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; (viii) all
Hedging Obligations of such Person; and (ix) all Guarantees of such Person in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (i) through (viii) above.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances and loans and other
arrangements, in each case made to officers and employees in the ordinary course
of business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of.
"Joint Venture" means a corporation, partnership, limited liability
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) which is not a Subsidiary
of the Company or any of its Restricted Subsidiaries and which is now or
8
hereafter formed by the Company or any of its Restricted Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.
"Legal Holiday" means a Saturday, a Sunday or a day on which
commercial banks in the City of New York, Chicago or San Francisco or at a place
of payment are authorized or required by law, regulation or executive order to
remain closed. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing (other
than any option, call or similar right relating to treasury shares of the
Company to the extent that such option, call or similar right is granted (i)
under any employee stock option plan, employee stock ownership plan or similar
plan or arrangement of the Company or its Subsidiaries or (ii) in connection
with the issuance of Indebtedness permitted under Section 4.09 hereof).
"Liquidated Damages" means the additional amounts (if any) payable by
the Company in the event of a Registration Default under, and as defined in, the
Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
which amount is equal to the excess, if any, of (i) the cash received by the
Company or such Restricted Subsidiary (including any cash payments received by
way of deferred payment pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received) in connection with such
disposition over (ii) the sum of (a) the amount of any Indebtedness which is
secured by such asset and which is required to be repaid in connection with the
disposition thereof, plus (b) the reasonable out-of-pocket expenses incurred by
the Company or such Restricted Subsidiary, as the case may be, in connection
with such disposition or in connection with the transfer of such amount from
such Restricted Subsidiary to the Company, plus (c) provisions for taxes,
including income taxes, reasonably estimated to be attributable to the
disposition of such asset or attributable to required prepayments or repayments
of Indebtedness with the proceeds thereof plus (d) if the Company does not first
receive a transfer of such amount from the relevant Restricted Subsidiary with
respect to the disposition of an asset by such Restricted Subsidiary and such
Restricted Subsidiary intends to make such transfer as soon as practicable, the
out-of-pocket expenses and taxes that the Company reasonably estimates will be
incurred by the Company or such Restricted
9
Subsidiary in connection with such transfer at the time such transfer is
expected to be received by the Company (including, without limitation,
withholding taxes on the remittance of such amount).
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company (or
any Guarantor, if applicable), any Subsidiary of the Company or the Trustee.
"Permitted Investments" means (i) any Investments in the Company or in
a Wholly Owned Restricted Subsidiary of the Company which, with respect to any
such Wholly Owned Restricted Subsidiary, has a fair market value which does not
exceed $1.0 million in the aggregate, or any Investments in a Wholly Owned
Restricted Subsidiary that (A) is a Guarantor, or (B) is not a Guarantor, but is
a Foreign Subsidiary and the aggregate fair market value of all Investments made
after the date of this Indenture in Foreign Subsidiaries does not exceed $3.0
million (or the equivalent thereof in one or more foreign currencies), (ii) any
Investments in Cash Equivalents; (iii) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (a) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company that is a Guarantor; (iv) Investments in accounts and
notes receivable acquired in the ordinary course of business; (v) notes from
employees, officers, directors, and their transferees and Affiliates issued to
the Company representing payment of the exercise price of options to purchase
common stock of the Company; and (vi) other Investments made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (vii) Investments by the Company and
its Subsidiaries in Joint Ventures in the form of contributions of capital,
loans, advances or Guarantees; provided that, immediately before and after
giving effect to such Investment, (a) no Event
10
of Default shall have occurred and be continuing, and (b) the aggregate fair
market value of all Investments pursuant to this clause (vii) shall not exceed
$2.0 million in the aggregate; (viii) Hedging Obligations permitted by the terms
of the Credit Agreement and this Indenture to be outstanding; and (ix) other
Investments in any Person having an aggregate fair market value (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value) not to exceed $5.0 million at any time outstanding. For
purposes of this definition, the aggregate fair market value of any Investment
shall be measured on the date such Investment is made without giving effect to
subsequent changes in value and shall be valued at the cash amount thereof, if
in cash, the fair market value thereof as determined by the Board of Directors,
if in property, and at the maximum amount thereof, if in Guarantees.
"Permitted Liens" means
(i) any Lien existing on property of the Company or any Subsidiary on
the date of this Indenture securing Indebtedness outstanding on such date;
(ii) any Lien securing obligations under the Senior Bank Debt and any
Guarantee thereof, which obligations or Guarantee are permitted by the terms
hereof to be incurred and outstanding;
(iii) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP are being maintained;
(iv) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto;
(v) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(vi) Liens on property of the Company or any Subsidiary securing (a)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases and statutory obligations, (b) surety bonds (excluding appeal
bonds and bonds posted in connection with court proceedings or judgments) and
(c) other non-delinquent obligations of a like nature, including pledges or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
legislation, in each case, incurred in the ordinary course of business;
(vii) Liens consisting of judgment or judicial attachment Liens and
Liens securing contingent obligations on appeal bonds and other bonds posted in
connection with court proceedings or judgments; provided that the enforcement of
such Liens is effectively stayed and all such Liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $3.0 million;
(viii) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in
11
any case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Company and its
Subsidiaries, taken as a whole;
(ix) purchase money security interests on any property acquired by the
Company or any Subsidiary in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property, provided that (a) any such Lien attaches to
such property concurrently with or within 90 days after the acquisition thereof,
(b) such Lien attaches solely to the property so acquired in such transaction,
(c) the principal amount of the Indebtedness secured thereby does not exceed
100% of the cost of such property and (d) the principal amount of the
Indebtedness secured by all such purchase money security interests shall not at
any time exceed $5.0 million;
(x) Liens securing obligations in respect of Capital Lease Obligations
on assets subject to such leases, provided that such Capital Lease Obligations
are otherwise permitted hereunder;
(xi) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (a) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board, and (b) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository institution;
(xii) Liens in favor of the Company or any Wholly Owned Restricted
Subsidiary that is a Guarantor;
(xiii) Liens on property of a Person existing at the time such Person
becomes a Restricted Subsidiary or such Person is merged into or consolidated
with the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company;
(xiv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(xv) extensions, renewals and replacements of Liens referred to in
clauses (i) through (xiv) above; provided that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure any Indebtedness in addition
to that secured immediately prior to such extension, renewal or replacement;
(xvi) Liens securing Indebtedness permitted by clause (xiv) of the
second paragraph of Section 4.09 hereof; and
(xvii) Liens securing other Indebtedness of the Company and its
Subsidiaries not expressly permitted by clauses (i) through (xvi) above;
provided that the aggregate amount of the Indebtedness secured by Liens
permitted pursuant to this clause (xvii) does not exceed $3.0 million in the
aggregate.
12
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Principals" means Thomas H. Lee Equity Fund III, L.P. and its
co-investors, Thomas H. Lee Foreign Fund III L.P. and Thomas H. Lee Company, and
any Affiliates of Thomas H. Lee Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of October 17, 1996, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (i) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (ii) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (i).
"Representative" means, for purposes of Articles 6, 10 and 11, the
Bank Agent or other agent or representative for any Senior Debt or Designated
Senior Debt or, with respect to any Guarantor, for any Senior Debt of such
Guarantor.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means with respect to any Person, any
Subsidiary of the referent Person that is not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Bank Debt" means all Obligations outstanding under or in
connection with the Credit Agreement as such agreement may be restated, further
amended, supplemented or otherwise modified or replaced from time to time
hereafter, together with any refunding or replacement of such Indebtedness, up
to an aggregate maximum principal amount outstanding or available at any time of
$170.0 million plus the aggregate principal amount of Indebtedness issued under
the Credit Agreement pursuant to clause (vi) of the second paragraph of Section
4.09 hereof, less all outstanding Obligations with respect to Existing
Indebtedness, less the aggregate principal amount of Indebtedness issued
pursuant to clause (xiv) (b) of the second paragraph of Section 4.09 hereof,
less, without duplication, the aggregate amount of all mandatory repayments of
principal (which may not be reborrowed) of and/or mandatory permanent reductions
of availability of Indebtedness under such Senior Bank Debt and any optional
prepayments on any term loans under the Credit Agreement that have been made
since the date of this Indenture (including, without limitation, the aggregate
amount of all such mandatory payments and reductions made pursuant to Section
4.10 hereof).
13
"Senior Debt" means (i) the Senior Bank Debt and (ii) any other
Indebtedness permitted to be incurred by the Company or any Guarantor, as the
case may be, under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes; provided that the amount
of any Guarantee of Senior Bank Debt that constitutes Senior Debt with respect
to any Guarantor shall be determined without regard to any reduction in the
amount of any Guarantee of such Senior Bank Debt necessary to cause such
Guarantee not to be a fraudulent conveyance. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (a) any liability for
federal, state, local or other taxes owed or owing by the Company, (b) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (c)
any trade payables or (d) any Indebtedness that is incurred in violation of this
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Subsidiary Guarantee" means, individually and collectively, the
guarantees given by ROV Holding, Inc. and any Additional Guarantor pursuant to
the terms of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, provided that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939, as so amended.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) Minera Vidaluz, S.A. de C.V., (ii)
Zoe Phos International, N.V., (iii) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary: (a) has no Indebtedness other than
Non-Recourse Debt, (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary of the
Company than those that might be obtained at the time from Persons who are not
Affiliates of the Company, (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interest or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results, and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any
14
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the Company
shall be in default of such Section). The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, and
(ii) no Default or Event of Default would be in existence following such
designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
of the Company all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
the Company or by one or more Wholly Owned Restricted Subsidiaries of the
Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"...................... 4.11
"Asset Sale"................................. 4.10
"Asset Sale Offer"........................... 3.09
"Benefitted Party"........................... 10.01
"Change of Control Offer".................... 4.14
"Change of Control Payment".................. 4.14
"Change of Control Payment Date"............. 4.14
"Covenant Defeasance"........................ 8.03
"Custodian".................................. 6.01
"Event of Default"........................... 6.01
"Excess Proceeds"............................ 4.10
"Guarantor Significant Senior Debt".......... 10.04
"incur"...................................... 4.09
"Legal Defeasance" .......................... 8.02
"Offer Amount"............................... 3.09
"Offer Period"............................... 3.09
"Other Indebtedness"......................... 4.16
"Paying Agent"............................... 2.03
15
"Payment Blockage Notice"..................... 10.04
"Payment Default"............................. 6.01
"Purchase Date"............................... 3.09
"Refinancing Indebtedness".................... 4.09
"Registrar"................................... 2.03
"Restricted Payments"......................... 4.07
"Significant Senior Debt"..................... 11.02
"Subordinated Obligations".................... 11.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes or any Guarantor.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. 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) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
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(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the Commission from time to time.
SECTION 1.05. BUSINESS DAY CERTIFICATE.
On the date of execution and delivery of this Indenture (with respect
to the remainder of calendar year 1996) and thereafter, within 15 days prior to
the end of each calendar year while this Indenture remains in effect (with
respect to the succeeding calendar years), the Company shall deliver to the
Trustee an Officers' Certificate specifying the days on which banking
institutions in the City of Chicago and the City of San Francisco are authorized
or obligated by law to close.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Subsidiary Guarantees shall
be substantially in the form of Exhibit A-1, the terms of which are incorporated
in and made part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, ROV Holding
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
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A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company or any Guarantor in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company or a
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Guarantor shall furnish to the Trustee
at least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company and the Guarantor shall otherwise comply with
TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal amount
of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his or her
attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the
form of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act,
19
a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may not be exchanged for a beneficial interest in
a Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the form
of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Security, written instructions from the Holder thereof directing
the Trustee to make, an endorsement on the Global Note to reflect
an increase in the aggregate principal amount of the Notes
represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Beneficial Interests in a Global Note.
The registration of transfer and exchange of beneficial interests in a Global
Note shall be effected through the Depositary, in accordance with this Indenture
and the procedures of the Depositary therefor, which shall include restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no responsibility or liability for any
acts or omissions of the Depositary taken pursuant to this Section 2.06(c).
(d) Transfer of a Global Note for a Definitive Note.
(i) The Holder of a Global Note may upon request exchange any such
Global Note or portion thereof for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other form
of instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case of a
Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of Exhibit B hereto); or
20
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of
Exhibit B hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the Trustee to
the effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee shall cause the aggregate principal
amount of Global Notes to be reduced accordingly and, following
such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Definitive Note in
the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note 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.
(f) Authentication of Definitive Notes in Absence of Depositary. If at
any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for
the Global Notes and a successor Depositary for the Global Notes
is not appointed by the Company within 90 days after delivery of
such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legend.
21
(i) Except as permitted by the following paragraphs (ii) and (iii),
each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5
OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO
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, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL), (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note that does not bear the legend set forth in
(i) above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the first legend set forth in (i)
above, but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect
to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Definitive Note that does not bear the legend set forth in
(i) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in
22
writing to the Registrar that such request is being made pursuant
to Rule 144 (such certification to be substantially in the form
of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate New Notes in exchange for Notes
accepted for exchange in the Exchange Offer, which New Notes
shall not bear the legend set forth in (i) above, and the
Registrar shall rescind any restriction on the transfer of such
Notes.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 4.10, 4.14 and 9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note
being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(v) Neither the Company nor the Registrar shall be required:
(A) to issue, to register the transfer of or to exchange
Notes during a period beginning at the opening of
business 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of
selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part;
or
(C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest
payment date.
23
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving
payment of principal of, interest and Liquidated Damages, if
any, on such Note, and neither the Trustee, any Agent nor
the Company shall be affected by notice to the contrary.
(vii)The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses, including the fees and expenses of the Trustee in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes or any fraction
owned by the Company, any Guarantor or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control
24
with the Company, shall be considered as though not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that a Responsible Officer of
the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes. Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 40 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which
25
the redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
26
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on the
redemption date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, accrued
interest and Liquidated Damages, if any, on all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to November 1, 2001. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
27
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on November 1 of the
years indicated below:
Year Percentage
2001.................................................... 105.125%
2002 ................................................... 103.417
2003 ................................................... 101.708
2004 and thereafter..................................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time during the first 36 months after the date of this Indenture, the
Company may redeem up to 35% of the initial principal amount of the Notes
originally issued with the net proceeds of one or more public offerings of
equity securities of the Company, at a redemption price equal to 109.250% of the
principal amount of such Notes, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of redemption; provided that at least 65%
of the principal amount of the Notes originally issued remain outstanding
immediately after the occurrence of such redemption and that such redemption
occurs within 60 days of the date of the closing of such public offerings.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.14 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
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Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his or her election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than
29
five days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made subject to Sections 3.05 and 3.06
hereof. The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with an Asset Sale Offer.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time
30
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New York for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company and, if the
Company is required to file financial statements for any Guarantor, such
Guarantor shall furnish to the Trustee and to all Holders (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company and/or such Guarantor
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's and/or the
Guarantor's certified independent accountants and (ii) all financial information
that would be required to be filed with the Commission on Form 8-K if the
Company and/or such Guarantor were required to file such reports. In addition,
whether or not required by the rules and regulations of the Commission, the
Company shall file a copy of all such information with the Commission for public
availability (unless the Commission will not accept such a filing) and shall
promptly make such information available to all securities analysts and
prospective investors upon written request. The Company and any Guarantor shall
at all times comply with TIA ss. 314(a).
(b) For so long as any Transfer Restricted Securities remain
outstanding, the Company and each Guarantor shall furnish to all Holders and
prospective purchasers of the Notes designated by the Holders of Transfer
Restricted Securities, promptly upon their request, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor shall deliver to the Trustee,
within 90 days after the end of each fiscal year of the Company, an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, interest or Liquidated Damages, if any,
on the Notes is prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
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(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or to any
direct or indirect holders of the Company's Equity Interests in their capacity
as such (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted Subsidiary or
dividends or distributions payable to the Company or any Wholly Owned Restricted
Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company or any Restricted Subsidiary or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Restricted Subsidiary of the Company that is a
Guarantor); (iii) purchase, redeem, defease or otherwise acquire or retire for
value prior to a scheduled mandatory sinking fund payment date or final maturity
date any Indebtedness that is pari passu with or subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other actions
32
set forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
the date of this Indenture (including Restricted Payments permitted by the next
succeeding paragraph), is less than (w) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of this Indenture to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, 100% of such
deficit), plus (x) 100% of the aggregate net cash proceeds received by the
Company from the issuance or sale after the date of this Indenture of Equity
Interests of the Company or of debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (y) $2.0 million, plus (z) to the extent that any
Unrestricted Subsidiary is designated to be a Restricted Subsidiary, the fair
market value (as determined in good faith by the Board of Directors) of the
Company's Equity Interests in such Subsidiary at the time of such designation.
The foregoing provisions will not prohibit: (i) the payment of any
dividend or other distribution within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (c)(x) of the preceding
paragraph; (iii) the defeasance, redemption or repurchase of pari passu or
subordinated Indebtedness with the net proceeds from an incurrence of
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(x) of the preceding paragraph;
(iv) the purchase, redemption or other acquisition prior to the stated maturity
thereof of Indebtedness that is subordinated to the Notes in exchange for or out
of the net cash proceeds of a substantially concurrent issue and sale (other
than to the Company or any of its Restricted Subsidiaries) of new Indebtedness;
provided that (x) the principal amount of such new Indebtedness shall not exceed
the principal amount of Indebtedness so refinanced (plus the amount of such
reasonable expenses incurred in connection therewith), (y) such new Indebtedness
shall have a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being refinanced, and (z)
the new Indebtedness shall be subordinate in right of payment
33
to the Notes; (v) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company held by any member of the
Company's (or any of its Restricted Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement or in
connection with the termination of employment of any employees or management of
the Company or its Subsidiaries; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $2.0 million in the aggregate plus the aggregate cash proceeds received
by the Company after the date of this Indenture from any reissuance of Equity
Interests by the Company to members of management of the Company and its
Restricted Subsidiaries; (vi) Investments received by the Company and its
Restricted Subsidiaries as non-cash consideration from Asset Sales to the extent
permitted by Section 4.10 hereof; and (vii) the repurchase of Notes pursuant to
a Change of Control Offer or an Asset Sale Offer; and no Default or Event of
Default shall have occurred and be continuing immediately after any such
transaction.
The Board of Directors may designate a Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash or
Government Securities) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of this covenant.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash or Government
Securities) shall be the fair market value (evidenced by a Board Resolution
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, which calculations may be based upon the Company's latest available
financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (x) on its Capital Stock or
(y) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) the Credit Agreement and all related
Senior Bank Debt documents as in effect as of the date of this Indenture, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Agreement as in effect on the date of this Indenture, (c) this Indenture, the
Subsidiary Guarantees and the Notes, (d) applicable law, (e) any instrument
governing
34
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person is not taken into account in determining whether such
acquisition was permitted by the terms of this Indenture, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations or Capital Lease Obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced, (i) customary
restrictions imposed on the transfer of copyrighted or patented materials and
customary provisions in agreements that restrict the assignees of such
agreements or any rights thereunder, or (j) restrictions with respect to a
Subsidiary of the Company imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing limitations shall not apply to: (i) the incurrence by
the Company of Senior Bank Debt; (ii) Guarantees of the Senior Bank Debt
permitted under or required by the Credit Agreement and Guarantees permitted
under or required by this Indenture; (iii) the incurrence by the Company and its
Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the
Company of Indebtedness represented by the Notes and this Indenture, and the
incurrence by Restricted Subsidiaries of Guarantees required or permitted to be
incurred under this Indenture; (v) the incurrence by the Company or any of its
Restricted Subsidiaries of Capital Lease Obligations and/or additional
Indebtedness constituting purchase money obligations in an aggregate principal
amount not to exceed $5.0 million at any time outstanding; (vi) the incurrence
by the Company of additional Indebtedness for any corporate purposes in an
outstanding principal amount (or accreted value, as applicable) at no time
exceeding $25.0 million (which may, but need not be, borrowed under the Credit
Agreement); (vii) the incurrence by any Foreign Subsidiary of Indebtedness,
which when aggregated with the principal amount of Indebtedness of all Foreign
Subsidiaries then outstanding and incurred pursuant to this clause (vii), does
not exceed $5.0 million (or the equivalent thereof in any other currency) at any
one time outstanding; (viii) the incurrence
35
by any Restricted Subsidiary of the Company of Acquired Debt in an aggregate
principal amount not to exceed $20.0 million for all Restricted Subsidiaries
(reduced by the amount of Acquired Debt repaid with the Net Proceeds of Asset
Sales of any Restricted Subsidiary subject to such Acquired Debt) that (a) has
not been incurred in connection with, or in contemplation of such Restricted
Subsidiary becoming a Restricted Subsidiary, or a merger of a Person subject to
such Acquired Debt with or into such Restricted Subsidiary, and (b) is without
recourse to the Company or any of its Restricted Subsidiaries or any of their
respective assets (other than the Restricted Subsidiary subject to such Acquired
Debt and its assets), and is not guaranteed by any such Person; provided that
(A) after giving pro forma effect to the incurrence thereof as if incurred by
the Company, the Company could incur at least $1.00 of Indebtedness under the
first paragraph of this Section 4.09, (B) any Refinancing Indebtedness with
respect thereto may not be incurred by any Person other than the Restricted
Subsidiary that is the obligor on such Acquired Indebtedness, and (C) such
Restricted Subsidiary becomes an Additional Guarantor upon incurrence of such
Acquired Debt in accordance with this Indenture; (ix) the incurrence by the
Company of Indebtedness in connection with the issuance of notes in payment of
the repurchase, redemption, acquisition or retirement of Equity Interests of the
Company or any Restricted Subsidiary of the Company to the extent permitted by
Section 4.07 hereof; (x) Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Credit Agreement or this
Indenture to be outstanding; (xi) Indebtedness arising out of letters of credit,
performance bonds, surety bonds, guarantees resulting from endorsements of
negotiable instruments and bankers' acceptances, incurred in the ordinary course
of business; (xii) all Obligations with respect to the foregoing; (xiii) the
incurrence by the Company and its Restricted Subsidiaries of Indebtedness issued
in exchange for, or the proceeds of which are used to repay, redeem, defease,
extend, refinance, renew, replace, or refund Indebtedness referred to in clauses
(ii) through (xii) above, and this clause (xiii) (the "Refinancing
Indebtedness"); provided that (a) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of Indebtedness so extended,
refinanced, renewed, replaced, substituted or refunded (plus the amount of fees,
premiums, consent fees, prepayment penalties and expenses incurred in connection
therewith); (b) in the case of Refinancing Indebtedness for Indebtedness
permitted under clause (iii) or (viii) of this paragraph, the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded or shall mature after the scheduled
maturity date of the Notes; (c) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinate to the Notes, such Refinancing Indebtedness
shall be subordinated in right of payment to the Notes on terms at least as
favorable to the holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced or
refunded; and (d) with respect to Refinancing Indebtedness incurred by a
Guarantor, such Refinancing Indebtedness shall rank no more senior, and shall be
at least as subordinated, in right of payment to the Guarantee of such Guarantor
as the Indebtedness being extended, refinanced, renewed, replaced or refunded;
(xiv) Indebtedness of the Company (a) not to exceed an aggregate principal
amount of $8.0 million outstanding at any time arising as a result of the
issuance of tax-exempt industrial development bonds or similar tax-exempt public
financing, and (b) additional Indebtedness arising out of the issuance of
additional tax-exempt public financing obligations, but only to the extent that
Indebtedness owing under the Credit Agreement is prepaid, concurrently with the
receipt of the net proceeds of such issuance, in an amount at least equal to the
amount of such proceeds, and term indebtedness or the availability of revolving
credit borrowings under the Credit Agreement is permanently reduced by the
amount of such net proceeds and (xv) the incurrence of Indebtedness between (a)
the Company and its Restricted Subsidiaries and (b) the Restricted Subsidiaries;
provided, that (x) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the Company
or a Wholly Owned
36
Restricted Subsidiary and (y) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any assets
(including by way of a sale and leaseback) other than sales of inventory in the
ordinary course of business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company will be
governed by Section 4.14 hereof and/or Section 5.01 hereof and not by the
provisions of this Section 4.10), or (ii) issue or sell Equity Interests of any
of its Restricted Subsidiaries, in the case of either clause (i) or (ii) above,
whether in a single transaction or a series of related transactions, (a) that
have a fair market value in excess of $1.0 million, or (b) for net proceeds in
excess of $1.0 million (each of the foregoing, an "Asset Sale"), unless (x) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by an Officers' Certificate delivered to the Trustee, and for
Asset Sales having a fair market value or net proceeds in excess of $5.0
million, evidenced by a Board Resolution delivered to the Trustee) of the assets
sold or otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided, however, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Guarantee) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (B) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) or Cash Equivalents,
shall be deemed to be cash for purposes of this provision; and provided,
further, that the 75% limitation referred to in this clause (y) shall not apply
to any Asset Sale in which the cash portion of the consideration received
therefrom, determined in accordance with the foregoing proviso, is equal to or
greater than what the after-tax proceeds would have been had such Asset Sale
complied with the aforementioned 75% limitation. Notwithstanding the foregoing:
(i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary
or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary, (ii) an issuance of Equity Interests (other than
Disqualified Stock) by a Wholly Owned Restricted Subsidiary to the Company or
another Wholly Owned Restricted Subsidiary, (iii) issuances of Equity Interests
by the Company pursuant to warrants outstanding on the date of this Indenture,
(iv) a Restricted Payment that is permitted by Section 4.07 hereof, (v) the
surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind (other than assignment of such
rights or claims for value outside the ordinary course of business) or (vi) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registration therefor and other similar intellectual
property, will not be deemed to be an Asset Sale. In addition, notwithstanding
the foregoing, the Company and any of its Restricted Subsidiaries may create or
assume Liens (or permit any foreclosure thereon) securing Indebtedness to the
extent that such Lien does not violate Section 4.12 hereof.
Within 270 days after the receipt of any Net Proceeds from any Asset
Sale, the Company shall apply such Net Proceeds from such Asset Sale to
permanently reduce Senior Debt in accordance with the
37
terms of the Credit Agreement, if applicable, or to the extent not required to
be applied thereunder, may, at its option, apply such Net Proceeds to repayment
of Indebtedness of a Restricted Subsidiary (in the case of Net Proceeds from an
Asset Sale effected by a Restricted Subsidiary) or to an investment in a
Restricted Subsidiary or in another business or capital expenditure or other
long-term/tangible assets, in each case, in the same or a similar line of
business as the Company or any of its Restricted Subsidiaries were engaged in on
the date of this Indenture or in businesses reasonably related thereto. Pending
the final application of any such Net Proceeds, the Company may temporarily
reduce Senior Debt or otherwise invest such Net Proceeds in any manner that is
not prohibited by this Indenture. Any Net Proceeds from an Asset Sale that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an Asset
Sale Offer to all Holders of Notes to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.09 hereof. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to or enter into any other
transaction with, or for the benefit of, an Affiliate of the Company (an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a Board Resolution certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to the
Company or such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that (v) the Employment Agreement and any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice (other than past practice with respect to Thomas F. Pyle) of the
Company or such Restricted Subsidiary, (w) transactions between or among the
Company and/or its Restricted Subsidiaries, (x) investment banking and
management fees in an aggregate amount no greater than $360,000 per annum plus
reimbursement of expenses to be paid by the Company to Thomas H. Lee Company,
(y) payments to Thomas F. Pyle pursuant to the Consulting Agreements (whether or
not Thomas F. Pyle would be considered an Affiliate), and (z) transactions
permitted by Section 4.07 hereof, in each case, shall not be deemed Affiliate
Transactions; further provided, however, that (A) the provisions of clause (ii)
shall not apply to sales of inventory by the Company or any Restricted
Subsidiary to any Affiliate in the ordinary course of business and (B) the
provisions of clause (ii)(b) shall not apply to loans or advances to the Company
38
or any Restricted Subsidiary from, or equity investments in the Company or any
Restricted Subsidiary by, any Affiliate to the extent permitted by Section 4.09
hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any of their property, assets or revenue now owned or
hereafter acquired by them, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens; provided,
however, that in addition to creating Permitted Liens on its properties or
assets, the Company may create any Lien upon any of its properties or assets if
the Notes are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 in principal amount or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase (the "Change of Control Payment"). Within 30 calendar days
following any Change of Control, the Company will mail a notice to each Holder
stating: (i) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment; (ii) the
purchase price and the purchase date, which will be no earlier than 30 calendar
days nor later than 60 calendar days from the date such notice is mailed (the
"Change of Control Payment Date"); (iii) that any Note not tendered will
continue to accrue interest; (iv) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue interest after the
Change of Control Payment Date; (v) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
39
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have such
Notes purchased; and (vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes in
connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of the Notes or portions thereof required to be
purchased by the Company. The Paying Agent will promptly mail to each Holder of
Notes so accepted the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.14, but in any event within 90 calendar
days following a Change of Control, the Company shall either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this Section 4.14. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
SECTION 4.15. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinated or junior in right of payment to any
Senior Debt of the Company and senior in any respect in right of payment to the
Notes, and (ii) the Company will not permit any Guarantor to incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
subordinated or junior in right of payment to its Senior Debt and senior in any
respect in right of payment to its Guarantee.
SECTION 4.16. LIMITATIONS ON GUARANTEES OF COMPANY INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES.
In the event that any Restricted Subsidiary, directly or indirectly,
guarantees any Indebtedness of the Company other than the Notes (the "Other
Indebtedness") the Company shall cause such Restricted Subsidiary to deliver to
the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary shall concurrently guarantee the Company's Obligations under this
Indenture and the Notes to the same extent that such Restricted Subsidiary
guaranteed the Company's Obligations under the Other Indebtedness (including
waiver of subrogation, if any), provided that if such Other Indebtedness is
Senior Debt, the Additional Guarantee shall be subordinated in right of payment
to the guarantee of such Other Indebtedness, as provided by the provisions of
Article 11 hereof, and such Additional Guarantee shall be on the same terms and
subject to the same conditions as the initial Guarantee given by ROV Holding,
Inc. hereunder. Each Additional Guarantee shall by its terms provide that the
Additional Guarantor making such Additional Guarantee will be automatically and
unconditionally released and discharged from
40
its obligations under such Additional Guarantee upon the release or discharge of
the guarantee of the Other Indebtedness that resulted in the creation of such
Additional Guarantee, except a discharge or release by, or as a result of, any
payment under the guarantee of such Other Indebtedness by such Additional
Guarantor.
SECTION 4.17. ADDITIONAL GUARANTEES.
If (i) if the Company or any of its Restricted Subsidiaries shall,
after the date of this Indenture, transfer or cause to be transferred, including
by way of any Investment, in one or a series of transactions (whether or not
related), any assets, businesses, divisions, real property or equipment having
an aggregate fair market value (as determined in good faith by the Board of
Directors) in excess of $1.0 million to any Restricted Subsidiary that is not a
Guarantor, (ii) the Company or any of its Restricted Subsidiaries shall acquire
another Restricted Subsidiary having total assets with a fair market value (as
determined in good faith by the Board of Directors) in excess of $1.0 million,
or (iii) any Restricted Subsidiary shall incur Acquired Debt, then the Company
shall, at the time of such transfer, acquisition or incurrence, (i) cause such
transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring
Acquired Debt (if not then a Guarantor) to execute a Guarantee of the
Obligations of the Company hereunder in the form set forth herein and (ii)
deliver to the Trustee an Opinion of Counsel, in form reasonably satisfactory to
the Trustee, that such Guarantee is a valid, binding and enforceable obligation
of such transferee, acquired Restricted Subsidiary or Restricted Subsidiary
incurring Acquired Debt, subject to customary exceptions for bankruptcy and
equitable principles. Notwithstanding the foregoing, the Company or any of its
Restricted Subsidiaries may make a Restricted Investment in any Wholly Owned
Restricted Subsidiary of the Company without compliance with this Section 4.17
provided that such Restricted Investment is permitted by Section 4.07 hereof.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another Person (other than the
Company) whether or not affiliated with such Guarantor unless: (i) subject to
the provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under its Guarantee, the Notes
and this Indenture; (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and (iii) such Guarantor, or any Person
formed by or surviving any such consolidation or merger, (a) would have
Consolidated Net Worth (immediately after giving effect to such transaction),
equal to or greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction and (b) would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio to incur, immediately after
giving effect to such transaction, at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) shall be released and relieved of any
obligations under its Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable provisions
hereof. In the event the Board of Directors designates a Guarantor to be an
Unrestricted Subsidiary, such Guarantor will be
41
released and relieved of any obligation under its Guarantee, provided that such
designation is conducted in accordance with the applicable provisions hereof
including, but not limited to, Section 4.07.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (i) the
Company is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (a) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(b) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof; provided, however, that this provision
shall not prohibit any merger or consolidation among the Company and one or more
of its Wholly Owned Restricted Subsidiaries that is a Guarantor.
In connection with any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance, or other disposition of all or
substantially all of the assets of the Company in accordance with this Section
5.01, the Company shall deliver, or cause to be delivered, to the Trustee, in
form reasonably satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance, or other disposition and any
supplemental indenture in respect thereto comply with this Article 5 and that
all conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer
42
instead to the successor corporation and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein; provided,
however, that the predecessor Company shall not be relieved from the obligation
to pay the principal of, interest and Liquidated Damages, if any, on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest or Liquidated
Damages, if any, on any Note when the same becomes due and payable and the
Default continues for a period of 30 days, whether or not such payment is
prohibited by the provisions of Article 11 hereof;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at
maturity, upon redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article 11 hereof;
(3) the Company or any Guarantor, as the case may be, fails to observe
or perform any other covenant, condition or agreement on its part to be
observed or performed pursuant to Articles 4 or 5 hereof; provided that, in
the case of Sections 4.02, 4.03, 4.04, 4.05, 4.12 and 4.13, such failure
shall have continued for 60 days after receipt of written notice from the
Trustee or any Holder;
(4) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by a Guarantee of the
Company or any of its Restricted Subsidiaries), whether such Indebtedness
or Guarantee now exists or shall be created hereafter, if (a) such default
results in the acceleration of such Indebtedness prior to its express
maturity or shall constitute a default in the payment of such Indebtedness
at final maturity of such Indebtedness, and (b) the principal amount of any
such Indebtedness that has been accelerated or not paid at maturity, when
added to the aggregate principal amount of all other Indebtedness that has
been accelerated or not paid at maturity, exceeds $5.0 million;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments (to the extent not covered by insurance) exceeds $5.0 million;
(6) the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
43
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) generally is not paying its debts as they become due; or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any Restricted
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of the
Company or any Restricted Subsidiary, or
(c) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive
days; and
(8) except as permitted by this Indenture, any Subsidiary Guarantee
issued by a Guarantor shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor, or any Person acting by or on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 3.08 hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon acceleration of the Notes, anything in this Indenture or
in the Notes to the contrary notwithstanding. If an Event of Default occurs
prior to the November 1, 2001 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to November 1, 2001
pursuant to Section 3.07 hereof, then the premium payable for purposes of this
paragraph for each of the years beginning on November 1 of the years set forth
below shall be as set forth in the following table expressed as a percentage of
the amount that would otherwise be due but for the provisions of this sentence,
plus accrued interest, if any, to the date of payment:
Year Percentage
1996......................................... 110.250%
1997 ........................................ 109.225%
1998 ........................................ 108.200%
1999 ........................................ 107.175%
44
2000 ........................................ 106.150%
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (6) and (7) of Section 6.01 relating to the Company, any Significant
Subsidiary of the Company or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary of 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 then outstanding Notes by written notice to the
Company, the Trustee and the Bank Agent may declare the unpaid principal of,
accrued interest and Liquidated Damages, if any, on all the Notes to be due and
payable. Upon such declaration the principal, interest and Liquidated Damages,
if any, shall be due and payable immediately (together with the premium referred
to in Section 6.01, if applicable); provided, however, that so long as any
Designated Senior Debt is outstanding, such declaration shall not become
effective until the earlier of (i) the day which is five Business Days after the
receipt by the Representative with regard to any Designated Senior Debt of such
written notice of acceleration or (ii) the date of acceleration of any
Designated Senior Debt. If an Event of Default specified in clause (6) or (7) of
Section 6.01 relating to the Company, any Significant Subsidiary of the Company
or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary of the Company occurs, such an amount shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. In the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (4) of Section 6.01 hereof, the declaration of acceleration of the Notes
shall be automatically annulled if the holders of any Indebtedness described in
clause (4) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (a) the
annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a court of competent jurisdiction, and (b) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have been cured or waived and
all amounts due to the Trustee under Section 7.07 have been paid.
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, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding, and any recovery
or judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of Notes. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability, and (ii) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. Notwithstanding any provision to the contrary in this Indenture, the
Trustee shall not be obligated to take any action with respect to the provisions
of the last paragraph of Section 6.01 unless directed to do so pursuant to this
Section 6.06.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), 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 occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any Guarantor for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(premium, if any) or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
47
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.06 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of Notes has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.06 hereof.
(d) Whether or not therein expressly so provided, 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) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protections to the Trustee shall be
subject to the provisions of this Article 7 and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take
49
in good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and 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 that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to the provisions of this Indenture, including,
without limitation, the provisions of Section 6.06 hereof, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in compliance with
such request or direction.
(g) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7),
6.01(8) or 6.01(9) hereof and the Trustee shall not be charged with knowledge of
the existence of any Liquidated Damages unless either (i) a Responsible Officer
shall have actual knowledge thereof, or (ii) the Trustee shall have received
notice thereof in accordance with Section 12.02 hereof from the Company or any
Holder of Notes.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company or the Guarantor, personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Guarantor or any Affiliate of the Company or any Guarantor with the same rights
it would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest within the meaning of Section 3.10(b) of the
TIA it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
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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 Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each December 31 beginning with the December 31
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company or any
Guarantor (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Guarantor or any Holder or any other
Person) or liability in connection with the exercise
51
or performance of any of its powers or duties hereunder, except to the extent
any such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation or removal
of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a Board Resolution, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In
54
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(4) through 6.01(6)
hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the incurrence of Indebtedness all or a
portion of the proceeds of which will be used to defease the Notes
pursuant to this Article 8 concurrently with such incurrence) or
insofar as Sections 6.01(6) or 6.01(7) hereof is concerned, at any
time in the period ending on the 123rd day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by
which the Company or any of its Restricted Subsidiaries is bound;
55
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 123rd day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such
56
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of Notes; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall
57
not be obligated to enter into such amended or supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture and the Notes
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes),
and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, interest or Liquidated Damages, if any, on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental indenture unless such
amended or supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of
the Notes in a manner adverse to the Holders;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
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(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or Section 4.14);
(h) except pursuant to Sections 4.16 or 4.17, release any Guarantor
from its obligations under its Guarantee, or change any Guarantee in any
manner that would adversely affect the Holders; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, in addition to the documents required by
Section 12.04, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
GUARANTEES
SECTION 10.01. GUARANTEE.
Each Guarantor and each Restricted Subsidiary of the Company which in
accordance with Section 4.16 or 4.17 hereof is required to guarantee the
obligations of the Company under the Notes, upon execution of a counterpart of
this Indenture, hereby jointly and severally unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity or enforceability
of this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, that: (i) the principal of, premium (if any) and
interest and Liquidated Damages, if any, on the Notes will be paid in full when
due, whether at the maturity or interest payment date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal of, interest or
Liquidated Damages, if any, on the Notes and all other obligations of the
Company to the Holders or the Trustee under this Indenture or the Notes will be
promptly paid in full or performed, all in accordance with the terms of this
Indenture and the Notes; and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, they will be paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed for whatever reason, each Guarantor will be obligated
to pay the same whether or not such failure to pay has become an Event of
Default which could cause acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment not a guarantee of
collection.
Each Guarantor hereby agrees that its obligations with regard to this
Subsidiary Guarantee shall be joint and several, unconditional, irrespective of
the validity or enforceability of the Notes or the obligations of the Company
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and relinquishes all claims,
rights and remedies accorded by applicable law to guarantors and agrees not to
assert or take advantage of any such claims, rights or remedies, including but
not limited to: (a) any right to require the Trustee, the Holders or the Company
(each, a "Benefitted Party") to proceed against the Company or any other Person
or to proceed against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any Benefitted Party's power before
60
proceeding against such Guarantor; (b) the defense of the statute of limitations
in any action hereunder or in any action for the collection of any Indebtedness
or the performance of any obligation hereby guaranteed; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of any
other Person or the failure of a Benefitted Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (d) demand, protest and notice of any kind including but not
limited to notice of the existence, creation or incurring of any new or
additional Indebtedness or obligation or of any action or non-action on the part
of such Guarantor, the Company, any Benefitted Party, any creditor of such
Guarantor, the Company or on the part of any other Person whomsoever in
connection with any Indebtedness or obligations hereby guaranteed; (e) any
defense based upon an election of remedies by a Benefitted Party, including but
not limited to an election to proceed against such Guarantor for reimbursement;
(f) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (g) any defense arising because of a
Benefitted Party's election, in any proceeding instituted under Bankruptcy Law,
of the application of 11 U.S.C. Section 1111(b)(2); or (h) any defense based on
any borrowing or grant of a security interest under 11 U.S.C. Section 364. Each
Guarantor hereby covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in its Subsidiary
Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Company or any Guarantor, or any Custodian acting in
relation to either the Company or such Guarantor, any amount paid by the Company
or such Guarantor to the Trustee or such Holder, the applicable Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor agrees that it will not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between such Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (i) the maturity
of the Obligations guaranteed hereby may be accelerated as provided in Section
6.02 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration as to the
Company or any other obligor on the Notes of the Obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of those Obligations as
provided in Section 6.02 hereof, those Obligations (whether or not due and
payable) will forthwith become due and payable by such Guarantor for the purpose
of this Subsidiary Guarantee.
To evidence its Subsidiary Guarantee, each Guarantor hereby agrees
that a notation of such Guarantee substantially in the form of Exhibit A-1
hereto shall be endorsed by an officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents and attested to by an Officer.
SECTION 10.02. SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Subsidiary Guarantee is
subordinated in right of payment, to the extent and in the manner provided in
this Article 10, to the prior payment in full of all Obligations with respect to
Senior Debt of such Guarantor (whether outstanding on the date hereof or
hereafter created, incurred, assumed
61
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt of such Guarantor.
SECTION 10.03. DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of any Guarantor upon any dissolution,
winding up, liquidation or reorganization of such Guarantor (whether in
bankruptcy, insolvency, receivership or similar proceeding related to the
Guarantor or its property or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Debt of such Guarantor will first be
entitled to receive payment in full in cash or U.S. dollar denominated Cash
Equivalents of the principal of and interest due on Senior Debt of such
Guarantor and other amounts due in connection with Senior Debt of such
Guarantor (including interest accruing subsequent to certain bankruptcy
events and certain winding up events described in clauses (6) and (7) of
Section 6.01 hereof at the rate provided for in the documents governing
such Senior Debt, whether or not such interest is an allowed claim
enforceable against the debtor in a bankruptcy case under Title 11 of the
United States Code) before the Holders are entitled to receive any payment
or distribution from such Guarantor with respect to such Guarantor's
Subsidiary Guarantee;
(b) any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, to which the
Holders or the Trustee would be entitled except for the provisions of this
Article 10 will be paid by the liquidating trustee or agent or other Person
making such a payment or distribution directly to the holders of Senior
Debt of such Guarantor or their Representatives to the extent necessary to
make payment in full in cash or U.S. dollar denominated Cash Equivalents of
all Senior Debt of such Guarantor remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt;
and
(c) if, notwithstanding the foregoing, any payment or distribution of
assets of such Guarantor of any kind or character, whether in cash,
property or securities, is received by the Trustee or the Holders on
account of the Subsidiary Guarantee before all Senior Debt of such
Guarantor is paid in full in cash or U.S. dollar denominated Cash
Equivalents, such payment or distribution will be received and held in
trust for and will be paid over forthwith to the holders of the Senior Debt
of such Guarantor remaining unpaid or their Representatives for application
to the payment of such Senior Debt until all such Senior Debt has been paid
in full in cash or U.S. dollar denominated Cash Equivalents, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Debt (except that Holders may receive payments made from the trust
described in Section 8.04 hereof).
Each Guarantor will give prompt written notice to the Holders and to
the Trustee of any dissolution, winding up, liquidation or reorganization
of such Guarantor or any assignment for the benefit of its creditors and of
any event of default in respect of Senior Debt of such Guarantor.
For purposes of this Article 10, the words "cash, property or
securities" shall not be deemed to include (i) shares of Capital Stock of a
Guarantor as reorganized or readjusted (excluding Capital Stock redeemable at
the option of the holder thereof prior to the final maturity date or any
mandatory pre-payment date with respect to any Designated Senior Debt of such
Guarantor or Guarantor Significant
62
Senior Debt (as defined below), (ii) Capital Stock convertible into or
exchangeable for Indebtedness which is subordinated, to at least the same extent
as the Subsidiary Guarantee, to the payment of all Senior Debt of such Guarantor
then outstanding, (iii) securities of the Guarantor or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated,
to at least the same extent as the Subsidiary Guarantee, to the payment of all
Senior Debt of such Guarantor then outstanding, or (iv) any payment or
distribution of securities of such Guarantor or any other corporation authorized
by an order or decree giving effect, and stating in such order or decree that
effect has been given, to subordination of the Subsidiary Guarantee to Senior
Debt of such Guarantor and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy, insolvency or similar
law.
SECTION 10.04. DEFAULT ON SENIOR DEBT OF THE GUARANTOR.
(a) No payment will be made on account of the Subsidiary Guarantees,
or to acquire any of the Notes for cash, property or securities or on account of
the redemption provisions of the Notes upon the maturity of any (i) Senior Bank
Debt or other Designated Senior Debt guaranteed by a Guarantor or (ii) any
Senior Debt permitted by clause (xiv) of the second paragraph of Section 4.09
hereof guaranteed by a Guarantor and any other Senior Debt of a Guarantor issued
in a single transaction or a series of related transactions having an aggregate
principal amount outstanding of $5.0 million or more ("Guarantor Significant
Senior Debt"), by lapse of time, acceleration or otherwise, unless and until all
such Designated Senior Debt or Guarantor Significant Senior Debt, as the case
may be (including interest accruing subsequent to certain bankruptcy events and
certain winding up events at the rate provided for in documents governing such
Senior Debt, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under Title 11 of the United States
Code), shall first be paid in full in cash or U.S. dollar denominated Cash
Equivalents.
(b) No Guarantor may make any payment or distribution upon or in
respect of its Subsidiary Guarantee, including, without limitation, by way of
set-off or otherwise, or redeem (or make a deposit in redemption of), defease or
acquire any of the Notes, for cash, property or securities if (i) a default in
the payment of any Obligation under any Significant Senior Debt that is
guaranteed by such Guarantor or any Designated Senior Debt or in the payment of
any Obligation of such Guarantor with respect to (a) any Guarantee of Designated
Senior Debt or (b) Guarantor Significant Senior Debt occurs and is continuing or
(ii) any other default (or any event that, after notice or passage of time would
become an event of default) occurs and is continuing with respect to any
Designated Senior Debt and, in the case of clause (ii), the Trustee receives
notice of such default (a "Payment Blockage Notice") from the holders (or the
agent or Representative of such holders) of any Designated Senior Debt. Payment
on the Notes or any Subsidiary Guarantee may and shall be resumed (i) in the
case of a payment default, upon the date on which such default is cured or
waived and (ii) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity of
any such Designated Senior Debt or Guarantor Significant Senior Debt has been
accelerated. No new period of payment blockage pursuant to a Payment Blockage
Notice may be commenced unless and until (i) 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
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(c) If any payment or distribution of assets of a Guarantor is
received by any Holder in respect of the Subsidiary Guarantees at a time when
that payment or distribution should not have been made because of paragraph (a)
or (b), such payment or distribution will be received and held in trust for and
will be paid over forthwith to the holders of Senior Debt of such Guarantor
which is due and payable and remains unpaid (pro rata as to each of such holders
on the basis of the respective amounts of Senior Debt of such Guarantor which is
due and payable held by them) until all such Senior Debt of such Guarantor has
been paid in full in cash or U.S. dollar denominated Cash Equivalents, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt (except that Holders may receive payments made from the trust
described in Section 8.04 hereof).
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
each Guarantor shall promptly notify the Representative of the holders of Senior
Debt of such Guarantor of the acceleration.
SECTION 10.06. SUBROGATION.
With respect to any Guarantor, following the payment in full of all
Senior Debt of such Guarantor, the Holders will be subrogated to the rights of
the holders of Senior Debt of such Guarantor to receive payments or
distributions of assets of such Guarantor applicable to the Senior Debt of such
Guarantor until all amounts owing on the Notes have been paid in full, and for
the purpose of such subrogation no such payments or distributions to the holders
of Senior Debt of such Guarantor by or on behalf of the Guarantor or by or on
behalf of the Holders by virtue of this Article 10 which otherwise would have
been made to the Holders will, as between the Guarantor and Holders, be deemed
to be payment by the Guarantor to or on account of the Senior Debt of such
Guarantor, it being understood that the provisions of this Article 10 are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Debt of any Guarantor, on the other
hand.
SECTION 10.07. OBLIGATIONS UNCONDITIONAL.
Nothing contained in this Article 10 or elsewhere in this Indenture or
the Notes is intended to or will impair, as between any Guarantor and the
Holders, the obligations of the Guarantor, which are absolute and unconditional,
to pay principal of, interest and Liquidated Damages, if any, on the Notes in
accordance with the terms of the Subsidiary Guarantee as and when such
Obligations become due and payable, or is intended to or will affect the
relative rights of the Holders and creditors of the Guarantor other than the
holders of the Senior Debt of such Guarantor, nor will anything herein or
therein prevent any Holder from exercising all remedies otherwise permitted by
applicable law upon default of the Notes, subject to the rights, if any, under
this Article 10 of the holders of Senior Debt of such Guarantor in respect of
cash, property or securities of the Guarantor received upon the exercise of any
such remedy.
SECTION 10.08. RELATIVE RIGHTS.
No right of any present or future holders of any Senior Debt of any
Guarantor to enforce subordination as provided in this Article 10 will at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Guarantor or by any act or failure to act by any such holders, or by
any noncompliance by the Guarantor with the terms of the Notes, regardless of
any knowledge thereof which any such holders may have or otherwise be charged
with. The holders of Senior Debt of any
64
Guarantor may extend, renew, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Guarantor, all without affecting the liabilities and obligations
of the parties to the document or the Holders. No amendment to these provisions
will be effective against the holders of the Senior Debt of any Guarantor who
have not consented thereto in writing.
SECTION 10.09. EVENT OF DEFAULT PRESERVED.
The failure to make a payment on account of any Subsidiary Guarantee
by reason of any provision of this Article 10 will not be construed as
preventing the occurrence of an Event of Default.
SECTION 10.10. TRUSTEE DUTIES.
With respect to the holders of Senior Debt of any Guarantor, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt of such Guarantor shall
be read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt of such Guarantor, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person money
or assets to which any holders of Senior Debt of such Guarantor shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.11. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying Agent
of any facts known to such Guarantor that would cause a payment of any
Obligations with respect to the Notes or its Subsidiary Guarantee to violate
this Article 10, but failure to give such notice shall not affect the
subordination of its Subsidiary Guarantee or of the Notes to the Senior Debt of
such Guarantor as provided in this Article 10.
SECTION 10.12. SUBORDINATION MAY NOT BE IMPAIRED BY GUARANTOR.
No right of any holder of Senior Debt of any Guarantor to enforce the
subordination of the Indebtedness evidenced by a Subsidiary Guarantee shall be
impaired by any act or failure to act by the Guarantor or any Holder or by the
failure of the Guarantor or any Holder to comply with this Indenture.
SECTION 10.13. RELIANCE UPON ORDER.
Upon any payment or distribution of assets of a Guarantor referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Debt of such Guarantor and other Indebtedness of the Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10; provided
that the foregoing shall only apply if such court has been apprised of the
subordination provisions of this Article 10.
65
SECTION 10.14. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt of a Guarantor with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 10.15. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding relative to any
Guarantor referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the Representatives of Senior Debt of
such Guarantor are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 10.16. AMENDMENTS.
With respect to any Guarantor, the provisions of Section 10.02 through
10.16 hereof shall not be amended or modified without the written consent of the
holders of all Senior Debt of such Guarantor.
SECTION 10.17. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and by its acceptance hereof, each beneficiary hereof,
hereby confirm that it is its intention that the Subsidiary Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Guarantee. To effectuate the foregoing intention, each such person hereby
irrevocably agrees that the obligation of such Guarantor under its Subsidiary
Guarantee under this Article 10 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from, rights to receive contribution from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor in respect of such maximum amount not constituting
a fraudulent conveyance. Each beneficiary under the Subsidiary Guarantees, by
accepting the benefits hereof, confirms its intention that, in the event of a
bankruptcy, reorganization or other similar proceeding of the Company or any
Guarantor in which concurrent claims are made upon such Guarantor hereunder, to
the extent such claims will not be fully satisfied, each such claimant with a
valid claim against the Company shall be entitled to a ratable share of all
payments by such Guarantor in respect of such concurrent claims.
66
ARTICLE 11
SUBORDINATION
SECTION 11.01. AGREEMENT TO SUBORDINATE.
The Company, for itself and its successors, and each Holder, by its
acceptance of the Notes, agrees that the payment of all Obligations with respect
to the Notes and this Indenture, including principal, premium, if any, and
interest (including post-petition interest, as provided below) on, and
Liquidated Damages, if any, with respect to, the Notes and any claim for
rescission or damages in respect thereof under any applicable law (the
"Subordinated Obligations") by the Company is subordinated, to the extent and in
the manner provided in this Article 11, to the prior payment of Senior Debt.
This Article 11 will constitute a continuing offer to all persons who,
in reliance upon its provisions, become holders of, or continue to hold, Senior
Debt, and such provisions are made for the benefit of the holders of Senior
Debt, and such holders are made obligees under this Article 11 and they and/or
each of them may enforce its provisions.
SECTION 11.02. NO PAYMENT ON NOTES UNDER CERTAIN CIRCUMSTANCES.
(a) No payment will be made on account of the Subordinated
Obligations, or to acquire any of the Notes for cash, property or securities or
on account of the redemption provisions of the Notes upon the maturity of any
(i) Designated Senior Debt or (ii) any Senior Debt permitted by clause (xiv) of
the second paragraph of Section 4.09 of this Indenture and any other outstanding
Senior Debt issued in a single transaction or a series of related transactions
having an aggregate principal amount outstanding of $5.0 million or more
("Significant Senior Debt"), by lapse of time, acceleration or otherwise, unless
and until all such Designated Senior Debt or Significant Senior Debt, as the
case may be (including interest accruing subsequent to certain bankruptcy events
and certain winding up events at the rate provided for in documents governing
such Senior Debt, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under Title 11 of the United States
Code), shall first be paid in full in cash or U.S. dollar denominated Cash
Equivalents.
(b) The Company may not make any payment or distribution upon or in
respect of the Subordinated Obligations, including, without limitation, by way
of set-off or otherwise, or redeem (or make a deposit in redemption of), defease
or acquire any of the Notes, for cash, property or securities if (i) a default
in the payment of any Obligation of the Company with respect to (a) any
Designated Senior Debt or (b) any Significant Senior Debt, occurs and is
continuing or (ii) any other default (or any event that, after notice or passage
of time would become an event of default) occurs and is continuing with respect
to any Designated Senior Debt and, in the case of clause (ii), the Trustee
receives a Payment Blockage Notice from the holders (or the agent or
Representative of such holders) of any Designated Senior Debt. Payment on the
Notes may and shall be resumed (i) in the case of a payment default, upon the
date on which such default is cured or waived and (ii) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received, unless the maturity of any such Designated Senior Debt or
Significant Senior Debt has been accelerated. No new period of payment blockage
pursuant to a Payment Blockage Notice may be commenced unless and until (i) 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of
67
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.
(c) If any payment or distribution of assets of the Company is
received by any Holder in respect of the Subordinated Obligations at a time when
that payment or distribution should not have been made because of paragraph (a)
or (b), such payment or distribution will be received and held in trust for and
will be paid over forthwith to the holders of Senior Debt which is due and
payable and remains unpaid (pro rata as to each of such holders on the basis of
the respective amounts of Senior Debt which is due and payable held by them)
until all such Senior Debt has been paid in full in cash or U.S. dollar
denominated Cash Equivalents, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt (except that Holders may receive
payments made from the trust described in Section 8.04 hereof).
SECTION 11.03. DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency, receivership or similar proceeding related to the Company or its
property or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Debt will first be entitled to receive
payment in full in cash or U.S. dollar denominated Cash Equivalents of the
principal of and interest due on Senior Debt and other amounts due in
connection with Senior Debt (including interest accruing subsequent to
certain bankruptcy events and certain winding up events described in
clauses (6) and (7) of Section 6.01 hereof at the rate provided for in the
documents governing such Senior Debt, whether or not such interest is an
allowed claim enforceable against the debtor in a bankruptcy case under
Title 11 of the United States Code) before the Holders are entitled to
receive any payment on account of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on the Notes;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders
or the Trustee would be entitled except for the provisions of this Article
11 will be paid by the liquidating trustee or agent or other person making
such a payment or distribution directly to the holders of Senior Debt or
their Representatives to the extent necessary to make payment in full in
cash or U.S. dollar denominated Cash Equivalents of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt; and
(c) if, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property
or securities, is received by the Trustee or the Holders on account of the
Subordinated Obligations before all Senior Debt is paid in full in cash or
U.S. dollar denominated Cash Equivalents, such payment or distribution will
be received and held in trust for and will be paid over forthwith to the
holders of the Senior Debt remaining unpaid or their Representatives for
application to the payment of such Senior Debt until all such Senior Debt
has been paid in full in cash or U.S. dollar denominated Cash Equivalents,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt (except that Holders may receive payments made
from the trust described in Section 8.04 hereof).
68
The Company will give prompt written notice to the Holders of any
dissolution, winding up, liquidation or reorganization of it or any
assignment for the benefit of its creditors and of any event of default in
respect of Senior Debt.
For purposes of this Article 11, the words "cash, property or
securities" shall not be deemed to include (i) shares of Capital Stock of the
Company as reorganized or readjusted (excluding Capital Stock redeemable at the
option of the holder thereof prior to the final maturity date or any mandatory
pre-payment date with respect to any Designated Senior Debt), (ii) Capital Stock
convertible into or exchangeable for Indebtedness which is subordinated, to at
least the same extent as the Notes, to the payment of all Senior Debt then
outstanding, (iii) securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment which are subordinated, to at
least the same extent as the Notes, to the payment of all Senior Debt then
outstanding or (iv) any payment or distribution of securities of the Company or
any other corporation authorized by an order or decree giving effect, and
stating in such order or decree that effect has been given, to subordination of
the Notes to Senior Debt and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy, insolvency or similar
law. For purposes of this Article 11, "payment on the account of the
Subordinated Obligations" shall not include the issuance of the Notes or any
sale or transfer of the Notes.
SECTION 11.04. SUBROGATION.
Following the payment in full of all Senior Debt, the Holders will be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Company applicable to the Senior Debt until all
amounts owing on the Notes have been paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior Debt by
or on behalf of the Company or by or on behalf of the Holders by virtue of this
Article 11 which otherwise would have been made to the Holders will, as between
the Company and Holders, be deemed to be payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article 11
are and are intended solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of Senior Debt, on the other hand.
SECTION 11.05. OBLIGATIONS UNCONDITIONAL.
Nothing contained in this Article 11 or elsewhere in this Indenture or
the Notes is intended to or will impair, as between the Company and the Holders,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders the Subordinated Obligations as and when they become due and payable
in accordance with their terms, or is intended to or will affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Debt, nor will anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by applicable law upon default the
Notes, subject to the rights, if any, under this Article 11 of the holders of
Senior Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
SECTION 11.06. RELATIVE RIGHTS.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided in this Article 11 will at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holders, or by any
noncompliance by the Company with the terms of the Notes, regardless of any
knowledge thereof which
69
any such holders may have or otherwise be charged with. The holders of Senior
Debt may extend, renew, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the parties to the document or the Holders. No amendment to these provisions
will be effective against the holders of the Senior Debt who have not consented
thereto in writing.
SECTION 11.07. EVENT OF DEFAULT PRESERVED.
The failure to make a payment on account of the Subordinated
Obligations by reason of any provision of this Article 11 will not be construed
as preventing the occurrence of an Event of Default.
SECTION 11.08. TRUSTEE DUTIES.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 11, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 11.09. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 11, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 11.
SECTION 11.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
SECTION 11.11. RELIANCE UPON ORDER.
Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Debt 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 11; provided that the foregoing shall only
apply if such court has been apprised of the provisions of this Article 11.
70
SECTION 11.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 11. Nothing in this Article 11
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 11.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the Bank Agent is hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, a Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guarantying next day delivery, to the
others' address:
If to the Company:
Rayovac Corporation
601 Rayovac Drive
Madison, WI 53711-2497
Attention: David A. Jones
Telecopier No.: (608) 275-3340
71
With a copy to:
Thomas H. Lee Company
75 State Street, Suite 2600
Boston, MA 02119
Attention: Scott A. Schoen
Telecopier No.: (617) 227-3514
If to a Guarantor:
c/o ROV Holding, Inc.
Delaware Corporate Management, Inc.
1105 North Market Street, Suite 1300
Wilmington, DE 19899
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Department
The Company, the Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guarantying next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guarantying next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
72
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, any
Guarantor, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any Guarantor to
the Trustee to take any action under this Indenture, the Company and/or such
Guarantor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture or the Subsidiary Guarantees.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
74
SECTION 12.14. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
IN WITNESS WHEREOF, each of RAYOVAC CORPORATION and ROV HOLDING, INC.,
has caused this Indenture to be signed in its corporate name and acknowledged by
one of its duly authorized officers; and MARINE MIDLAND BANK has caused this
Indenture to be signed and acknowledged by one of its duly authorized
signatories, and its seal to be affixed hereunto or impressed hereon, duly
attested, as of the day and year first above written.
[Signatures on following page]
75
SIGNATURES
Dated as of October 22, 1996 RAYOVAC CORPORATION
By: /s/ James A. Broderick
-------------------------
Name: James A. Broderick
Title: Vice President
Attest:
/s/ Lorrie Rimorsky
- - -------------------------
Dated as of October 22, 1996 ROV HOLDING, INC.
By: /s/ Roger F. Warren
-------------------------
Name: Roger F. Warren
Title: President
Attest:
/s/ Lorrie Rimorsky
- - -------------------------
Dated as of October 22, 1996 MARINE MIDLAND BANK
(SEAL) By: /s/ Frank J. Godino
-------------------------
Name: Frank J. Godino
Title: Assistant Vice President
Attest:
/s/ Eileen M. Hughes
- - -------------------------
S-1
===============================================================================
EXHIBIT A
(Face of Note)
10 1/4% Senior Subordinated Notes due 2006
No. $__________
RAYOVAC CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on November 1, 2006.
Interest Payment Dates: May 1, and November 1
Record Dates: April 15, and October 15
Dated: _______________ __, _____
RAYOVAC CORPORATION
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
Trustee's Certificate of Authentication
MARINE MIDLAND BANK,
as Trustee, certifies that this is one of the
Notes referred to in the Indenture.
By:__________________________________
===============================================================================
A-1
(Back of Note)
10 1/4% Senior Subordinated Notes due 2006
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer 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 may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.](1)
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Rayovac Corporation, a Wisconsin corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10
1/4% per annum from October 22, 1996 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
- - --------
(1) This Paragraph should be included only if the Note is issued in global
form.
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referred to below. The Company will pay interest and Liquidated Damages
semi-annually on May 1 and November 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be May 1, 1997. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the Record Date set
forth on the face hereof next preceding the Interest Payment Date, even if such
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes will be payable as to principal, premium,
interest and Liquidated Damages, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Paying Agent on or prior to the applicable Record Date. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of October 22, 1996 ("Indenture") between the Company, ROV Holding and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. The Notes are unsecured obligations of the Company limited to $100.0
million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
The Notes will not be redeemable at the Company's option prior to
November 1, 2001. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any,
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thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 1 of the years indicated below:
Year Percentage
2001 . . . . . . . . . . . . . . . . . . . . . . . 105.125%
2002 . . . . . . . . . . . . . . . . . . . . . . . 103.417
2003 . . . . . . . . . . . . . . . . . . . . . . . 101.708
2004 and thereafter. . . . . . . . . . . . . . . . 100.000%
Notwithstanding the foregoing, at any time during the first 36 months
after the date of the Indenture, the Company may redeem up to 35% of the initial
principal amount of the Notes originally issued with the net proceeds of one or
more public offerings of equity securities of the Company, at a redemption price
equal to 109.250% of the principal amount of such Notes, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption; provided,
that at least 65% of the principal amount of Notes originally issued remain
outstanding immediately after the occurrence of any such redemption and that
such redemption occurs within 60 days following the closing of any such public
offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase (the
"Change of Control Payment"). Within 10 days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall commence an offer to all
Holders of Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to or 101% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
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8. 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
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. SUBORDINATION. This Note is subject to the subordination
provisions set forth in Article 11 of the Indenture. Each Holder of a Note, by
accepting the same, agrees to be bound by such provisions, authorizes and
directs the Trustee, on behalf of such Holder, to take such action as may be
necessary or appropriate to effectuate such subordination and appoints the
Trustee to act as such Holder's attorney-in-fact for such purpose.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Articles 4 or 5 of the Indenture, provided that
such failure with respect to Sections 4.02, 4.03, 4.04, 4.05, 4.12 and 4.13 of
the Indenture remains uncured for 60 days after written notice; (iv) default
under certain other agreements relating to Indebtedness of the Company which
default results in the acceleration of such Indebtedness prior to its express
maturity; (v) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; and (vi) certain events of bankruptcy or
insolvency with respect to the Company or any of its Restricted Subsidiaries. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then
A-5
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of the principal of, Liquidated Damages, if any, or interest on the
Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
14. GUARANTEES. Payment of principal of, Liquidated Damages, if any,
and interest (including interest on overdue principal, Liquidated Damages, if
any, and interest, if lawful) on the Notes is guaranteed on an unsecured, senior
subordinated basis by the Guarantors pursuant to Article 10 of the Indenture.
Each Holder of a Note, by accepting the same, agrees to be bound by such
provisions, authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate such
subordination and appoints the Trustee to act as such Holder's attorney-in-fact
for such purpose.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company, any Guarantor or their Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of October 17, 1996, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
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20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Rayovac Corporation
601 Rayovac Drive
Madison, WI 53711-2497
Attention: David A. Jones
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________________________
Your Signature:__________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $_____________
Date: ________________________ Your Signature:____________________________
(Sign exactly as your name appears
on the Note)
Tax Identification No.:________________
Signature Guarantee.
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SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- - ---------------------- ----------------------- ------------------------ ------------------------ ----------------
- - ---------------
(2) This should be included only if the Note is issued in global form.
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EXHIBIT A-1
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
The Guarantor set forth below and each Subsidiary of the Company which
in accordance with Section 4.16 or 4.17 of the Indenture is required to
guarantee the obligations of the Company under the Notes upon execution of a
counterpart of the Indenture or a supplemental Indenture, has jointly and
severally unconditionally guaranteed (i) the due and punctual payment of the
principal of, interest and Liquidated Damages, if any, on the Notes, whether at
the maturity or interest payment date, by acceleration, call for redemption or
otherwise, and of interest on the overdue principal of, interest and Liquidated
Damages, if any, on the Notes and all other obligations of the Company to the
Holders or the Trustee under the Indenture or the Notes and (ii) in case of any
extension of time of payment or renewal of any Notes 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 maturity,
by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are as expressly set
forth in Article 10 of the Indenture and in such other provisions of the
Indenture as are applicable to Guarantors, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 10 of the Indenture and such other provisions of the Indenture as are
applicable to Guarantors are incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a guarantee of payment and not a guarantee of collection.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
ROV HOLDING, INC.
By:__________________________________
Name:
Title:
A1-1
===============================================================================
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF NOTES
Re: 10 1/4% Senior Subordinated Notes due 2006 of Rayovac Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
/ / Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
- - ---------------
*Check applicable box.
B-1
/ / Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
_____________________________________
[INSERT NAME OF TRANSFEROR]
By:__________________________________
Date:______________________________
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