INDENTURE
CONE MILLS CORPORATION
AND
THE BANK OF NEW YORK,
a New York banking corporation, as Trustee
Dated as of___________________, 2001
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS
Section 1.1 Certain Terms Defined.....................................................................1
Article 2 SECURITIES
Section 2.1 Forms Generally..........................................................................12
Section 2.2 Form of Trustee's Certificate of Authentication..........................................12
Section 2.3 Amount of Debentures.....................................................................12
Section 2.4 Authentication and Delivery of Securities................................................12
Section 2.5 Execution of Securities..................................................................13
Section 2.6 Certificate of Authentication............................................................13
Section 2.7 Denomination and Date of Securities; Payments of Interest ...............................13
Section 2.8 Registration, Transfer and Exchange......................................................14
Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities................................15
Section 2.10 Cancellation of Securities; Destruction Thereof..........................................16
Section 2.11 Temporary Securities.....................................................................16
Section 2.12 Securities Issuable in the Form of a Global Security.....................................16
Section 2.13 CUSIP Numbers............................................................................18
Article 3 COVENANTS OF THE ISSUER AND THE TRUSTEE
Section 3.1 Payment of Principal and Interest........................................................18
Section 3.2 Offices for Payments, etc................................................................18
Section 3.3 Appointment to Fill a Vacancy in Office of Trustee.......................................19
Section 3.4 Paying Agent.............................................................................19
Section 3.5 Certificate of the Issuer................................................................20
Section 3.6 Security Holders Lists...................................................................20
Section 3.7 Reports by the Issuer....................................................................20
Section 3.8 Reports by the Trustee...................................................................20
Section 3.9 Limitations on Liens.....................................................................20
Section 3.10 Limitations on Sale and Lease-Back Transactions..........................................22
Section 3.11 Notice to Trustee........................................................................23
Section 3.12 Calculation of Original Issue Discount...................................................23
Section 3.13 Statement by Officers as to Default......................................................23
Article 4 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
Section 4.1 Event of Default; Acceleration of Maturity; Waiver of Default............................23
Section 4.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt............................25
Section 4.3 Application of Proceeds..................................................................27
Section 4.4 Suits for Enforcement....................................................................28
Section 4.5 Restoration of Rights on Abandonment of Proceedings......................................28
Section 4.6 Limitations on Suits by Securityholders..................................................28
Section 4.7 Unconditional Right of Securityholders to Institute Certain Suits........................29
Section 4.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default..................29
Section 4.9 Control by Securityholders...............................................................29
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Section 4.10 Waiver of Past Defaults..................................................................30
Section 4.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances.............30
Section 4.12 Right of Court to Require Filing of Undertaking to Pay Costs.............................31
Article 5 CONCERNING THE TRUSTEE
Section 5.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default.............31
Section 5.2 Certain Rights of the Trustee............................................................32
Section 5.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application
of Proceeds Thereof......................................................................33
Section 5.4 Trustee and Agents May Hold Securities; Collections, etc.................................33
Section 5.5 Moneys Held by Trustee...................................................................34
Section 5.6 Compensation and Indemnification of Trustee and Its Prior Claim..........................34
Section 5.7 Right of Trustee to Rely on Officers' Certificate, etc...................................34
Section 5.8 Persons Eligible for Appointment as Trustee..............................................34
Section 5.9 Resignation and Removal; Appointment of Successor Trustee................................35
Section 5.10 Acceptance of Appointment by Successor Trustee...........................................36
Section 5.11 Merger, Conversion, Consolidation or Succession to Business of Trustee...................36
Section 5.12 Trustee's Application for Instructions from the Issuer...................................37
Article 6 CONCERNING THE SECURITYHOLDERS
Section 6.1 Evidence of Action Taken by Securityholders..............................................37
Section 6.2 Proof of Execution of Instruments and of Holding of Securities; Record Date..............37
Section 6.3 Holders to be Treated as Owners..........................................................38
Section 6.4 Securities Owned by Issuer Deemed Not Outstanding........................................38
Section 6.5 Right of Revocation of Action Taken......................................................38
Article 7 SUPPLEMENTAL INDENTURES
Section 7.1 Supplemental Indentures Without Consent of Securityholders...............................39
Section 7.2 Supplemental Indentures With Consent of Securityholders..................................40
Section 7.3 Effect of Supplemental Indenture.........................................................41
Section 7.4 Documents to Be Given to Trustee.........................................................41
Section 7.5 Notation on Securities in Respect of Supplemental Indentures.............................41
Section 7.6 Consent of Holders of Senior Debt........................................................41
Article 8 CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 8.1 Issuer May Consolidate, etc., on Certain Terms...........................................42
Section 8.2 Successor Corporation Substituted........................................................42
Section 8.3 Opinion of Counsel to Trustee............................................................42
Article 9 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
Section 9.1 Satisfaction and Discharge of Indenture..................................................43
Section 9.2 Issuer's Option to Effect Defeasance or Covenant Defeasance..............................44
Section 9.3 Defeasance and Discharge.................................................................44
Section 9.4 Covenant Defeasance......................................................................44
Section 9.5 Conditions to Defeasance or Covenant Defeasance..........................................45
Section 9.6 Application by Trustee of Funds Deposited for Payment of Securities......................46
Section 9.7 Repayment of Moneys Held by Paying Agent.................................................47
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Section 9.8 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years................47
Section 9.9 Indemnity for Money and Direct Obligations of the United States..........................47
Section 9.10 Reinstatement............................................................................47
Article 10 MISCELLANEOUS PROVISIONS
Section 10.1 Incorporators, Shareholders, Officers and Directors of Issuer Exempt from
Individual Liability.....................................................................47
Section 10.2 Provisions of Indenture for the Sole Benefit of Parties and Securityholders..............48
Section 10.3 Successors and Assigns of Issuer Bound by Indenture......................................48
Section 10.4 Notices and Demands on Issuer, Trustee and Securityholders...............................48
Section 10.5 Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein.......48
Section 10.6 Payments Due on Saturdays, Sundays and Holidays..........................................49
Section 10.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939..................49
Section 10.8 New York Law to Govern...................................................................50
Section 10.9 Counterparts.............................................................................50
Section 10.10 Effect of Headings.......................................................................50
Article 11 GUARANTY
Section 11.1 Guaranty.................................................................................50
Section 11.2 Execution and Delivery of Guaranty.......................................................52
Section 11.3 Successors and Assigns...................................................................52
Section 11.4 No Waiver, Etc...........................................................................52
Section 11.5 Modification, Etc........................................................................52
Article 12 SECURITY
Section 12.1 Security Interest........................................................................53
Section 12.2 Mortgages................................................................................53
Section 12.3 No Assumption of Liability...............................................................53
Section 12.4 Filings and Recordings...................................................................53
Section 12.5 Limitation on Modification of Accounts...................................................54
Section 12.6 Insurance................................................................................54
Section 12.7 Remedies upon Default....................................................................55
Section 12.8 Acceleration and Directions by the Securityholders.......................................56
Section 12.9 Application of Proceeds..................................................................56
Section 12.10 Trust Indenture Act Requirements; Release of Collateral..................................57
Section 12.11 Disposition of Certain Collateral without Requesting Release.............................58
Section 12.12 Releases.................................................................................59
Section 12.13 Suits to Protect the Collateral..........................................................60
Section 12.14 Determinations Relating to Collateral....................................................61
Section 12.15 Termination of Security Interest.........................................................61
Section 12.16 Application of Trust Indenture Act.......................................................61
Article 13 SUBORDINATION
Section 13.1 Securities Subordinated to Senior Debt with Respect to Collateral........................61
Section 13.2 Payment Over of Proceeds.................................................................62
Section 13.3 Obligations of the Issuer and Guarantor Subsidiary Unconditional.........................63
Section 13.4 Notice to Trustee; Trustee's Obligations.................................................63
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Section 13.5 Reliance on Judicial Order or Certificate of Liquidating Agent...........................64
Section 13.6 Trustee's Relation to Senior Debt........................................................64
Section 13.7 Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders
of Senior Debt...........................................................................65
Section 13.8 Security Holders Authorize Trustee To Effectuate Subordination of Securities.............65
Section 13.9 Trustee's Compensation Not Prejudiced....................................................65
Section 13.10 Delay of Remedies........................................................................65
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THIS INDENTURE, dated as of __________________, 2001, between CONE
MILLS CORPORATION, a North Carolina corporation (the "Issuer"), and THE BANK OF
NEW YORK, a New York banking corporation, as Trustee (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the issue of up to $85,000,000
in principal amount of its Secured Subordinated 11% Debentures Due March 15,
2005 (the "Securities"); and
WHEREAS, the Issuer wishes the Trustee to act on behalf of the Issuer
and the Trustee is willing so to act in connection with the issuance, delivery
and exchange of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by
the holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities as follows:
Article 1
DEFINITIONS
Section 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939, including terms defined therein by reference to the
Securities Act of 1933 (except as herein otherwise expressly provided or unless
the context otherwise clearly requires), shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force at
the date of this Indenture. All accounting terms used herein and not expressly
defined shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein," and "hereof" and
"hereafter" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. The terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular.
"Account Debtor" means any person who is or who may become obligated to
either Grantor under, with respect to or on account of an Account.
"Accounts" means any and all right, title and interest of either
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper,
whether due or to become due, whether or not it has been earned by performance,
and whether now or hereafter acquired or arising in the future, including
Accounts Receivable from affiliates of the Grantors.
"Accounts Receivable" means all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Attributable Debt" means, in connection with a Sale and Lease-Back
Transaction, as of any particular time, the aggregate of present values
(discounted at a rate per annum equal to the interest borne by all Outstanding
Securities compounded semi-annually) of the obligations of the Issuer or any
Subsidiary for net rental payments during the remaining term of the applicable
lease (including any period for which such lease has been extended or may, at
the option of the lessor, be extended). The term "net rental payments" under any
lease of any period shall mean the sum of the rental and other payments required
to be paid in such period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee (whether or not designated as rental
or additional rental) on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates or similar charges required to be
paid by such lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges.
"Bankruptcy Proceeding" means, with respect to any Person, a general
assignment of such Person for the benefit of its creditors, or the institution
by or against such Person of any proceeding seeking relief as debtor, or seeking
to adjudicate such Person as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of such Person or its debts, under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for such Person or for any substantial part of its property.
"Board of Directors" means either the Board of Directors of the Issuer
or any committee of such Board duly authorized to act hereunder.
"Business Day" means, with respect to any Security, a day that in the
city (or in any of the cities, if more than one) in which amounts are payable,
as specified in the form of such Security, is not a day on which banking
institutions are authorized or obligated by law or regulation to close.
"Collateral" means all of the following assets and properties of the
Issuer and of the Subsidiary Guarantor (a) Accounts Receivable other than
Excluded Accounts, (b) Documents, (c) Equipment, (d) General Intangibles, (e)
Inventory, (f) Proceeds, (g) capital stock of the Subsidiary Guarantors, (h)
Real Property, and (i) cash and cash accounts, whether now owned or hereafter
acquired, other than Excluded Assets.
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"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means, at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the Issuer
and its Subsidiaries as of the end of a fiscal quarter of the Issuer, prepared
in accordance with generally accepted accounting principles, plus the
outstanding balance of any Receivables Securitization Program, less (a) all
current liabilities shown on such balance sheet (other than current maturities
of Funded Indebtedness), (b) all intangible assets shown on such balance sheet,
and (c) all assets that do not constitute Collateral securing payment of the
Securities other than assets held in the Receivables Securitization Program and
prepaid expenses as determined in accordance with generally accepted accounting
principles. "Intangible assets" means the value (net of any applicable
reserves), as shown on or reflected in such balance sheet of: (i) all trade
names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organizational costs; and (iii) deferred charges (other than prepaid items such
as insurance, pensions, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); but in no event shall the term "intangible
assets" include product development costs.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by either Grantor or which such Grantor otherwise has the right
to license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" means all of the following now owned or hereafter acquired
by either Grantor: (a) all copyright rights in any work subject to the copyright
laws of the United States , whether as author, assignee, transferee or
otherwise, and (b) all registrations and applications for registration of any
such copyright in the United States, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 Barclay Street, 21st Floor West, New York,
New York 10286, Attention: Corporate Trust Administration.
"Credit Agreement" means the Credit Agreement, dated as of January 28,
2000, among the Issuer, Bank of America, N.A., as agent and as lender, and the
other lenders party thereto, together with the related documents thereto
(including, without limitation, any guaranty agreements and security documents),
in each case as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring all or any portion of the Obligations under such
agreement or any
3
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Depositary" means, unless otherwise specified by the Issuer pursuant
to Section 2.12, with respect to Securities issuable or issued in whole or in
part in the form of one or more Global Securities, The Depository Trust Company,
New York, New York, or any successor thereto registered under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation.
"Documents" means all instruments, documents of title, drafts, notes,
acceptances and chattel paper, whether now owned or hereafter acquired, files,
records, ledger sheets and documents covering or relating to any of the
Collateral.
"Dollar" means the coin or currency of the United States of America
that as of the time of payment is legal tender for the payment of public and
private debts.
"Event of Default" means any event or condition specified as such in
Section 4.1.
"Equipment" means all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by either
Grantor and located in the United States. The term Equipment shall include
Fixtures.
"Excluded Accounts" means any Accounts Receivable sold, contributed or
otherwise transferred to the Receivables Seller pursuant to any Receivables
Securitization Program.
"Excluded Assets" means (i) Excluded Accounts, (ii) real property not
listed on Schedule I, (iii) assets not Located in the United States, (iv) the
capital stock or other equity interest of (X) Persons organized under the laws
of a jurisdiction other than the United States or any state or other political
subdivision thereof or (Y) Persons primarily conducting their business outside
the United States, and (v) the cash surrender values and the proceeds of life
insurance policies owned by Issuer or the Grantors.
"Fixtures" means all items of Equipment, whether now owned or hereafter
acquired, of either Grantor that become so related to particular real estate
that an interest in them arises under any real estate law applicable thereto.
"Fully Satisfied" means, with respect to the Senior Debt, (i) the
principal of and interest on the Obligations arising under such Senior Debt
shall have been paid in full in cash, (ii) the aggregate undrawn and unexpired
amount of any outstanding letters of credit shall have been cash collateralized
on terms satisfactory to the holders of such Senior Debt, (iii) all interest
swap agreements with holders of Senior Debt shall have been terminated or all
obligations of the Issuer thereunder shall have been cash collateralized on
terms satisfactory to the holders of such Senior Debt, and (iv) the commitments
or other obligations of the holders of any Senior Debt to make additional
advances of funds shall have expired or been terminated.
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"Funded Indebtedness" means any Indebtedness maturing by its terms more
than one year from the date of the determination thereof, including any
Indebtedness renewable or extendible at the option of the obligor to a date
later than one year from the date of the determination thereof.
"General Intangibles" means all choses in action and causes of action
and all other assignable intangible personal property of either Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by either Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, and other agreements), Intellectual Property,
goodwill, registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to
either Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.
"Global Security" means a Security issued to evidence all or part of
the Securities which is executed by the Issuer and authenticated and delivered
by the Trustee to the Depositary or pursuant to the Depositary's instruction,
all in accordance with this Indenture and pursuant to an Issuer order, which
shall be registered in the name of the Depositary or its nominee.
"Grantors" means the Issuer and the Subsidiary Guarantor, and "Grantor"
means either of the Issuer or the Subsidiary Guarantor.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean the registered holder of any Security.
"Indebtedness" means, without duplication, (a) all Obligations for
borrowed money, (b) all Obligations evidenced by bonds, debentures, Securities
or other similar instruments, (c) all Obligations in respect of letters of
credit or bankers acceptances or similar instruments (or reimbursement
obligations with respect thereto), (d) all Obligations to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (e) all Obligations as lessee which are
capitalized in accordance with generally accepted accounting principles, and (f)
all Indebtedness of others guaranteed by the Issuer or any of its Subsidiaries
or for which the Issuer or any of its Subsidiaries is legally responsible or
liable (whether by agreement to purchase indebtedness of, or to supply funds or
to invest in, others) and (g) the balance of any Receivables Securitization
Program.
"Indenture" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or supplemented
or both, and shall include the forms and terms of the Securities established as
contemplated hereunder.
"Intellectual Property" means all intellectual and similar property of
either Grantor of every kind and nature now owned or hereafter acquired by
either Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related
5
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
"Inventory" means all goods manufactured or acquired for sale or lease
by either Grantor, and any piece goods, raw materials, work in process and
finished merchandise, component materials, and all supplies, goods, incidentals,
office supplies, packaging materials and any and all items used or consumed in
the operation of the business of either Grantor, or which may contribute to the
finished product or to the sale, promotion or shipment thereof, in which either
Grantor now or hereafter may have any interest, whether or not the same is in
transit or in the constructive, actual or exclusive occupancy or possession of
either Grantor or is held by either Grantor or by others for such Grantor's
account, excluding, however, any of the foregoing that is not located in the
United States.
"Issuer" means Cone Mills Corporation, a North Carolina corporation ,
and, subject to Article 8, its successors and assigns.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense to which either Grantor is a party (other
than license agreements which by their terms prohibit assignment or a grant of a
security interest by such Grantor as licensee thereunder).
"Lien" or "Liens" means the liens granted to the Trustee as Trustee
under the Security Documents.
"Located in the United States" means Collateral that is situated in and
relates to business arising from manufacturing operations carried on within the
United States of America or is primarily used with respect to such manufacturing
operations. Notwithstanding the foregoing sentence, Accounts are located in the
United States if they are Accounts owed to either Grantor.
"Morgan Swap Agreement" means that certain ISDA Master Agreement dated
as of July 20, 1998 between the Issuer and Morgan Guaranty Trust Company of New
York, as supplemented pursuant to that certain letter agreement dated as of July
20, 1998, together with the documents related thereto, as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the term
of, refinancing, replacing or otherwise restructuring all or any portion of the
obligations under such agreements or any successor or replacement agreement and
whether by the same or any other counterpart.
"Mortgages" means the mortgages and deeds of trust on the Real Property
in favor of the Trustee on behalf of the Securityholders.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements (including reimbursement
obligations under letters of credit), damages and other liabilities payable
under the documentation governing or otherwise relating to any Indebtedness.
6
"Officers' Certificate" means a certificate signed by the chairman or
any vice chairman of the Board of Directors or the president or any vice
president and by the treasurer or any assistant treasurer or the secretary or
any assistant secretary of the Issuer and delivered to the Trustee. Each such
certificate shall comply with Section 314 of the Trust Indenture Act of 1939 and
include the statements provided for in Section 10.5.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Issuer. Each such opinion
shall comply with Section 314 of the Trust Indenture Act of 1939 and include the
statements provided for in Section 10.5, if and to the extent required hereby.
"Ordinary Course of Business" means, with respect to sales of Inventory
or services performed, all sales of Inventory or services performed by a Grantor
in the ordinary course of business, but in any event excluding (i) "bulk
transfers" as defined in Section 6-102 of the Uniform Commercial Code, (ii) such
sales and services after the time there shall have occurred an Event of Default
under Article 4 and (iii) such sales and services after the time the Trustee has
taken possession of such Inventory after the occurrence of an Event of Default
and a Grantor has rights in such Inventory pursuant to Section 9-506 of the
Uniform Commercial Code.
"Original Issue Date" of any Security (or portion thereof) means the
earlier of: (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.
"Outstanding", when used with reference to Securities, shall, subject
to the provisions of Section 6.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except (a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation, (b) Securities, or portions thereof, for the payment
or redemption of which moneys in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the Issuer) or
shall have been set aside, segregated and held in trust by the Issuer for the
Holders of such Securities (if the Issuer shall act as its own paying agent),
provided, that if such Securities, or portions thereof, are to be redeemed prior
to the maturity thereof, notice of such redemption shall have been given as
herein provided, or provision satisfactory to the Trustee shall have been made
for giving such notice, and (c) Securities in substitution for which other
Securities shall have been authenticated and delivered, or which shall have been
paid, pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that such
Security is held by a Person in whose hands such Security is a legal, valid and
binding obligation of the Issuer).
In determining whether the Holders of the requisite Principal amount of
Outstanding Securities are present at a meeting of Holders of Securities for
quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, Securities held for the account of the Issuer, any of its
subsidiaries or any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer shall be disregarded
and deemed not to be Outstanding, except that in determining whether the Trustee
shall be protected in making such a
7
determination or relying upon any such quorum, consent or both, only Securities
which a Responsible Officer of the Trustee actually knows to be so owned shall
be so disregarded.
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by either Grantor or which either
Grantor otherwise has the right to license, is in existence, or granting to
either Grantor any right to make, use or sell any invention on which a Patent,
now or hereafter owned by any third party, is in existence, and all rights of
either Grantor under any such agreement.
"Patents" means all of the following now owned or hereafter acquired by
either Grantor: (a) all letters patent of the United States, all registrations
and recordings thereof, and all applications for letters patent of the United
States, including registrations, recordings and pending applications in the
United States Patent and Trademark Office, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use and/or
sell the inventions disclosed or claimed therein.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Principal" whenever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "and premium, if
any."
"Priority Collateral" means the certain personal and real property,
assets and fixtures of the Grantors, whether now existing or hereafter arising,
created or acquired, upon which a Priority Lien has been granted to, or
hereafter is granted to or for the benefit of, the Priority Securityholders
pursuant to the Priority Security Instruments.
"Priority Lien" means any lien securing a Priority Obligation.
"Priority Mortgages" means, collectively, all mortgages, deeds of trust
and deeds to secure debt granting a Priority Lien by either Grantor to or for
the benefit of the Priority Securityholders in Priority Collateral constituting
real property and fixtures as collateral security for the Priority Obligations
with respect thereto, as such documents may be amended, supplemented or restated
from time to time.
"Priority Obligations" means all obligations secured by liens against
the Collateral permitted by Section 3.9(a) through (j) of this Indenture.
"Priority Securityholders" means all holders of liens against the
Collateral permitted by Section 3.9 (a) through (j) of this Indenture.
"Priority Security Agreements" means collectively that certain Priority
Security Agreement dated as of January 28, 2000, and each additional Priority
Security Agreement
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entered into after the date hereof by either Grantor in accordance with the
terms of any document governing any of the Priority Obligations, granting a
Priority Lien to or for the benefit of any Priority Securityholder.
"Priority Security Instruments" means the Priority Security Agreements
and the Priority Mortgages, each granting a Priority Lien for the benefit of any
Priority Securityholder as collateral security for the Priority Obligations, as
amended, supplemented or restated from time to time.
"Proceeds" means all property of any kind or character, whether in cash
securities or other property, realized or obtained upon any foreclosure, sale,
exchange, transfer, setoff, recoupment or other disposition or retention
(whether in strict foreclosure or otherwise) with respect to any of the
Collateral.
"Real Property" means all items of real property owned by the Issuer
that are listed in Schedule I.
"Receivables Seller" means Cone Receivables II, LLC, a North Carolina
limited liability company, or any other entity hereafter designated by the
Issuer to purchase Accounts Receivable from the Issuer for securitization,
factoring or any similar arrangement.
"Receivables Securitization Program" means any arrangement pursuant to
which the Issuer or any of its Subsidiaries sells, contributes or otherwise
transfers its Accounts Receivable to a Receivables Seller, whether for
securitization, factoring or any similar arrangement.
"Representative" means the collateral agent or other representative, if
any, in respect of the holders of Senior Debt or any successor Person appointed
by the holders of Senior Debt; provided that if, and for so long as, the holders
of Senior Debt lack such a representative, then the Representative shall be the
holders of a majority in outstanding principal amount of Senior Debt.
"Responsible Officer" when used with respect to the Trustee means any
vice president, the treasurer, any trust officer, any assistant trust officer,
any assistant vice president, any assistant treasurer, or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Issuer or a Subsidiary of any property or
assets, whereby such property or asset has been or is to be sold or transferred
by the Issuer or any Subsidiary to such Person; provided, however, that the
foregoing shall not include any such arrangement involving a lease for a term,
including renewal rights, for not more than three years.
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"Security" or "Securities" means securities that have been
authenticated and delivered under this Indenture.
"Security Documents" means any agreements and Mortgages executed by the
Grantors necessary to create a Security Interest in favor of the Trustee and the
Security Holders in the Collateral.
"Security Interest" means the security interests granted under Section
12.1.
"Senior Credit Documents" means the Credit Agreement, the Senior Note
Agreement, the Morgan Swap Agreement, in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring all or any
portion of the Obligations under such agreement or any successor or replacement
agreement and any other agreement evidencing or creating Senior Debt whether by
the same or any other creditor or group of creditors, and any and all notes,
documents and agreements relating thereto, including all documents and
agreements guaranteeing all or any portion of the Senior Debt or granting any
lien, mortgage or security interest on any property or asset of the Issuer or
any of its Subsidiaries as security for all or any portion of the Senior Debt.
"Senior Credit Facility" means the credit facilities and Obligations
arising under the Senior Credit Documents and any credit facility or facilities
entered into by the Issuer refinancing, renewing, replacing, amending or
extending all or part of such credit facilities or Obligations.
"Senior Credit Facility Debt" means all Obligations arising under the
Senior Credit Documents.
"Senior Debt" means the principal of, premium, if any, interest
(including any interest accruing subsequent to the filing of, or which would
have accrued but for the filing of, a Bankruptcy Proceeding at the rate provided
for in the documentation with respect thereto, whether or not such interest is
an allowed claim under applicable law) on, and all other amounts owing in
respect of (i) the Senior Credit Facility (including guarantees thereof),
whether outstanding on the Issue Date or thereafter incurred and (ii) all other
Indebtedness secured by liens permitted under Section 3.9(i) hereof.
Notwithstanding the foregoing, Senior Debt shall not include that portion of any
Indebtedness that would otherwise be Senior Debt if and to the extent that at
the time incurred such Indebtedness exceeds the aggregate amount of Senior Debt
permitted to be secured by liens pursuant to Section 3.9(i) hereof.
"Senior Note Agreement" means that certain Note Agreement dated as of
August 13, 1992 between the Issuer and The Prudential Insurance Company of
America, together with the securities and other documents related thereto, as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring all or any portion of the indebtedness under such agreements or
any successor or
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replacement agreement and whether by the same or any other holder of the
securities issued thereunder.
"Subsidiary" means any corporation, association, limited liability
company, partnership, joint venture or other business entity of which at least a
majority of the total voting power of outstanding securities or other interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time directly or
indirectly owned or controlled by the Issuer or by one or more Subsidiaries or
by the Issuer and one or more Subsidiaries; provided, however, that the term
"Subsidiary" shall not include (i) the joint venture between Cone Mills
(Mexico), S.A. de C.V. and Compania Industrial de Parras, S.A. de C.V., (ii)
Cone Mills (Mexico), S.A. de C.V. or (iii) any other corporation, association,
limited liability company, partnership, joint venture or business entity
substantially all the property of which is located, or substantially all of the
business of which is carried on, outside the United States of America; provided,
further, that notwithstanding the foregoing, the term "Subsidiary" shall include
Cone Receivables II, LLC or any other special purpose entity which purchases and
securitizes accounts receivable of the Issuer and its Subsidiaries and in which
the Issuer and one or more Subsidiaries holds the primary economic interest.
"Subsidiary Guarantor" means Cone Foreign Trading , LLC, each a wholly
owned Subsidiary of the Issuer.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by either Grantor or which either Grantor otherwise has the
right to license, or granting to either Grantor any right to use any Trademark
now or hereafter owned by any third party, and all rights of either Grantor
under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by either Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof and used by either Grantor in
the United States, and all registration and recording applications filed in
connection therewith, including registrations and registration applications in
the United States Patent and Trademark Office, any State of the United States,
and all extensions or renewals thereof, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article 5, shall also include
any successor trustee.
"Trust Indenture Act of 1939" (except as otherwise provided in Sections
7.1 and 7.2) means the Trust Indenture Act of 1939 as in force at the date as of
which this Indenture was originally executed.
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"Vice President" when used with respect to the Issuer or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title of "vice president."
"Yield to Maturity" means the yield to maturity of the Securities,
calculated at the time of issuance, or, if applicable, at the most recent
redetermination of interest, and calculated in accordance with accepted
financial practice.
Article 2
SECURITIES
Section 2.1 Forms Generally. The Securities, the Trustee's
authentication thereof, and the form of guaranty shall be substantially in the
form of Debenture annexed hereto as Exhibit A.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Section 2.2 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:____________________________________
Authorized Signatory
Dated:_________________________________
Section 2.3 Amount of Debentures. The aggregate Principal amount of
Securities which may be authenticated and delivered under this Indenture is
$85,000,000.
Section 2.4 Authentication and Delivery of Securities. At any time and
from time to time after the execution and delivery of this Indenture, the Issuer
may deliver Securities executed by the Issuer to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver for original issue
Securities in the aggregate principal amount of up to $85,000,000 to or upon the
written order of the Issuer, signed by both (a) the chairman of its Board of
Directors, or any vice chairman of its Board of Directors, or its president or
any vice president and (b) by its secretary or any assistant secretary or its
treasurer or any assistant treasurer, without any further action by the Issuer.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Issuer or if the
Trustee in good faith by a trust committee of Responsible
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Officers shall determine that such action would expose the Trustee to personal
liability to existing Holders.
Section 2.5 Execution of Securities. The Securities shall be signed on
behalf of the Issuer by both (a) the chairman of its Board of Directors or any
vice chairman of its Board of Directors or its president or any vice president
and (b) by its treasurer or any assistant treasurer or its secretary or any
assistant secretary, under its corporate seal which may, but need not, be
attested. Such signatures may be the manual or facsimile signatures of the
present or any future such officers. The seal of the Issuer may be in the form
of a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. Typographical and other minor errors or defects in
any such reproduction of the seal or any such signature shall not affect the
validity or enforceability of any Security that has been duly authenticated and
delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Issuer, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be signed on behalf of the Issuer by such
Persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of execution and delivery of
this Indenture any such Person was not such an officer.
Section 2.6 Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized signatories, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
Section 2.7 Denomination and Date of Securities; Payments of Interest .
The Securities shall be issuable as registered securities without coupons in
denominations of $1,000 and any multiple thereof. The Securities shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plan as the Officers of the Issuer executing the same may determine
with the approval of the Trustee as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication, shall bear
interest at the rate of 11% per annum, from the date and shall be payable on the
15th day of March and of September of each year.
The Person in whose name any Security is registered at the close of
business on any record date with respect to any interest payment date for
Securities shall be entitled to receive the interest, if any, payable on such
interest payment date notwithstanding any transfer or exchange of such Security
subsequent to the record date and prior to such interest payment date, except if
and to the extent the Issuer shall default in the payment of the interest due on
such interest payment date, in which case such defaulted interest shall be paid
to the Persons in whose names Outstanding Securities are registered at the close
of business on a subsequent record date (which
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shall be not less than five Business Days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of the
Issuer to the Holders of Securities not less than 15 days preceding such
subsequent record date. The term "record date" as used with respect to any
interest payment date (except a date for payment of defaulted interest) shall
mean the date specified as such in the terms of the Securities, or, if no such
date is so specified, if such interest payment date is the first day of a
calendar month, the fifteenth day of the next preceding calendar month or, if
such interest payment date is the fifteenth day of a calendar month, the first
day of such calendar month, whether or not such record date is a Business Day.
Section 2.8 Registration, Transfer and Exchange. The Issuer will keep
or cause to be kept at each office or agency to be maintained for the purpose as
provided in Section 3.2 a register or registers in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Securities as in this Article provided. Such register shall be
in written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security at
any such office or agency to be maintained for the purpose as provided in
Section 3.2, the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Security or
Securities in authorized denominations for a like aggregate Principal amount.
Any Security or Securities may be exchanged for a Security or
Securities in other authorized denominations, in an equal aggregate Principal
amount. Securities to be exchanged shall be surrendered at any office or agency
to be maintained by the Issuer for the purpose as provided in Section 3.2, and
the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the Securityholder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee, duly executed by
the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities. No service charge shall be made for any
such transaction.
The Issuer shall not be required to exchange or register a transfer of
(a) any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not so to be redeemed.
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All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
None of the Issuer, the Trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial interests.
Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.
In case any temporary or definitive Security shall become mutilated, defaced or
be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon
the written request of any officer of the Issuer, the Trustee shall authenticate
and deliver, a new Security, bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated or defaced Security, or in lieu
of and substitution for the Security so destroyed, lost or stolen. In every case
the applicant for a substitute Security shall furnish to the Issuer and to the
Trustee and any agent of the Issuer or the Trustee such security or indemnity as
may be required by them to indemnify and defend and to save each of them
harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. In case any Security
which has matured or is about to mature or has been called for redemption in
full shall become mutilated or defaced or be destroyed, lost or stolen, the
Issuer may instead of issuing a substitute Security, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
or defaced Security), if the applicant for such payment shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee
evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section by virtue of the fact that any such Security is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Issuer,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but shall be
subject to all the limitations of rights set forth in) this Indenture equally
and proportionately with any and all other Securities duly authenticated and
delivered hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced or
destroyed, lost or stolen Securities and shall preclude any and all other rights
or remedies notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
15
Section 2.10 Cancellation of Securities; Destruction Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or analogous
fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee,
shall be delivered to the Trustee for cancellation or, if surrendered to the
Trustee, shall be cancelled by it; and no Securities shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall dispose of such cancelled Securities in its
customary manner. If the Issuer shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
Section 2.11 Temporary Securities. Pending the preparation of
definitive Securities, the Issuer may execute and the Trustee shall authenticate
and deliver temporary Securities (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Trustee).
Temporary Securities shall be issuable as registered Securities without coupons,
of any authorized denomination, and substantially in the form of the definitive
Securities but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee. Temporary Securities may contain such
reference to any provisions of this Indenture as may be appropriate. Every
temporary Security shall be executed by the Issuer and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Securities. Without unreasonable delay the Issuer
shall execute and shall furnish definitive Securities and thereupon temporary
Securities may be surrendered in exchange therefor without charge at each office
or agency to be maintained by the Issuer for that purpose pursuant to Section
3.2, and the Trustee shall authenticate and deliver in exchange for such
temporary Securities a like aggregate Principal amount of definitive Securities
of authorized denominations. Until so exchanged, the temporary Securities shall
be entitled to the same benefits under this Indenture as definitive Securities.
Section 2.12 Securities Issuable in the Form of a Global Security.
(a) The Securities may be issued in whole or in part in the
form of one or more Global Securities, and the Issuer shall execute and
the Trustee shall, in accordance with Section 2.4 and the Issuer order
delivered to the Trustee thereunder, authenticate and deliver, such
Global Security or Securities, which
(i) shall represent, and shall be denominated in an
amount equal to the aggregate Principal amount of, the
Outstanding Securities to be represented by such Global
Security or Securities,
(ii) shall be registered in the name of the
Depositary for such Global Security or Securities or its
nominee,
(iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction and
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(iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole
or in part for Securities in definitive form, this Global
Security 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."
(b) Notwithstanding any other provision of this Section 2.12
or of Section 2.8, unless the terms of a Global Security expressly
permit such Global Security to be exchanged in whole or in part for
individual Securities, a Global Security may be transferred, in whole
but not in part and in the manner provided in Section 2.8, only to
another nominee of the Depositary for such Global Security, or by the
nominee of the Depositary to the Depositary, or to a successor
Depositary for such Global Security selected or approved by the Issuer
or to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security
notifies the Issuer that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time the Depositary
for the Securities shall no longer be eligible or in good standing
under the Securities Exchange Act of 1934, as amended, or other
applicable statute or regulation, the Issuer shall appoint a successor
Depositary with respect to such Global Security. If a successor
Depositary for such Global Security is not appointed by the Issuer
within 90 days after the Issuer receives such notice or becomes aware
of such ineligibility, the Issuer's election to have the Securities
issued in whole or in part in the form of Global Securities shall no
longer be effective with respect to such Global Security and the Issuer
will execute, and the Trustee, upon receipt of an Issuer order for the
authentication and delivery of individual Securities in exchange for
such Global Security, will authenticate and deliver individual
Securities of like tenor and terms in definitive form in an aggregate
Principal amount equal to the Principal amount of the Global Security
in exchange for such Global Security.
(c) (ii) The Issuer may at any time and in its sole discretion
determine that the Securities issued or issuable in the form of one or
more Global Securities shall no longer be represented by such Global
Security or Securities. In such event the Issuer will execute, and the
Trustee, upon receipt of an Issuer order for the authentication and
delivery of individual Securities in exchange in whole or in part for
such Global Security, will authenticate and deliver individual
Securities of like tenor and terms in definitive form in an aggregate
Principal amount equal to the Principal amount of such Global Security
or Securities in exchange for such Global Security or Securities.
(c) (iii) If specified by the Issuer with respect to
Securities issued or issuable in the form of a Global Security, the
Depositary for such Global Security may surrender such Global Security
in exchange in whole or in part for individual Securities of like tenor
and terms in definitive form on such terms as are acceptable to the
Issuer and such Depositary. Thereupon the Issuer shall execute, and the
Trustee shall authenticate and deliver, without service charge, (A) to
each Person specified by such Depositary a new Security or Securities
of like tenor and terms and of any authorized
17
denomination as requested by such Person in aggregate Principal amount
equal to and in exchange for such Person's beneficial interest in the
Global Security; and (B) to such Depositary a new Global Security of
like tenor and terms and in a denomination equal to the difference, if
any, between the Principal amount of the surrendered Global Security
and the aggregate Principal amount of Securities delivered to Holders
thereof.
(c) (iv) In any exchange provided for in any of the preceding
three paragraphs, the Issuer will execute and the Trustee will
authenticate and deliver individual Securities in definitive registered
form in authorized denominations. Upon the exchange of a Global
Security for individual Securities, such Global Security shall be
cancelled by the Trustee. Securities issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and
in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Persons in whose names such
Securities are so registered.
Section 2.13 CUSIP Numbers. The Issuer in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Issuer will
promptly notify the Trustee of any change in the "CUSIP" numbers.
Article 3
COVENANTS OF THE ISSUER AND THE TRUSTEE
Section 3.1 Payment of Principal and Interest. The Issuer covenants and
agrees for the benefit of the Securities that it will duly and punctually pay or
cause to be paid the Principal of, and interest on, each of the Securities at
the place or places, at the respective times and in the manner provided in such
Securities. Each installment of interest on the Securities may be paid by
mailing checks for such interest payable to or upon the written order of the
Holders of Securities entitled thereto as they shall appear on the registry
books of the Issuer.
Section 3.2 Offices for Payments, etc. So long as any of the Securities
remain outstanding, the Issuer will maintain in The Borough of Manhattan, The
City of New York: an office or agency
(a) where the Securities may be presented for payment,
(b) where the Securities may be presented for registration of
transfer and for exchange as provided in this Indenture and
(c) where notices and demands to or upon the Issuer in respect
of the Securities or of this Indenture may be served.
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The Issuer will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. The Issuer hereby
initially designates the Corporate Trust Office as the office to be maintained
by it for each such purpose. In case the Issuer shall fail to so designate or
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Corporate Trust Office.
Section 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.9, a Trustee, so that there
shall at all times be a Trustee with respect to the Securities issued hereunder.
Section 3.4 Paying Agent. Whenever the Issuer shall appoint a paying
agent other than the Trustee with respect to the Securities, it will cause such
paying agent to execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent,
for the payment of the Principal of or interest on the Securities
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit of the Holders of
the Securities or of the Trustee,
(b) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment
of the Principal of or interest on the Securities when the same shall
be due and payable, and
(c) pay any such sums so held in trust by it to the Trustee
upon the Trustee's written request at any time during the continuance
of the failure referred to in clause (b) above.
The Issuer will, on or prior to each due date of the Principal of or
interest on the Securities, deposit with the paying agent a sum sufficient to
pay such Principal or interest so becoming due, and (unless such paying agent is
the Trustee) the Issuer will promptly notify the Trustee of any failure to take
such action.
If the Issuer shall act as its own paying agent with respect to the
Securities, it will, on or before each due date of the Principal of or interest
on the Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such Principal or interest so
becoming due. The Issuer will promptly notify the Trustee of any failure to take
such action.
Anything in this Section to the contrary notwithstanding, the Issuer
may at any time, for the purpose of obtaining a satisfaction and discharge with
respect to the Securities hereunder, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust by the Issuer or any paying agent
hereunder, as required by this Section, such sums to be held by the Trustee upon
the trusts herein contained.
19
Anything in this Section to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section is subject to the provisions
of Sections 5.4 and 5.5.
Section 3.5 Certificate of the Issuer. The Issuer will furnish to the
Trustee on or before 90 days after the end of each fiscal year of the Issuer
(beginning with 2001) a brief certificate (which need not comply with Section
10.5) executed by the principal executive, financial or accounting officer of
the Issuer on its behalf as to his or her knowledge, after due inquiry, of the
Issuer's compliance with all covenants and agreements under the Indenture (such
compliance to be determined without regard to any period of grace or requirement
of notice provided under the Indenture).
Section 3.6 Security Holders Lists. If and so long as the Trustee shall
not be the Security registrar for the Securities, the Issuer will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the Securities
pursuant to Section 312 of the Trust Indenture Act of 1939 (a) semi-annually not
more than 15 days after each record date for the payment of interest on such
Securities, as hereinabove specified, as of such record date in each year and
(b) at such other times as the Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request as of a date not more than 15
days prior to the time such information is furnished.
Section 3.7 Reports by the Issuer. The Issuer covenants to file with
the Trustee, within 15 days after the Issuer is required to file the same with
the Commission, copies of the annual reports and of the information, documents,
and other reports which the Issuer may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.8 Reports by the Trustee. Any Trustee's report required under
Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or
before May 15 in each year following the date hereof, so long as any Securities
are outstanding hereunder, and shall be dated as of a date convenient to the
Trustee no more than 60 nor less than 45 days prior thereto.
Section 3.9 Limitations on Liens. After the date hereof and so long as
any Securities are Outstanding (but subject to defeasance as provided in Article
9), the Issuer will not, and will not permit any Subsidiary to, issue, assume or
guarantee any Indebtedness that is secured by a mortgage, pledge, security
interest, lien or encumbrance (each a "lien") upon any property or assets of the
Issuer or such Subsidiary or any shares of stock of or Indebtedness issued by
any Subsidiary (whether such property, assets, shares of stock or Indebtedness
are now owned or hereafter acquired) unless such lien, with respect to the
Collateral, is junior in priority to the Liens held by the Trustee pursuant to
Article 12 of this Indenture, except that the following liens will be prior to
the Liens held by the Trustee:
20
(a) liens on the property, assets, shares of stock or
Indebtedness of any Person existing at the time such Person becomes a
Subsidiary;
(b) liens on property, assets, shares of stock or Indebtedness
of a Person existing at the time such Person is merged into or
consolidated with the Issuer or a Subsidiary or at the time all or
substantially all of such property, assets or shares of stock of such
Person are purchased, leased or otherwise acquired by the Issuer or a
Subsidiary;
(c) liens existing at the time of acquisition of the property
or assets affected thereby by the Issuer or a Subsidiary, or liens to
secure the payment of all or any part of the purchase price of such
property or assets or to secure any Indebtedness incurred, assumed or
guaranteed by the Issuer or a Subsidiary prior to, at the time of, or
within one year after the acquisition of such property or assets (or in
the case of real property, the completion of construction (including
any improvements on an existing property or asset) or commencement of
full operation of such property or asset, whichever is later) which
Indebtedness is incurred, assumed or guaranteed for the purpose of
financing all or any part of the purchase price thereof or, in the case
of real property, construction or improvements thereon; provided,
however, that in the case of any such acquisition, construction or
improvement, the lien shall not apply to any property or assets
theretofore owned by the issuer or a Subsidiary other than the property
or assets so acquired, constructed or improved;
(d) liens to secure Indebtedness of a Subsidiary to the Issuer
or to another Subsidiary;
(e) liens in favor of the United States of America or any
State thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any State
thereof, or in favor of any other country, or any political subdivision
thereof, to secure partial, progress, advance or other payments
pursuant to any contract, statute, rule or regulation or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or
any part of the purchase price (or, in the case of real property, the
cost of construction or improvement) of the property or assets subject
to such liens (including, but not limited to, liens incurred in
connection with pollution control, industrial revenue or similar
financings);
(f) pledges, liens or deposits under worker's compensation
laws or similar legislation and liens or judgments thereunder which are
not currently dischargeable, or in connection with bids, tenders,
contracts (other than for the payment of money) or leases to which the
Issuer or any Subsidiary is a party, or to secure the public or
statutory obligations of the Issuer or any Subsidiary, or in connection
with obtaining or maintaining self-insurance or to obtain the benefits
or any law, regulation or arrangement pertaining to unemployment
insurance, old age pensions, social security or similar matters, or to
secure surety, performance, appeal or customs bonds to which the Issuer
or any Subsidiary is a party, or in litigation or other proceedings
such as, but not limited to, interpleader proceedings, and other
similar pledges, liens or deposits made or incurred in
21
the ordinary course of business;
(g) liens created by or resulting from any litigation or other
proceeding which is being contested in good faith by appropriate
proceedings, including liens arising out of judgments or awards against
the Issuer or any Subsidiary with respect to which the Issuer or such
Subsidiary is in good faith prosecuting an appeal or proceedings for
review or for which the time to make an appeal has not yet expired; or
final unappealable judgment liens which are satisfied within 15 days of
the date of judgment; or liens incurred by the Issuer or any Subsidiary
for the purpose of obtaining a stay or discharge in the course of any
litigation or other proceeding to which the Issuer or such Subsidiary
is a party;
(h) liens for taxes or assessments or governmental charges or
levies not yet delinquent, or which can thereafter be paid without
penalty, or which are being contested in good faith by appropriate
proceedings; landlord's liens on property held under lease; liens of
carriers, warehouseman, mechanics and materialman incurred in the
ordinary course of business for sums not yet due and payable or which
are being contested in good faith by appropriate proceedings; statutory
liens of banks and other financial institutions arising during the
collection of instruments in the ordinary course of business; and any
other liens or charges incidental to the conduct of the business of the
Issuer or any Subsidiary or the ownership of the property or assets of
any of them which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit and which do not, in the
opinion of the Board of Directors of the Issuer, materially impair the
use of such property or assets in the operation of the business of the
Issuer or such Subsidiary or the value of such property or assets for
the purposes of such business;
(i) liens not permitted by clauses (a) through (h) above, if
at the time of, and after giving effect to, the execution and delivery
of the security document granting any such lien (or at the time of, and
after giving effect to, the assumption of any such lien), the aggregate
amount of all outstanding Indebtedness of the Issuer and its
Subsidiaries (considering the maximum amount committed under any
revolving credit facility as outstanding Indebtedness) (without
duplication) secured by all such liens not permitted by clauses (a)
through (h) above, together with the Attributable Debt in respect of
Sale and Lease-Back Transactions permitted by paragraph (a) of Section
3.10, does not exceed 55% of Consolidated Net Tangible Assets; or
(j) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part of any lien
referred to in the foregoing clauses (a) to (e), inclusive; provided,
however, that the Principal amount of Indebtedness secured thereby
shall not exceed the Principal amount of Indebtedness so secured at the
time of such extension, renewal or replacement, and that such
extension, renewal or replacement shall be limited to all or a part of
the assets (or any replacements therefor) which secured the lien so
extended, renewed or replaced (plus improvements and construction on
real property).
Section 3.10 Limitations on Sale and Lease-Back Transactions. The
Issuer will not, and will not permit any Subsidiary to, enter into any Sale and
Lease-Back Transaction, unless:
22
(a) the Issuer or such Subsidiary would, at the time of
entering into a Sale and Lease-Back Transaction, be entitled to incur
Indebtedness secured by a Priority Lien on the property or assets to be
leased in an amount at least equal to the Attributable Debt in respect
of such Sale and Lease-Back Transaction; or
(b) the direct or indirect proceeds of the sale of the
property or assets to be leased are at least equal to their fair value
(as determined by Board of Directors of the Issuer) and an amount equal
to the net proceeds from the sale of the property or assets so leased
is applied, within 90 days of the effective date of any such Sale and
Lease-Back Transaction, (i) to the purchase or acquisition (or, in the
case of real property, the commencement of construction) of property or
assets or (ii) to the retirement or repayment (other than at maturity
or pursuant to a mandatory sinking fund or mandatory redemption
provision) of Securities or of Funded Indebtedness of the Issuer
ranking on a parity with or senior to the Securities or of Funded
Indebtedness of a consolidated Subsidiary; provided, that there shall
be credited to the amount of net proceeds required to be applied
pursuant to this clause (b) an amount equal to the sum of (i) the
Principal amount of Securities delivered within 90 days of the
effective date of such Sale and Lease-Back Transaction to the Trustee
for retirement and cancellation and (ii) the principal amount of other
Funded Indebtedness voluntarily retired by the Issuer within such 90
day period, excluding retirements of Securities and other Funded
Indebtedness as a result of conversions or pursuant to mandatory
sinking fund or mandatory prepayment provisions.
Section 3.11 Notice to Trustee. The Issuer shall provide written notice
to the Trustee within 30 days of the occurrence of any Event of Default under
Section 4.1.
Section 3.12 Calculation of Original Issue Discount. The Issuer shall,
if applicable, file with the Trustee promptly at the end of each calendar year
(i) a written notice specifying the amount of original issue discount (including
daily rates and accrual periods), if any, accrued on Outstanding Securities as
of the end of such year and (ii) such other specific information relating to
such original issue discount as may then be relevant under the Internal Revenue
Code of 1986, as amended from time to time.
Section 3.13 Statement by Officers as to Default. The Issuer shall
deliver to the Trustee, as soon as possible and in any event within five days
after the Issuer becomes aware of the occurrence of any Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Issuer proposes to take with respect
thereto.
Article 4
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
Section 4.1 Event of Default; Acceleration of Maturity; Waiver of
Default. "Event of Default" with respect to Securities wherever used herein,
means any one of the following events shall have occurred and be continuing
(whatever the reason for such Event of Default and whether it shall
23
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) default in the payment of any installment of interest upon
any of the Securities as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(b) default in the payment of all or any part of the Principal
on any of the Securities as and when the same shall become due and
payable either at maturity, upon redemption, by declaration or
otherwise; or
(c) default in the payment of any sinking fund installment as
and when the same shall become due and payable by the terms of the
Securities; or
(d) default in the performance or breach of any covenant or
agreement of the Issuer or the Subsidiary Guarantor contained in the
Securities or in this Indenture (other than a covenant or agreement the
default in the performance or breach of which is elsewhere in this
Section specifically dealt with), and continuance of such default or
breach for a period of 90 days after the date on which there has been
given, by registered or certified mail, to the Issuer by the Trustee or
to the Issuer and the Trustee by the Holders of at least 25% in
Principal amount of the Outstanding Securities, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(e) an event of default, as defined in any indenture,
including this Indenture, or instrument evidencing or under which the
Issuer, on the date any determination shall be made under this clause
(e), shall have outstanding at least $15,000,000 aggregate principal
amount of indebtedness for borrowed money shall happen and be
continuing and such event of default shall involve the failure to pay
the principal of or interest on such indebtedness (or any part thereof)
on the final maturity date thereof after the expiration of any
applicable grace period with respect thereto, or such indebtedness
shall have been accelerated so that the same shall be or become due and
payable prior to the date on which the same would otherwise have become
due and payable, and such acceleration shall not be rescinded or
annulled within 10 Business Days after notice thereof shall have been
given to the Issuer by the Trustee (if such event be known to it) or to
the Issuer and the Trustee by the Holders of at least 25% in aggregate
Principal amount of all of the Securities at the time Outstanding
(treated as one class); provided, that, if such event of default under
such indenture or instrument shall be remedied or cured by the Issuer
or waived by the requisite Holders of such indebtedness, then the Event
of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon
the part of either the Trustee or any of the Securityholders, and
provided further, however, that, subject to the provisions of Sections
5.1 and 5.2, the Trustee shall not be charged with knowledge of any
such event of default unless written notice thereof shall have been
given to the Trustee by the Issuer, by the holder or an agent of the
holder of any such indebtedness, by the trustee
24
then acting under any indenture or other instrument under which such
default shall have occurred, or by the Holders of not less than 25% in
the aggregate Principal amount of the Securities at the time
Outstanding; or
(f) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Issuer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of
the Issuer or for any substantial part of its property or ordering the
winding up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days; or
(g) the Issuer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Issuer or for any
substantial part of its property, or make any general assignment for
the benefit of creditors.
If an Event of Default described in clauses (a), (b), (c) or (d) occurs
and is continuing, then, and in each and every such case, unless the Principal
of all of the Securities shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate Principal amount of the
Securities then Outstanding hereunder by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire Principal of
the Securities and the interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the Principal of the Securities shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities and the Principal of
all Securities specified in the Securities to the date of such payment or
deposit and such amount as shall be sufficient to cover reasonable compensation
to the Trustee, its agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trust except as a result of
negligence or bad faith, and if any and all Events of Default under the
Indenture, other than the non-payment of the Principal of Securities which shall
have become due by acceleration, shall have been cured, waived or otherwise
remedied as provided herein--then and in every such case the Holders of a
majority in aggregate Principal amount of all the Securities then outstanding,
by written notice to the Issuer and to the Trustee, may waive all defaults with
respect to all the Securities, and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
Section 4.2 Collection of Indebtedness by Trustee; Trustee May Prove
Debt. The Issuer covenants that (a) in case default shall be made in the payment
of any installment of interest on the
25
Securities when such interest shall have become due and payable, and such
default shall have continued for a period of 30 days or (b) in case default
shall be made in the payment of all or any part of the Principal of the
Securities when the same shall have become due and payable, whether upon
maturity of the Securities or upon any redemption or by declaration or
otherwise--then upon demand of the Trustee, the Issuer will pay to the Trustee
for the benefit of the Holders of the Securities the whole amount that then
shall have become due and payable on all Securities for Principal or interest,
as the case may be; and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and any expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee except as a
result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
Principal of and interest on the Securities to the Holders, whether or not the
Principal of and interest on the Securities be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon such
Securities and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor, or in case
of any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the Principal of any
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of Principal and interest owing and unpaid in respect of the
Securities, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence or bad faith) and of the
Securityholders allowed in any judicial proceedings relative to the
Issuer or other obligor upon the Securities, or to the creditors or
property of' the Issuer or such other obligor,
26
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Securities in any election of a
trustee or a standby trustee in arrangement, reorganization,
liquidation or other, bankruptcy or insolvency proceedings or Person
performing similar functions in comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Securityholders and
of the Trustee on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby authorized by
each of the Securityholders to make payments to the Trustee, and, in
the event that the Trustee shall consent to the making of payments
directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith and all other amounts due to the
Trustee or any predecessor Trustee pursuant to Section 5.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment, liquidation
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding except as set forth in clause (b) of the preceding
paragraph.
All rights of action and to assert claims under this Indenture or under
any of the Securities, may be enforced by the Trustee without the possession of
any of the Securities or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses, disbursements
and compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Securities in respect to which such action was taken, and it
shall not be necessary to make any Holders of such Securities parties to any
such proceedings.
Section 4.3 Application of Proceeds. Any moneys collected by the
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of Principal or interest, upon presentation of the several
Securities in respect of which monies have been collected and stamping (or
otherwise noting) thereon the payment, or issuing Securities in reduced
Principal amounts in exchange for the presented Securities if only partially
paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such series
in respect of
27
which monies have been collected, including reasonable compensation to the
Trustee and each predecessor Trustee and their respective agents and attorneys
and of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith, and all other amounts due to the Trustee or any predecessor Trustee
pursuant to Section 5.6;
SECOND: In case the Principal of the Securities in respect of which
moneys have been collected shall not have become and be then due and payable, to
the payment of interest on the Securities in default in the order of the
maturity of the installments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue installments
of interest at the same rate as the rate of interest or Yield to Maturity (in
the case of Original Issue Discount Securities) specified in such Securities,
such payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the Principal of the Securities in respect of which
moneys have been collected shall have become and shall be then due and payable,
to the payment of the whole amount then owing and unpaid upon all the Securities
for Principal and interest, with interest upon the overdue Principal, and (to
the extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the same rate as the rate of interest or Yield to
Maturity (in the case of original issue Discount Securities) specified in the
Securities; and in case such moneys shall be insufficient to pay in full the
whole amount so due and unpaid upon the Securities, then to the payment of such
Principal and interest or Yield to Maturity, without preference or priority of
Principal over interest or Yield to Maturity, or of interest or Yield to
Maturity over Principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security, ratably to
the aggregate of such Principal and accrued and unpaid interest or Yield to
Maturity; and
FOURTH: To the payment of the remainder, if any, to the Issuer.
Section 4.4 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as are necessary to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.
Section 4.5 Restoration of Rights on Abandonment of Proceedings. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Trustee, then and in every such
case the Issuer and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Issuer, the Trustee and the Securityholders shall continue as though no such
proceedings had been taken.
Section 4.6 Limitations on Suits by Securityholders. No Holder of any
Security shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceeding at
28
law or in equity or in bankruptcy or otherwise upon or under or with respect to
this Indenture, or for the appointment of a trustee, receiver, liquidator,
custodian or other similar official or for any other remedy hereunder, unless
such Holder previously shall have given to the Trustee written notice of default
and of the continuance thereof, as hereinbefore provided and unless also the
Holders of not less than 25% in aggregate Principal amount of the Securities
then outstanding shall have made written request upon the Trustee to institute
such action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby and the Trustee for
60 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 4.9; it being understood and intended, and being expressly
covenanted by the taker and Holder of every Security with every other taker and
Holder and the Trustee, that no one or more Holders of Securities shall have any
right in any manner whatever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of any other such Holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Securities. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 4.7 Unconditional Right of Securityholders to Institute Certain
Suits. Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder of any Security to receive payment of
the Principal of and interest on such Security on or after the respective due
dates expressed in such Security, or to institute 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 4.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 4.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Securityholders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 4.6, every power and remedy given by this
Indenture or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
Section 4.9 Control by Securityholders. The Holders of a majority in
aggregate Principal amount of the Securities at the time outstanding shall have
the right to direct the time, method, and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or
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power conferred on the Trustee with respect to the Securities by this Indenture;
provided, that such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture and provided further that (subject to the
provisions of Section 5.1) the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by counsel, shall determine
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by a trust committee of Responsible Officers of the
Trustee shall determine that the action or proceedings so directed would involve
the Trustee in personal liability or if the Trustee in good faith shall so
determine that the actions or forbearance specified in or pursuant to such
direction would be unduly prejudicial to the interests of Holders of the
Securities not joining in the giving of said direction, it being understood that
(subject to Section 5.1) the Trustee shall have no duty to ascertain whether or
not such actions or forbearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
Section 4.10 Waiver of Past Defaults. Prior to a declaration of the
acceleration of the maturity of the Securities as provided in Section 4.1, the
Holders of a majority in aggregate Principal amount of the Securities at the
time Outstanding may on behalf of the Holders of all the Securities waive any
past default or Event of Default described in clause (d) of Section 4.1, except
a default in respect of a covenant or provision hereof which cannot be modified
or amended without the consent of each Holder affected as provided in Section
7.2. Prior to a declaration of acceleration of the maturity of the Securities as
provided in Section 4.1, the Holders of Securities of a majority in Principal
amount of all the Securities then Outstanding may on behalf of all Holders waive
any past default or Event of Default referred to in said clause (d) which
relates to all Securities then Outstanding, or described in clause (e), (f) or
(g) of Section 4.1, except a default in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder of
each Security affected as provided in Section 7.2. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Securities shall be
restored to their former positions and rights hereunder, respectively.
Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Section 4.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall give to the Securityholders, as the
names and addresses of such Holders appear on the registry books, notice by mail
of all defaults actually known to a Responsible Officer of the Trustee which
have occurred, such notice to be transmitted within 90 days after the occurrence
thereof, unless such defaults shall have been cured before the giving of such
notice (the term "default" or "defaults" for the purposes of this Section being
hereby defined to mean any event or condition which is, or with notice or lapse
of time or both would become, an Event of Default); provided, that, except in
the case of default in the payment of the Principal of or
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interest on any of the Securities, the Trustee shall be protected in withholding
such notice if and so long as a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders.
Section 4.12 Right of Court to Require Filing of Undertaking to Pay
Costs. All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 10% in the aggregate
Principal amount of the Securities, or in the case of any suit relating to or
arising under clauses (d), (e), (f) or (g) of Section 4.1, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
Principal of or interest on any Security on or after the due date expressed in
such Security.
Article 5
CONCERNING THE TRUSTEE
Section 5.1 Duties and Responsibilities of the Trustee; During Default;
Prior to Default. With respect to the Holders of Securities issued hereunder,
the Trustee, prior to the occurrence of an Event of Default with respect to the
Securities and after the curing or waiving of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with
respect to the Securities and after the curing or waiving of all such
Events of Default which may have occurred:
(i) the duties and obligations of the Trustee with
respect to the Securities shall be determined solely by the
express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
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(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
any mathematical calculations or other facts stated therein);
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders pursuant to Section 4.9 relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers.
The provisions of this Section 5.1 are in furtherance of and subject to
Sections 315 and 316 of the Trust Indenture Act of 1939.
Section 5.2 Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 5.1:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
Officers' Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture,
note, coupon, security or other paper or document (whether in its
original or facsimile form) believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel of its own selection
and any advice or opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in
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accordance with such advice or opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders pursuant to the
provisions of this Indenture, unless such Securityholders shall have
offered to the Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities which might be incurred therein or
thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, 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, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless
requested in writing so to do by the Holders of not less than a
majority in aggregate Principal amount of the Securities then
outstanding; provided, that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Indenture, the Trustee may require indemnity
satisfactory to it against such expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such investigation
reasonably requested by the Holders as aforesaid shall be paid by the
Issuer or, if paid by the Trustee or any predecessor trustee, shall be
repaid by the Issuer upon demand; and
(g) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the Trustee
shall not be responsible for any misconduct or negligence on the part
of any such agent or attorney appointed with due care by it hereunder.
Section 5.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Issuer, and the Trustee assumes no responsibility
for the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee
shall not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
Section 5.4 Trustee and Agents May Hold Securities; Collections, etc.
The Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and may otherwise
deal with the Issuer and its Subsidiaries and receive, collect, hold and retain
collections from, make loans to, or perform other services for, the Issuer and
its Subsidiaries with the same rights it would have if it were not the Trustee
or such agent.
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Section 5.5 Moneys Held by Trustee. Subject to the provisions of
Section 9.8 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
Section 5.6 Compensation and Indemnification of Trustee and Its Prior
Claim. The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as the Issuer and the
Trustee shall from time to time agree upon in writing (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all expenses,
disbursements and advances incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all agents
and other Persons not regularly in its employ) except to the extent any such
expense, disbursement or advance may arise from its negligence or willful
misconduct. The Issuer also covenants to fully indemnify the Trustee and each
predecessor trustee for, and to hold it harmless against, any and all loss,
liability, claim, damage or expense arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and the
performance of its duties hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises, except to the extent such loss, liability or expense is due to the
negligence or willful misconduct of the Trustee or such predecessor trustee. The
obligations of the Issuer under this Section to compensate and indemnify the
Trustee and each predecessor trustee and to pay or reimburse the Trustee and
each predecessor trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. Such additional indebtedness shall be a senior
claim to that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the Holders
of Securities, and the Securities are hereby subordinated to such senior claim.
Section 5.7 Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 5.1 and 5.2, whenever in the administration of the trusts of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 5.8 Persons Eligible for Appointment as Trustee. The Trustee
for Securities hereunder shall at all times be a corporation having a combined
capital and surplus of at least $50,000,000, and which is eligible in accordance
with the provisions of Section 310(a) of the Trust Indenture Act of 1939. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of a Federal, State or District of Columbia
supervising or examining authority,
34
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
Section 5.9 Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign as trustee by giving written notice
of resignation to the Issuer and by mailing notice thereof by first
class mail to Holders of the applicable series of Securities at their
last addresses as they shall appear on the Security register. Upon
receiving such notice of resignation, the Issuer shall promptly appoint
a successor trustee or trustees with respect to the applicable series
by written instrument in duplicate, executed by authority of the Board
of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee or trustees. If
no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition at the expense of the
Issuer any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide
Holder of a Security or Securities for at least six months may, subject
to the provisions of Section 4.12, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribed, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act of
1939 with respect to of the Securities after written request
therefor by the Issuer or by any Securityholder who has been a
bona fide Holder of a Security or Securities for at least six
months; or
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 310(a) of the Trust
Indenture Act of 1939 and shall fail to resign after written
request therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting
with respect to the Securities, or shall be adjudged bankrupt
or insolvent, or a receiver or liquidator of the Trustee or of
its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, the Issuer may remove the Trustee with
respect to the Securities and appoint a successor trustee by
written instrument, in duplicate, executed by order of the
Board of Directors of the Issuer, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to
the successor trustee, or, subject to Section 315(e) of the
Trust Indenture Act of 1939, any Securityholder who has been a
bona fide Holder of a Security or Securities
35
for at least six months may on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate Principal amount of
the Securities at the time Outstanding may at any time remove the
Trustee with respect to the Securities and appoint a successor trustee
with respect to the Securities by delivering to the Trustee so removed,
to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 6.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of
this Section 5.9 shall become effective upon acceptance of appointment
by the successor trustee as provided in Section 5.10.
Section 5.10 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.9 shall execute and deliver
to the Issuer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee hereunder; but, nevertheless, on the written
request of the Issuer or of the successor trustee, upon payment of its charges
then unpaid, the trustee ceasing to act shall, subject to Section 9.8, pay over
to the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Issuer shall execute any and all instruments in writing to more
fully confirm to such successor trustee all such rights, powers, duties and
obligations. Any trustee ceasing to act shall, nevertheless, retain a prior
claim upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 5.6.
Upon acceptance of appointment by any successor trustee as provided in
this Section 5.10, the Issuer shall mail notice thereof by first class mail to
the Holders of Securities at their last addresses as they shall appear in the
Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.9. If
the Issuer fails to mail such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Issuer.
Section 5.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation or national banking association into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to all or substantially
all of the
36
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided, that such corporation or national banking association shall
be eligible under the provisions of Section 5.8, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor trustee or to
authenticate Securities in the name of any predecessor trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 5.12 Trustee's Application for Instructions from the Issuer.
Any application by the Trustee for written instructions from the Issuer may, at
the option of the Trustee, set forth in writing any action proposed to be taken
or omitted by the Trustee under this Indenture and the date on and/or after
which such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any officer of the Issuer actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
Article 6
CONCERNING THE SECURITYHOLDERS
Section 6.1 Evidence of Action Taken by Securityholders. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by a specified percentage in
Principal amount of the Securityholders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such specified
percentage of Securityholders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
5.1 and 5.2) conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Article.
Section 6.2 Proof of Execution of Instruments and of Holding of
Securities; Record Date. Subject to Sections 5.1 and 5.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may be prescribed by
37
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Securities shall be proved by the Security register or by a
certificate of the registrar thereof. The Issuer may set a record date for
purposes of determining the identity of Holders of Securities entitled to vote
or consent to any action referred to in Section 6.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or reconsideration) not more than 60 days
nor less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only Holders of
Securities of record on such record date shall be entitled to so vote or give
such consent or revoke such vote or consent.
Section 6.3 Holders to be Treated as Owners. The Issuer, the Trustee
and any agent of the Issuer or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register as the
absolute owner of such Security (whether or not such Security shall be overdue
and notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the Principal of and, subject
to the provisions of this Indenture, interest on such Security and for all other
purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
Section 6.4 Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate Principal amount of
Outstanding Securities have concurred in any direction, consent or waiver under
this Indenture, Securities which are owned by the Issuer or any other obligor on
the Securities with respect to which such determination is being made or by any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor on the Securities
with respect to which such determination is being made shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver only Securities which the
Trustee knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Issuer or any other obligor on the Securities. In case of a dispute as to such
right, the advice of counsel shall be full protection in respect of any decision
made by the Trustee in accordance with such advice. Upon request of the Trustee,
the Issuer shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Securities, if any, known by the Issuer to be owned
or held by or for the account of any of the above described Persons; and,
subject to Sections 5.1 and 5.2, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all securities not listed therein are outstanding for the
purpose of any such determination.
Section 6.5 Right of Revocation of Action Taken. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 6.1, of
the taking of any action by the Holders of the
38
percentage in aggregate Principal amount of the Securities specified in this
Indenture in connection with such action, any Holder of a Security the serial
number of which is shown by the evidence to be included among the serial numbers
of the securities the Holders of which have consented to such action may, by
filing written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Security.
Except as aforesaid any such action taken by the Holder of any Security shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Security and of any Securities issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the Holders of the percentage in
aggregate Principal amount of the Securities specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.
Article 7
SUPPLEMENTAL INDENTURES
Section 7.1 Supplemental Indentures Without Consent of Securityholders.
The Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of the execution thereof)
for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities any property or assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article 8;
(c) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection of
the Holders of Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, that in
respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate Principal
amount of the Securities to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture; or to make such other provisions in
regard to matters or questions arising under this Indenture or under
any
39
supplemental indenture as the Board of Directors may deem necessary or
desirable and which shall not adversely affect the interests of the
Holders of the Securities in any material respect;
(e) to establish the form of Securities as permitted by
Section 2.1; and
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Section 5.10.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
may be executed without the consent of the Holders of any of the Securities at
the time outstanding, notwithstanding any of the provisions of Section 7.2.
Section 7.2 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Article 6) of the Holders of not less
than a majority in aggregate Principal amount of the Securities at the time
outstanding, the Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act of 1939 as in force at the date of
execution thereof) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities; provided, that no such supplemental indenture shall (a)
extend the final maturity of any Security, or reduce the Principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or reduce any amount payable on redemption thereof or make the Principal thereof
(including any amount in respect of original issued discount) or interest
thereon payable in any coin or currency other than that provided in the
Securities or in accordance with the terms thereof, or impair or affect the
right of any Securityholder to institute suit for the payment thereof or, if the
Securities provide therefor, any right of repayment at the option of the
Securityholder, in each case without the consent of the Holder of each Security
so affected, or (b) reduce the aforesaid percentage of Securities, the consent
of the Holders of which is required for any such supplemental indenture, without
the consent of the Holders of each Security so affected.
Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors certified by the secretary or an assistant secretary
of the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence
40
of the consent of Securityholders as aforesaid and other documents, if any,
required by Section 6.1, the Trustee shall join with the Issuer in the execution
of such supplemental indenture unless such 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 supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Issuer
shall mail a notice thereof by first class mail to the Holders of Securities
affected thereby at their addresses as they shall appear on the registry books
of the Issuer, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
Section 7.3 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Section 7.4 Documents to Be Given to Trustee. The Trustee, subject to
the provisions of Sections 5.1 and 5.2, may receive an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article 7 complies with the applicable provisions of
this Indenture.
Section 7.5 Notation on Securities in Respect of Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture or as to any action taken at any
such meeting.
Section 7.6 Consent of Holders of Senior Debt. Notwithstanding anything
to the contrary in this Indenture, no supplemental indenture provided for under
this Article 7, or other amendment or modification hereto, that amends, modifies
or waives any term or provision of this Section 7.6 or Article 13 hereof shall
be effective without the written consent of the holders of the Senior Debt then
outstanding or their Representative, when duly authorized to act on behalf of
the holders under the Senior Credit Documents, such holders being intended
beneficiaries of the terms of this Section 7.6 and Article 13.
41
Article 8
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 8.1 Issuer May Consolidate, etc., on Certain Terms. The Issuer
will not merge or consolidate with any other Person or sell or convey all or
substantially all of its assets to any Person unless (i) either the Issuer shall
be the continuing corporation or the resulting, surviving or transferee Person
shall be a corporation organized and existing under the laws of the United
States of America or any State thereof or the District of Columbia and shall
expressly assume the due and punctual payment of the Principal of, premium, if
any, and interest on all the Securities, according to their tenor, and the due
and punctual performance and observance of all of the covenants and agreements
of this Indenture to be performed or observed by the Issuer, by supplemental
indenture satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, and (ii) immediately after such merger, consolidation, sale,
lease or conveyance, the Issuer or such resulting, surviving or transferee
Person, as the case may be, shall not be in default in the performance of any
covenant or agreement contained in this Indenture to be performed or observed by
the Issuer or such resulting, surviving or transferee Person.
Section 8.2 Successor Corporation Substituted. In case of any such
consolidation, merger, sale, lease or conveyance in which the Issuer is not the
resulting, surviving or transferee Person, and following such an assumption by
such Person, such Person shall succeed to and be substituted for the Issuer,
with the same effect as if it had been named herein. Such successor Issuer may
cause to be signed, and may issue either in its own name or in the name of the
Issuer prior to such succession any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor Issuer instead of the Issuer and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
which previously shall have been signed and delivered by the officers of the
Issuer to the Trustee for authentication, and any Securities which such
successor Issuer thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by
way of lease) the Issuer or any successor Issuer which shall theretofore have
become such in the manner described in this Article shall be discharged from all
obligations and covenants under this Indenture and the Securities and may be
liquidated and dissolved.
Section 8.3 Opinion of Counsel to Trustee. The Trustee, subject to the
provisions of Sections 5.1 and 5.2, shall be provided with an Opinion of
Counsel, prepared in accordance with Section 10.5, as conclusive evidence that
any such consolidation, merger, sale, lease or conveyance, and any such
42
assumption, and any such liquidation or dissolution, complies with the
applicable provisions of this Indenture.
Article 9
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
Section 9.1 Satisfaction and Discharge of Indenture. If at any time
(a) the Issuer shall have paid or caused to be paid the
Principal of and interest on all the Securities outstanding hereunder
(other than Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.9) as and
when the same shall have become due and payable, or
(b) the Issuer shall have delivered to the Trustee for
cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.9), or
(c) (i) all the Securities not theretofore delivered to the
Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or may, at the
option of the Issuer, be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Issuer shall have irrevocably deposited or
caused to be deposited with the Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Trustee or any paying
agent to the Issuer in accordance with Section 9.8) and/or direct
obligations of the United States of America, backed by its full faith
and credit, maturing as to principal and interest in such amounts and
at such times as will insure the availability of cash sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay at maturity or upon redemption all Securities
(other than any Securities which shall have been destroyed, lost or
stolen and which shall have been replaced or paid as provided in
Section 2.9) not theretofore delivered to the Trustee for cancellation,
including Principal and interest due or to become due on or prior to
such date of maturity or date of redemption, as the case may be, and
if, in any such case, the Issuer shall also pay or cause to be paid all
other sums payable hereunder by the Issuer with respect to Securities,
then this Indenture shall cease to be of further effect with respect to
Securities (except as to (i) rights of registration of transfer and
exchange of Securities, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) rights of Holders to
receive payments of Principal thereof and interest thereon upon the
original stated due dates therefor (but not upon acceleration), and
remaining rights of the Holders to receive mandatory sinking fund
payments, if any, in each case solely out of property so deposited with
the Trustee, (iv) the rights, obligations and immunities of the Trustee
hereunder, (v) the rights of Holders of Securities as beneficiaries
hereunder with respect to the property so deposited with the Trustee
payable to all or any of them, and (vi) the obligations of the Issuer
under Section 3.2) and the Trustee, on demand of the Issuer accompanied
by an Officers' Certificate and an Opinion of Counsel and at the cost
and expense of the Issuer, shall execute proper instruments
acknowledging such
43
satisfaction of and discharging this Indenture with respect to such
series; provided, that the rights of Holders of the Securities to
receive amounts in respect of Principal of and interest on the
Securities held by them shall not be delayed longer than required by
then-applicable mandatory rules or policies of any securities exchange
upon which the Securities are listed. The Issuer agrees to reimburse
the Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities.
Section 9.2 Issuer's Option to Effect Defeasance or Covenant
Defeasance. In addition to discharge of the Indenture pursuant to Section 9.1,
with respect to the Securities where the exact amount of Principal and interest
due on which can be determined at the time of making the deposit referred to in
Section 9.5(a), the Issuer may at its option by resolution of the Board of
Directors elect at any time either (a) to effect a defeasance (as defined in
Section 9.3) of the Securities under Section 9.3 or (b) to effect a covenant
defeasance (as defined in Section 9.4) of the Securities under Section 9.4, in
each case upon compliance with the applicable conditions set forth below in this
Article 9.
Section 9.3 Defeasance and Discharge. Upon the Issuer's exercise of the
option set forth in clause (a) of Section 9.2 with respect to the Securities,
the Issuer shall be deemed to have been discharged from its obligations with
respect to the Securities on and after the date the conditions precedent set
forth in Section 9.5 are satisfied (hereinafter, "defeasance") . For this
purpose such defeasance means that the Issuer shall be deemed to have paid and
discharged the entire indebtedness represented by the Securities and to have
satisfied all its other obligations under the Securities and under this
Indenture (and the Trustee, at the expense of the Issuer, shall execute proper
instruments acknowledging the same), except for, (i) rights of registration of
transfer and exchange of Securities, and the Issuer's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) rights of Holders to receive payments of Principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), and remaining rights of the Holders to receive mandatory
sinking fund payments, if any, in each case solely from the trust funds
described in Section 9.5(a); (iv) the rights, obligations and immunities of the
Trustee hereunder; (v) the rights of Holders of Securities as beneficiaries
hereunder with respect to the property so deposited with the Trustee payable to
all or any of them; and (vi) the obligations of the Issuer under Section 3.2.
Subject to compliance with this Article 9, the Issuer may exercise its option
under this Section 9.3 notwithstanding the prior exercise of its option under
Section 9.4 with respect to the Securities.
Section 9.4 Covenant Defeasance. Upon the Issuer's exercise of the
option set forth in clause (b) of section 9.2 with respect to the Securities,
the Issuer shall be released from its obligations under Sections 3.9, 3.10 and
8.1 and Article 12 with respect to the Securities on and after the date the
conditions precedent set forth in Section 9.5 are satisfied (hereinafter,
"covenant defeasance"). For this purpose, such covenant defeasance means that,
with respect to the Securities, the Issuer may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such Section, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any such
Section to any other Provision herein or in any other document and such omission
to comply shall not constitute
44
an Event of Default under Section 4.1, but the remainder of this Indenture and
such Securities shall be unaffected thereby.
Section 9.5 Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions precedent to the application of either Section
9.3 or Section 9.4 to the Securities:
(a) the Issuer shall irrevocably have deposited or caused to
be deposited with the Trustee, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust
funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities
(i) money in an amount, or
(ii) direct obligations of the United States of
America, backed by its full faith and credit, which through
the scheduled payment of Principal and interest in respect
thereof in accordance with their terms will provide, not later
than one day before the due date of any payment in respect of
the Securities, money in an amount, or
(iii) a combination thereof,
sufficient (without consideration of any reinvestment of such
money, Principal or interest), in the opinion of a nationally
recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee
to pay and discharge
(A) the Principal of and interest on all
Securities on each date such Principal or interest is
due and payable and
(B) any mandatory sinking fund payments on
the dates on which such payments are due and payable
in accordance with the terms of this Indenture and
the Securities.
(b) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to the
Securities shall have occurred and be continuing (i) on the date of
such deposit or (ii) insofar as Subsections 4.1(f) and 4.1(g) are
concerned, at any time during the period ending on the 91st day after
the date of such deposit or, if longer, ending on the date following
the expiration of the longest preference period applicable to the
Issuer in respect of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(c) Such defeasance or covenant defeasance will not (i) cause
the Trustee for the Securities to have a conflicting interest for
purposes of the Trust Indenture Act of 1939 with respect to any
securities of the Issuer or (ii) result in the trust arising from such
deposit to constitute, unless it is qualified as, a regulated
investment company under the
45
Investment Company Act of 1940, as amended.
(d) Such defeasance or covenant defeasance will not result in
a breach or violation of, or constitute a default under, this Indenture
or any other agreement or instrument to which the Issuer is a party or
by which it is bound.
(e) If the Securities are then listed on any national
securities exchange registered under the Securities Exchange Act of
1934, as amended, the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that the exercise of the option under
Section 9.3 or 9.4, as the case may be, will not cause such Securities
to be delisted.
(f) In the case of an election under Section 9.3, the Issuer
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Issuer has received from the United States
Internal Revenue Service (the "IRS") a private letter ruling,
(ii) there has been published by the IRS a general
revenue ruling, or
(iii) since the date of this Indenture there has been
a change in the applicable Federal income tax law,
in each case to the effect that, and based thereon, such
opinion shall confirm that the Holders of the Securities will
not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such
defeasance had not occurred.
(g) In the case of an election under Section 9.4, the Issuer
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Securities 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.
(h) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 9.3 or the covenant defeasance under Section 9.4 (as the
case may be) have been complied with.
Section 9.6 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 9.8, all moneys deposited with the Trustee
pursuant to Section 9.1 or 9.5 shall be held in trust and applied by it to the
payment, either directly or through any paying agent (including the Issuer
acting as its own paying agent), to the Holders of Securities for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for Principal and interest; but such money
need not be segregated from other funds
46
except to the extent required by law.
Section 9.7 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to
Securities, all moneys then held by any paying agent under the provisions of
this Indenture with respect to the Securities shall, upon demand of the Issuer,
be repaid to it or paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys.
Section 9.8 Return of Moneys Held by Trustee and Paying Agent Unclaimed
for Two Years. Any moneys deposited with or paid to the Trustee or any paying
agent for the payment of the Principal of or interest on any Security and not
applied but remaining unclaimed for two years after the date upon which such
Principal or interest shall have become due and payable, shall, upon the written
request of the Issuer and unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be repaid to the
Issuer by the Trustee or such paying agent, and the Holder of the Security
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Issuer for
any payment which such Holder may be entitled to collect, and all liability of
the Trustee or any paying agent with respect to such moneys shall thereupon
cease.
Section 9.9 Indemnity for Money and Direct Obligations of the United
States. The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the money or the direct obligations
of the United States of America deposited pursuant to Section 9.1 or 9.5 or the
Principal or interest received in respect of such obligations.
Section 9.10 Reinstatement. If the Trustee or the paying agent is
unable to apply any money or direct obligations of the United States of America
in accordance with Section 9.1 or 9.5 by reason of any legal proceedings or
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Issuer's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 9 until such time as the Trustee
or paying agent is permitted to apply all such money in accordance with this
Article 9; provided, that, if the Issuer makes any payment of Principal of or
interest on any such Security following the reinstatement of its obligations,
the Issuer shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the money or direct obligations of the United
States of America held by the Trustee or the paying agent.
Article 10
MISCELLANEOUS PROVISIONS
Section 10.1 Incorporators, Shareholders, Officers and Directors of
Issuer Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future shareholder,
officer or director, as such, of the Issuer or of any successor, either directly
or through the Issuer or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being
47
expressly waived and released by the acceptance of the Securities by the Holders
thereof and as part of the consideration for, and as a condition of, the issue
of the Securities.
Section 10.2 Provisions of Indenture for the Sole Benefit of Parties
and Securityholders. Except to the extent provided in Section 7.6 and Article
13, nothing in this Indenture or in the Securities, expressed or implied, shall
give or be construed to give to any Person, firm or corporation, other than the
parties hereto and their successors and the Holders of the Securities, any legal
or equitable right, remedy or claim under this Indenture or under any covenant
or provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Securities.
Section 10.3 Successors and Assigns of Issuer Bound by Indenture. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
Section 10.4 Notices and Demands on Issuer, Trustee and
Securityholders. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer may be given or served by being deposited
postage prepaid, first-class mail (except as otherwise specifically provided
herein) addressed (until another address of the Issuer is filed by the Issuer
with the Trustee) to Cone Mills Corporation, 3101 North Elm Street, Greensboro,
NC 27415-6540, Attention: Treasurer. Any notice, direction, request or demand by
the Issuer or any Securityholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made and received
at the Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 10.5 Officers' Certificates and Opinions of Counsel; Statements
to be Contained Therein. Upon any application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all
48
such conditions precedent have been complied with, except that in the case of
any such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture 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 has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters, information with respect to which is in the possession of
the Issuer, upon the certificate, statement or opinion of or representations by
an officer of officers of the Issuer, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
Section 10.6 Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or Principal of the Securities or the date fixed
for redemption or repayment of any such Security shall not be a Business Day,
then payment of interest or Principal need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.
Section 10.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939 (an "incorporated provision"), such incorporated provision shall control.
49
Section 10.8 New York Law to Govern. This Indenture and each Security
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes shall be construed in accordance with the laws of such State,
without regard to principles of the conflict of laws thereof.
Section 10.9 Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 10.10 Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
Article 11
GUARANTY
Section 11.1 Guaranty. The Subsidiary Guarantor hereby unconditionally
and irrevocably guarantees to each Holder and to the Trustee, and their
respective successors and assigns, the due and punctual payment of principal of
and, within applicable grace periods, interest on the Securities when due,
whether at Stated Maturity, by acceleration or otherwise, and all other monetary
obligations of the Issuer under this Indenture and the Securities and the due
and punctual performance within applicable grace period of all Obligations of
the Issuer under this Indenture and the Securities (each, a "Guaranty"). The
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor, and that such Subsidiary Guarantor will remain bound by
this Article 11 notwithstanding any extension or renewal of any Obligation.
The Subsidiary Guarantor waives presentment to, demand of payment from
and protest to the Issuer of any of the Obligations, and also waives notice of
protest for nonpayment. The Subsidiary Guarantor waives notice of any default
under the Securities or the Obligations. The Obligations of the Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Issuer or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder or the Trustee to exercise any right
or remedy against any other guarantor of the Obligations or (f) (except as
provided in Section 11.3) any change in the ownership of the Subsidiary
Guarantor.
The Subsidiary Guarantor further agrees that its Guaranty herein
constitutes a guaranty of payment when due (and not a guaranty of collection)
and waives any right to require that any resort be had by any Holder or the
Trustee to any security held for payment of the Obligations.
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The Obligations of the Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the Obligations of the Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of the Subsidiary Guarantor or would otherwise
act as a discharge of the Subsidiary Guarantor as a matter of law or equity.
The Subsidiary Guarantor further agrees that its Guaranty herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Issuer or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantor by virtue hereof, upon the failure of the Issuer to pay the
principal of or interest on any Obligation when and as the same shall become
due, whether at the stated maturity thereof, by acceleration, by redemption or
otherwise, the Subsidiary Guarantor hereby promises to and will, upon receipt of
written demand by the Trustee, forthwith pay or cause to be paid, in cash, to
the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Obligations, (ii) accrued and unpaid interest on such
Obligations (but not to exceed the maximum rate permitted by applicable law) and
(iii) all other monetary Obligations of the Issuer to the Holders and the
Trustee.
The Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guaranteed hereby until payment in full of all Obligations. The Subsidiary
Guarantor further agrees that, as between the Subsidiary Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Obligations guaranteed hereby may be accelerated as provided in Article 4
for the purposes of such Subsidiary Guarantor's Guaranty herein, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations guaranteed by the Subsidiary Guarantor, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article 4, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantor for purposes of this Section.
51
The Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
Section 11.2 Execution and Delivery of Guaranty. To evidence its
Guaranty set forth in Section 11.1, the Subsidiary Guarantor agrees that a
notation of its Guaranty substantially in the form set forth in Section 2.1
hereof shall be endorsed on each Security authenticated and delivered by the
Trustee and that such endorsement shall be executed on behalf of the Subsidiary
Guarantor by an Officer or a holder of a power of attorney authorized to execute
the Guaranty by manual or facsimile signature.
The Subsidiary Guarantor agrees that its Guaranty set forth in Section
11.1 shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guaranty.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guaranty is
endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty set forth in
this Indenture on behalf of the Subsidiary Guarantor.
Section 11.3 Successors and Assigns. This Article 11 shall be binding
upon the Subsidiary Guarantor and its successors and assigns 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 conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
Section 11.4 No Waiver, Etc. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies and benefits which either may have under this Article at law,
in equity, by statute or otherwise. Exercise by the Trustee or the Holders of
any rights, remedies and benefits under this Article 11 is subject to the
provisions of Article 4.
Section 11.5 Modification, Etc. No modification, amendment or waiver of
any provision of this Article 11, nor the consent to any departure by the
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, subject to the prior written
consent of the Holders pursuant to Section 7.2, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Subsidiary Guarantor in any case shall
entitle the
52
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
Article 12
SECURITY
Section 12.1 Security Interest. As security for the payment or
performance, as the case may be, in full of the Security Obligations, each
Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Trustee, its successors and assigns, for the
benefit of the Securityholders, and hereby grants to the Trustee, its successors
and assigns, for the benefit of the Securityholders, a security interest in all
of such Grantor's right, title and interest in, to and under the Collateral (the
"Security Interest").
Section 12.2 Mortgages. Also as security for the payment or performance
of Obligations, and in confirmation of the grant of the Security Interest, there
are concurrently herewith being, or will hereafter be, delivered to the Trustee,
its successors and assigns, for the benefit of the Securityholders, by the
Issuer the Mortgages. The Trustee's rights, interests and duties under the
Mortgages are to be construed and exercised in a manner consistent with the
provisions of this Agreement.
Section 12.3 No Assumption of Liability. The Security Interest and the
Mortgages are granted as security only and shall not subject the Trustee or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of either Grantor with respect to or arising out of the Collateral.
Section 12.4 Filings and Recordings.
(a) The Issuer shall furnish to the Trustee simultaneously
with the execution of the Indenture an Officers' Certificate (the
"Perfection Certificate") stating that fully executed Uniform
Commercial Code financing statements (including fixture filings, as
applicable), the Mortgages and other appropriate filings, recordings or
registrations, if any, containing a description of the Collateral have
been filed or recorded or have been delivered to the Trustee for filing
or recording in each governmental, municipal or other office specified
in the Perfection Certificate, which are all the filings, recordings
and registrations (other than filings, if any, required to be made in
the United States Patent and Trademark Office and the United States
Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and
Copyrights) that are necessary to publish notice of and protect the
validity of and to establish a legal, valid and perfected security
interest in favor of the Trustee (for the ratable benefit of the
Securityholders) in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its
territories and possessions and all Collateral to which the Mortgages
relate, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to
the filing of continuation statements with respect to Uniform
Commercial Code financing statements. Each Grantor shall ensure
53
that such financing statements are filed and that the Mortgages are
recorded in said offices promptly after the execution and delivery of
this Indenture.
(b) Each Grantor shall ensure that fully executed security
agreements substantially in the form of this Article 12 and containing
a description of all Collateral consisting of United States registered
Trademarks (and Trademarks for which United States registration
applications are pending) that are material to the Grantor's business
shall have been received and recorded within three months after the
execution of this Agreement by the United States Patent and Trademark
Office, and otherwise as may be required pursuant to the laws of any
other necessary jurisdiction, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of
the Trustee (for the ratable benefit of the Securityholders) in respect
of all Collateral consisting of Trademarks that are material to the
Grantor's business and in which a security interest may be perfected by
filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, or
in any other necessary jurisdiction, and no further or subsequent
filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary
to perfect the Security Interest with respect to any Collateral
consisting of Trademarks (or registration or application for
registration thereof) acquired or developed after the date hereof). No
Grantor owns any material Patents or Copyrights, and no filings other
than Uniform Commercial Code financing statements will be filed with
respect to Patents or Copyrights, even though such filings may be
required to perfect a security interest in Patents or Trademarks.
Section 12.5 Limitation on Modification of Accounts. Neither of the
Grantors will grant any extension of the time of payment of any of the Accounts
Receivable, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements either (i) granted or
made in the ordinary course of business and consistent with its current
practices and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such Grantor is
engaged or (ii) permitted by the Priority Security Instruments or the Priority
Securityholders.
Section 12.6 Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
their properties, including the Collateral to the extent appropriate and, in
such amounts and with such coverage as is reasonably prudent and consistent with
industry practice and shall cause such policies to be endorsed or otherwise
amended to name the Trustee as a loss payee, as its interest may appear. Each
Grantor irrevocably makes, constitutes and appoints the Trustee (and all
officers, employees or agents designated by the Trustee) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default, of making, settling and adjusting claims in respect of
Collateral under policies of insurance, endorsing the name of such Grantor on
any check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect thereto. In the event that either Grantor at any time or times shall
fail to obtain or maintain any of the policies of insurance
54
required hereby or to pay any premium in whole or part relating thereto, the
Trustee may, without having any obligation to do so and without waiving or
releasing any obligation or liability of the Grantors hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Trustee deems advisable. All sums disbursed by the Trustee in connection with
this Section 12.6, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Trustee and shall be additional Security Obligations secured
hereby.
Section 12.7 Remedies upon Default. Subject to the provisions of
Article 13 of this Indenture, upon the occurrence and during the continuance of
an Event of Default, each Grantor agrees to deliver each item of Collateral to
the Trustee on demand, and it is agreed that the Trustee shall have the right
(to the extent permitted by law) to take any or all of the following actions at
the same or different times:
(a) with respect to any Collateral consisting of Intellectual
Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Collateral by
the applicable Grantor to the Trustee, or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or
nonexclusive basis, any such Collateral throughout the world on such
terms and conditions and in such manner as the Trustee shall determine
(other than in violation of any then-existing licensing arrangements to
the extent that waivers cannot be obtained), and
(b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral
and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights
afforded to a secured party under the Uniform Commercial Code, the
provisions of any Mortgage related thereto or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees
that the Trustee shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral, at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or
for future delivery as the Trustee shall deem appropriate. The Trustee
shall be authorized at any such sale (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to persons who
will represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale
the Trustee shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely,
free from any claim or right on the part of either Grantor, and each
Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal that such Grantor now has or may at any
time in the future have under any rule of law or statute now existing
or hereafter enacted.
55
The Trustee shall give the Grantors 10 days' written notice (which each
Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of
the Uniform Commercial Code as in effect in the State of New York or its
equivalent in other jurisdictions) of the Trustee's intention to make any sale
of Collateral governed by that statute. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange and in the
case of a private sale, shall state the time after which any such sale is to be
made. Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Trustee may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or a portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Trustee may (in its sole and absolute discretion) determine. The
Trustee shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Trustee may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Trustee until the sale price is paid by the purchaser or
purchasers thereof, but the Trustee shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. At any public (or, to the extent permitted by law, private) sale
made pursuant to this Section, any Secured Party may bid for or purchase, free
(to the extent permitted by law) from any right of redemption, stay, valuation
or appraisal on the part of either Grantor (all said rights being also hereby
waived and released to the extent permitted by law), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to such Secured Party from each Grantor as a credit
against the purchase price, and such Secured Party may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to each Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Trustee shall be free to carry out such sale pursuant to
such agreement and no Grantor shall be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Trustee shall have entered into such an agreement all Events of Default shall
have been remedied and the Security Obligations paid in full. As an alternative
to exercising the power of sale herein conferred upon it, the Trustee may
proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree
of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
Section 12.8 Acceleration and Directions by the Securityholders. The
Holders of more than 50% of the Securities Outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee by action in accordance with Section 4.9 hereof, provided, that such
direction shall not be in conflict with any rule of law and that the Trustee may
take any other action deemed proper by it which is not inconsistent with such
direction.
56
Section 12.9 Application of Proceeds. After the occurrence and during
the continuance of an Event of Default, any money collected by the Trustee
pursuant to this Agreement or any other Security Document shall be applied by
the Trustee as follows:
FIRST, to the payment of all costs and expenses incurred by the Trustee
(in its capacity as such hereunder and under the other Security Documents or as
Trustee under the Indenture) in connection with the management, operation and
maintenance of any Collateral after an Event of Default and any collection or
sale of the Collateral or otherwise in connection with this Agreement, any other
Security Document or any of the Security Obligations, including all court costs
and the reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Trustee hereunder or under any other
Security Document on behalf of either Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Security Document;
SECOND, to the Trustee payment in full of the Security Obligations (the
amounts so applied to be distributed among the holders of Securities pro rata in
accordance with the amounts of Security Obligations owed to them on the date of
any such distribution); and
THIRD, to the Grantors, their respective successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Trustee shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Trustee (including pursuant to
a power of sale granted by statute or under a judicial proceeding), the receipt
of the Trustee or of the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Trustee or such officer or be answerable in any
way for the misapplication thereof.
Section 12.10 Trust Indenture Act Requirements; Release of Collateral.
(a) The release of any Collateral from the terms of, or the
release in whole or in part of the Liens created by any of the Security
Documents or this Indenture will not be deemed to impair the security
interests thereunder in contravention of the provisions of this
Indenture if and to the extent the Collateral or Liens are released
pursuant to, and in accordance with, the applicable Security Documents
and this Indenture.
(b) Subject to the provisions of Sections 12.11 and 12.12
hereof, to the extent applicable, the Grantors shall cause Section
314(d) of the Trust Indenture Act relating to the release of property
or securities from the Liens of the Security Documents to be complied
with. Any certificate required by Section 314(d) of the Trust Indenture
Act may be made by two officers of the Issuer, except in cases which
Section 314(d) of the Trust Indenture Act requires that such
certificate be made by an independent Person.
(c) In the case of transactions permitted by Section 12.11,
the Issuer may effect compliance with the provisions of this Section
12.10 by delivering to the Trustee
57
within 15 days after the end of each of the six-month periods ended on
June 30 and December 31 in each year, an Officers' Certificate to the
effect that all such transactions during the preceding six-month period
were made in accordance with Section 12.11(a) and that all proceeds
therefrom were used by the Issuer as permitted herein. The fair value
of Collateral released from the Lien of the Security Documents pursuant
to Section 12.11 shall not be considered in determining whether the
aggregate fair value of Collateral released from the Lien of the
Security Documents in any calendar year exceeds the 10% threshold
specified in Section 314(d)(1) of the Trust Indenture Act; provided
that the Issuer's right to rely on this sentence at any time is
conditioned upon the Issuer having furnished to the Trustee all
certificates described in the preceding sentence that were required to
be furnished to the Trustee at or prior to such time.
Section 12.11 Disposition of Certain Collateral without Requesting
Release.
(a) Notwithstanding the provisions of Section 12.10 hereof, so
long as the Issuer complies with the provisions of Section 12.10,
either Grantor may, pursuant to and in accordance with this Indenture
and the other Security Documents, without requesting the release or
consent of the Trustee:
(i) sell or dispose of in the ordinary course of
business, free from the Liens of the Security Documents, any
machinery, equipment, furniture, apparatus, tools or
implements, materials or supplies or other similar property
("Subject Property") which, in its reasonable opinion, may
have become obsolete or unfit for use in the conduct of its
businesses or the operation of the Collateral upon replacing
the same with or substituting for the same, within 12 months
before or after the sale or disposition, new property
constituting Collateral not necessarily of the same character
but being of at least reasonably equivalent value as the
Subject Property so disposed of, so long as such new property
becomes subject to the Lien of the Security Documents, which
new property shall without further action become Collateral
subject to the Lien of the Security Documents;
(ii) abandon, sell, assign, transfer, license or
otherwise dispose of in the ordinary course of business any
personal property the use of which is no longer necessary or
desirable in the proper conduct of the business of the Grantor
and the maintenance of its earnings and is not material to the
conduct of the business of the Grantors and their Subsidiaries
taken as a whole;
(iii) grant in the ordinary course of business,
rights-of-way and easements over or in respect of any of the
Collateral if such grants would not, in the opinion of the
Issuer's management, impair the usefulness of such property in
the conduct of the Issuer's business and will not be
prejudicial to the interests of the Securityholders;
(iv) sell, transfer or otherwise dispose of Inventory
in the ordinary course of business; or
58
(v) sell, collect, liquidate, securitize, factor or
otherwise dispose of Accounts and Accounts Receivable in the
ordinary course of business;
(vi) make cash payments (including for the scheduled
repayment of indebtedness) from cash that is at any time part
of the Collateral in the ordinary course of business or
otherwise in connection with the Issuer's business if such
payments are not otherwise prohibited by this Indenture and
the Security Documents; or
(vii) sell or transfer any Collateral if the sale,
transfer or disposal is approved by the Priority
Securityholders having a lien on such Collateral and the
proceeds of the sale or transfer is used to repay Senior Debt
after deduction of all expenses related to the sale or
transfer.
(b) Notwithstanding the provisions of Subsection (a) above,
(x) a Grantor shall not dispose of or transfer (by lease, assignment,
sale or otherwise), or pledge, mortgage or otherwise encumber (other
than liens permitted by Section 3.9 of this Indenture), Collateral
(other than cash) pursuant to the provisions of Subsection (a) above
with a fair value to the Issuer equal to 10% or more of the aggregate
principal amount of the Securities then outstanding (as determined in
the good faith judgment of the Grantor and, if required by the Trust
Indenture Act, an independent appraiser), in any transaction or any
series of related transactions without complying with Section 12.10
hereof; and (y) the right of either Grantor to rely upon the provisions
of Subsection (a) above from the date of this Indenture to December 31,
2000 and for each semiannual period thereafter shall be conditioned
upon the Issuer and the Subsidiary Guarantor delivering to the Trustee,
on or before February 28, 2001 and thereafter within 60 days following
each June 30 and December 31, an Officer's Certificate to the effect
that all of such dispositions by either Grantor of Collateral other
than cash during such preceding semiannual period ending on such dates
(other than such dispositions, collections or payments wherein the
Issuer and the Subsidiary Guarantor have complied with Section 12.10
hereof) were in accordance with Section 12.11(a) and that the proceeds
therefrom were used by the Grantor in connection with its business.
(c) Any disposition of Collateral made in compliance with the
provisions of this Section 12.11 shall be deemed not to impair the
Liens of the Security Documents in contravention of the provisions of
this Indenture.
(d) Upon receipt of any Issuer request and subject to Section
314(c) of the Trust Indenture Act, the Trustee shall execute and
deliver, within five business days from the receipt of the Issuer
request, any instrument deemed by the Issuer to be necessary or
appropriate to dispose of portions of the Collateral pursuant to this
Section 12.11 if the provisions of this Section 12.11 have been
complied with.
Section 12.12 Releases.
59
(a) So long as no Event of Default has occurred and is
continuing and subject to Section 12.11(b) hereof, whenever any
property of a Grantor that shall be subject to the Lien of the Security
Documents is disposed of in accordance with all relevant provisions of
any Senior Debt document (or pursuant to any valid waiver or consent
thereunder), the Trustee shall release the same from the Lien hereof or
thereof upon receipt by the Trustee of the following:
(i) A copy of a resolution of the Board of Directors
of the Issuer, requesting such release;
(ii) An Officers' Certificate stating in substance as
follows:
(A) That the Issuer has sold or exchanged,
or contracted to sell or exchange, the property so to
be released for a consideration representing, in the
opinion of the signers, its fair value to the Issuer,
which consideration may be cash and/or other
property, to be described in reasonable detail in
such certificate;
(B) That the retention of such property is
no longer desirable in the conduct of the business of
the Issuer; and
(C) That the sale or disposition is not
prohibited by any Senior Debt document (after giving
effect to any applicable amendment, waiver or
easement thereunder) and that any money stated in
said certificate to have been received in
consideration for any such sale or exchange is being
applied in accordance with the applicable provisions
of the Senior Debt documents.
(D) That the assets or properties disposed
of do not represent all or substantially all of the
Collateral, or if such is not the case, that the
consent of the Holders of more than 50% of the
Securities Outstanding has been obtained in
accordance with Section 7.2(b).
(iii) An Opinion of Counsel to the effect that the
Security Documents or other designated deeds or instruments of
conveyance, assignment or transfer covering any property
included in the consideration for such release or acquired
with the proceeds of such sale, are sufficient to subject the
same to the security interest granted by this Agreement or the
other Security Documents.
(b) Upon receipt of the Officers' Certificate and Opinion of
Counsel required by this Section 12.12, the Trustee must execute,
deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any
Collateral permitted to be released pursuant to this Agreement or the
other Security Documents and to release the Lien of this Agreement and
the other Security Documents.
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Section 12.13 Suits to Protect the Collateral. Upon the occurrence of
an Event of Default and subject to the provisions of the Security Documents and
Article 13 of this Indenture, (i) the Trustee may, in its sole discretion and
without the consent of the Securityholders, take all actions it deems necessary
or appropriate in order to (a) enforce any of the terms of the Security
Documents and (b) collect and receive any and all amounts payable in respect of
the obligations of the Grantors and (ii) the Trustee shall have the power to
institute and to maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts which may be unlawful or in
violation of any of the Security Documents or the Indenture, including such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and the interests of the Securityholders in the Collateral and in
the principal, interest, issues, profits, rents, revenues and other income
arising therefrom (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order would impair the security interests
or be prejudicial to the interests of the Securityholders or the Trustee),
except as otherwise provided in Sections 4.9 and 4.10.
Section 12.14 Determinations Relating to Collateral. In the event (i)
the Trustee shall receive any written request from either Grantor under any
Security Document for consent or approval with respect to any matter or thing
relating to any Collateral or the Grantors' obligations with respect thereto or
(ii) there shall be due to or from the Trustee under the provisions of any
Security Document any material performance or the delivery of any material
instrument, then, in each such event, the Trustee shall be entitled to hire
experts, consultants, agents and attorneys to advise the Trustee on the manner
in which the Trustee should respond to such request or render any requested
performance. The Trustee shall be fully protected in the taking of any action
recommended or approved by any such expert, consultant, agent or attorney or
agreed to by the majority Holders, pursuant to Section 7.2.
Section 12.15 Termination of Security Interest. Upon payment in full of
all Obligations of the Issuer under this Indenture and the Debentures, or upon
defeasance under Section 9.3 or Section 9.4, the liens will terminate.
Section 12.16 Application of Trust Indenture Act. The Trust Indenture
Act shall apply as a matter of law (or to the extent not so required, as a
matter of contract) to this Article 12 and the Security Documents for purposes
of interpretation, construction and definition of rights and obligations
hereunder and under the other Security Documents. If any provision hereof or
thereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under such Act to be a part of and govern this Agreement,
the latter shall control. If any provision hereof or thereof modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Article 12 or
such Security Document as so modified or excluded, as the case may be.
Article 13
SUBORDINATION
Section 13.1 Securities Subordinated to Senior Debt with Respect to
Collateral. Each of the Issuer and the Subsidiary Guarantor covenants and
agrees, and each Holder of the
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Securities, by its acceptance thereof, likewise covenants and agrees,
that all Securities shall be issued subject to the provisions of this Article
13; and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that,
notwithstanding the existence of, or the time, order or method of attachment,
perfection, filing or recording of, any lien or security interest (a) the right
of each Holder to payment of the Obligations on the Securities from Proceeds of
Collateral shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
of all Obligations on or in respect of the Senior Debt; (b) the subordination is
for the benefit of, and shall be enforceable directly by, the holders of Senior
Debt, including their Representative, and (c) each holder of Senior Debt whether
now outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Securities.
Section 13.2 Payment Over of Proceeds.
(a) Upon any distribution of Proceeds of Collateral to
creditors upon any foreclosure or other enforcement of liens, or upon
any total or partial liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors or marshaling
of assets of the Issuer or the Guarantor Subsidiary or in a Bankruptcy
Proceeding relating to the Issuer or the Subsidiary Guarantor or their
property, whether voluntary or involuntary, or upon any discharge or
defeasance of the Securities pursuant to Article 9 hereof or otherwise,
all Obligations due or to become due upon all Senior Debt shall first
be Fully Satisfied before any Proceeds of Collateral are paid,
distributed or applied on account or in satisfaction of any Obligations
on the Securities, or for the acquisition of any of the Securities for
cash or property or otherwise. Upon any such foreclosure, enforcement,
dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of Proceeds of
Collateral to which the Holders of the Securities or the Trustee under
this Indenture would be entitled except for the provisions of this
Article 13, shall be paid by the Issuer or the Guarantor Subsidiary or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them, directly to
the holders of Senior Debt secured by such Collateral (pro rata to such
holders on the basis of the respective amounts of Senior Debt that is
so secured held by such holders) or their Representative, as their
respective interests may appear, for application to the payment of
Senior Debt remaining unpaid until all such Senior Debt has been Fully
Satisfied.
(b) To the extent any payment of Senior Debt (whether by or on
behalf of the Issuer or any of its Subsidiaries, as Proceeds of
security or enforcement of any right of set-off or otherwise) is
declared to be fraudulent or preferential, set aside or required to be
paid to any receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person, the Senior Debt or
part thereof originally intended to be satisfied shall be deemed to be
reinstated and
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outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any
payment or distribution of Proceeds of Collateral shall be received by
any Holder when such payment or distribution is prohibited by Section
13.2(a), such payment or distribution shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of
Senior Debt secured by such Collateral (pro rata to such holders on the
basis of the respective amount of Senior Debt that is so secured held
by such holders) or their Representative, as their respective interests
may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been Fully Satisfied.
(d) The consolidation of the Issuer with, or the merger of the
Issuer with or into, another corporation or the liquidation or
dissolution of the Issuer following the conveyance or transfer of all
or substantially all of its assets, to another Person upon the terms
and conditions permitted under this Indenture and as long as permitted
under the terms of the Senior Debt, shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this
Article if such other Person shall, as a part of such consolidation,
merger, conveyance or transfer, assume the Issuer's obligations
hereunder in accordance with the terms hereof.
Section 13.3 Obligations of the Issuer and Guarantor Subsidiary
Unconditional. Nothing contained in this Article 13 or elsewhere in this
Indenture or in the Securities is intended to or shall impair the obligation of
the Issuer or the Guarantor Subsidiary to pay to the Holders the principal of
and any interest on the Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Issuer or the Subsidiary
Guarantor other than the holders of the Senior Debt.
Section 13.4 Notice to Trustee; Trustee's Obligations. The Issuer shall
give prompt written notice to the Trustee of any fact known to the Issuer which
would prohibit the application of Proceeds of Collateral by the Trustee in
respect of the Securities pursuant to the provisions of this Article 13. The
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Senior Debt or of any other facts which
would prohibit the application of Proceeds of Collateral by the Trustee unless
and until the Trustee shall have received notice in writing from the Issuer, or
from a holder of Senior Debt or a Representative therefor, and, prior to the
receipt of any such written notice, the Trustee shall be entitled to assume (in
the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article 13, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 13, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
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The Trustee shall cause each document or agreement at any time filed in
any public record to evidence or perfect the Liens granted to the Trustee and/or
the Holders of the Securities to secure the Obligations of the Issuer or the
Subsidiary Guarantor to the Trustee and/or the Holders of the Securities to
contain the following legend on the face thereof:
THE LIEN, SECURITY INTEREST, MORTGAGE OR OTHER INTEREST REFLECTED IN
THIS DOCUMENT IS SUBJECT TO THE SUBORDINATION PROVISIONS AND RELATED
RIGHTS OF CERTAIN HOLDERS OF SENIOR DEBT CONTAINED IN ARTICLE 13 OF
THAT CERTAIN INDENTURE DATED ______________, 2000 BY AND BETWEEN CONE
MILLS CORPORATION AND THE BANK OF NEW YORK, AS TRUSTEE
The Trustee shall give written notice of enforcement to the Issuer and
each holder of Senior Debt and their Representatives, if any, at least thirty
(30) days prior to any foreclosure or other enforcement of any Lien granted to
the Holders or the Trustee by the Issuer or the Subsidiary Guarantor to secure
any Obligation under the Securities.
The Trustee further agrees to execute and deliver from time to time, at
the request of any holder of Senior Debt or its Representative, such
confirmations, acknowledgments or reaffirmations of the subordination provided
herein as may be determined necessary or advisable by the holders of Senior Debt
or any issuer of title insurance with respect to any real property of the Issuer
to insure the priority of the lien of any holder of Senior Debt or evidence or
record the subordination terms of this Indenture. The Trustee hereby consents to
the filing or recordation of any such confirmations, acknowledgments or
reaffirmations or the filing or recordation of this Indenture.
Section 13.5 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Issuer or the Guarantor
Subsidiary referred to in this Article 13, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which any insolvency, bankruptcy, receivership,
dissolution, winding-up, liquidation, reorganization or similar case or
proceeding is pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribution, delivered
to the Trustee or the Holders of the Securities, for the purpose of ascertaining
the persons entitled to participate in such payment or distribution, the holders
of the Senior Debt and other Indebtedness of the Issuer, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 13.
Section 13.6 Trustee's Relation to Senior Debt. With respect to the
holders of Senior Debt, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set forth in this
Article 13, 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 in good
faith mistakenly pay over or distribute to Holders of
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Securities or to the Issuer or to any other person cash, property or securities
to which any holders of Senior Debt shall be entitled by virtue of this Article
or otherwise.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
Section 13.7 Subordination Rights Not Impaired by Acts or Omissions of
the Issuer or Holders of Senior Debt. No right of any present or future holders
of any Senior Debt or their Representative to enforce the provisions of this
Article 13 shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Issuer or the Guarantor Subsidiary or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Issuer or the Guarantor Subsidiary with the terms of this
Indenture, regardless of any knowledge thereof with which any such holder may
have or otherwise be charged.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, which consent is hereby
deemed to be given by the Trustee and the Holders of the Securities, without
incurring responsibility to the Trustee or the Holders of the Securities and
without impairing or releasing the subordination and other benefits provided in
this Article 13 or the obligations hereunder of the Holders of the Securities to
the holders of the Senior Debt, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, the Senior Debt, or otherwise amend, supplement, refinance or replace
in any manner Senior Debt, or any Senior Debt Document; (ii) foreclose upon,
sell, exchange, release or otherwise deal with any Collateral; (iii) release any
Person liable in any manner for the payment or collection of Senior Debt; and
(iv) exercise or refrain from exercising any rights against the Issuer and any
other Person.
Section 13.8 Security Holders Authorize Trustee To Effectuate
Subordination of Securities. Subject to Section 4.9, each Holder of Securities
by its acceptance of any Security authorizes and expressly directs the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Senior Debt and the Holders of Securities,
the subordination and other provisions of this Article 13, including, in the
event of any Bankruptcy Proceeding, the filing of a claim for the unpaid balance
of the Securities and accrued interest in the form required in those
proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt and their
Representative are or is hereby authorized (but not obligated) to file an
appropriate claim for and on behalf of the Holders of the Securities. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Debt or their Representative to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
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Section 13.9 Trustee's Compensation Not Prejudiced. Nothing in this
Article 13 will apply to amounts due to the Trustee pursuant to other Sections
in this Indenture.
Section 13.10 Delay of Remedies.
(a) If the Representative for any Senior Credit Facility gives
notice to the Trustee that an event of default has occurred and is
continuing with respect to any Senior Credit Facility Debt, as such
event of default is defined in any Senior Credit Document, permitting
the holders of the Senior Credit Facility Debt (or any trustee or agent
on their behalf) to accelerate the maturity thereof (a "Default
Notice"), no action may be taken by the Trustee or the Holders to
commence any foreclosure or enforcement of any Lien on the Collateral,
or to commence, or join with any other creditor (other than the holders
of the Senior Credit Facility Debt or their Representative) in
commencing, any Bankruptcy Proceeding, until the earliest to occur of
any of the following (a "Standstill Termination Date"):
(i) the date all Obligations under or in respect of
Senior Credit Facility Debt are Fully Satisfied;
(ii) the date on which the Senior Credit Facility
Debt is accelerated and becomes due and payable in full; or
(iii) 180 days after the delivery of a Default
Notice.
(b) Following the occurrence of the Standstill Termination
Date, the Trustee or the Holders may take any action or remedy
available hereunder or otherwise available under applicable law to
enforce the rights provided hereunder and under the Securities, subject
to the right of the holders of the Senior Credit Facility Debt set
forth in this Article 13 to receipt of all Proceeds of Collateral prior
to payment to the Trustee or any Holder until all Senior Credit
Facility Debt has been Fully Satisfied.
IN WITNESS WHEREOF, the parties hereto have caused this indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of _____________, 2001.
[CORPORATE SEAL] CONE MILLS CORPORATION
By:__________________________________
Title:
ATTEST:
By:________________________________
THE BANK OF NEW YORK, as Trustee
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By:__________________________________
Title:
CONE FOREIGN TRADING , LLC
[CORPORATE SEAL]
By:__________________________________
Title:
ATTEST:
By:________________________________
67
Exhibit A
[Form of Face of Debenture]
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Unless and until it is exchanged in whole or in part for Debentures in
definitive registered form, this Debenture may not be transferred except as a
whole by the Depositary to the nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
No. $85,000,000
CUSIP:
CONE MILLS CORPORATION
11% Secured Subordinated Debentures Due March 15, 2005
Cone Mills Corporation, a corporation duly organized and existing under
the laws of North Carolina (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of EIGHTY-FIVE MILLION DOLLARS on March 15, 2005, and to pay
interest thereon semiannually on March 15 and September 15 of each year (each,
an "Interest Payment Date"), commencing March 15, 2001, at the rate per annum
specified in the title of this Debenture, from ___________ or the most recent
Interest Payment Date to which interest has been paid or duly provided for, or
if no interest has been paid or duly provided for on this Debenture, from
________________, until payment of said principal sum has been made or duly
provided for. The interest so payable on any Interest Payment Date will, subject
to certain exceptions provided in the Indenture referred to on the reverse
hereof, be paid to the Person in whose name this Debenture is registered at the
close of business on the March 15 or September 15, as the case may be, next
preceding such Interest Payment Date.
Payment of the principal of and interest on this Debenture will be made
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York, 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; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security register.
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Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof. Such further provisions shall for all purposes
have the same effect as if fully set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or become obligatory for the purpose.
IN WITNESS WHEREOF, Cone Mills Corporation has caused this instrument
to be duly executed under its corporate seal.
Dated:
CONE MILLS CORPORATION
By ______________________________
Attest:
TRUSTEE'S CERTIFICATION OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, as Trustee
Dated: By ______________________________
Authorized Signatory
For value received, Cone Foreign Trading, LLC, a North Carolina limited
liability company, hereby unconditionally guarantees to the Holder of the
Security upon which this Guaranty is endorsed the due and punctual payment, as
set forth in the Indenture pursuant to which such Security and this Guaranty are
issued, of the principal of, and interest on, such Security when and as the same
shall become due and payable for any reason according to the terms of such
Security and Article 11 of the Indenture. The Guaranty of the Security upon
which the Guaranty is endorsed will not become effective until the Trustee signs
the certificate of authentication on such Security.
CONE FOREIGN TRADING , LLC
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By_______________________________
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Exhibit A
[Form of Reverse of Debenture]
CONE MILLS CORPORATION
11% Secured Subordinated Debentures Due March 15, 2005
This Debenture is one of a duly authorized issue of the 11% Secured
Subordinated Debentures Due March 15, 2005 of the Company (herein called the
"Securities"), issued in the aggregate principal amount of Eighty-Five Million
Dollars ($85,000,000) under an Indenture, dated as of ________, 2000 (herein
called the "Indenture"), between the Company and The Bank of New York, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the respective rights, limitations
of rights, obligations, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities.
If an Event of Default with respect to the Debentures shall occur and
be continuing, the principal of the Debentures may be declared due and payable,
in the manner and with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture or certain restrictive covenants with
respect to this Debenture, in each case upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding (as defined
in the Indenture), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the right of the Holders of the Securities;
provided, that no such supplemental indenture shall (i) extend the final
maturity of any Security, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of any interest thereon, or reduce any amount
payable on redemption thereof or make the principal thereof or interest thereon
payable in any coin or currency other than that provided in the Securities or in
accordance with the terms thereof, or impair or affect the right of any Holder
to institute suit for the payment thereof, any right of repayment at the option
of the Holder, in each case without the consent of the Holder of each Security
so affected, or (ii) reduce the aforesaid percentage of Securities, the consent
of the Holders of which is required for any such supplement indenture, without
the consent of the Holder of each Security so affected. It is also provided in
the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities, prior to any declaration of the acceleration of the
maturity of such Securities, the Holders of a majority in aggregate principal
amount of the Securities Outstanding (or, in the case of certain defaults or
Events of Default, all of the Securities) may on behalf of the Holders of all
the Securities waive any such past default or Event of Default and its
consequences. The preceding sentence shall not, however, apply to a default in
the payment of the principal of or interest on any of the Securities. Any such
consent
71
or waiver by the Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and any Debentures which may be issued in
exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Debenture or such other Debentures.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture in the manner, at the respective times, place and rate, and in the
coin or currency, herein prescribed.
The Debentures may not be redeemed prior to maturity.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registrable in the Security
register upon surrender of this Debenture for registration of transfer at the
office or agency of the Company in any place where the principal of and interest
on this Debenture are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple thereof at the office or
agency of the Company in the Borough of Manhattan, The City of New York, and in
the manner and subject to the limitations provided in the Indenture.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any authorized agent of the Company or the
Trustee may deem and treat the Person in whose name this Debenture is registered
as the owner hereof for all purposes, whether or not this Security be overdue
and notwithstanding any notation of ownership or other writing hereon, for the
purpose of receiving payment of, or on account of, the principal hereof and,
subject to the provisions on the face hereof, interest hereon, and for all other
purposes, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any indenture supplemental thereto or in any
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, or any past, present or future
shareholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or of any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any
72
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance hereof and as part of the consideration
for the issue hereof.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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Schedule I
Real Property
1. Carlisle Plant
3863 Carlisle/Chester Highway
Carlisle, Union County, South Carolina
2. Cliffside Plant
3478 U.S. Highway 221-A
High Shoals Township
Cliffside, Rutherford County, North Carolina
3. Florence Plant
101 Depot Street
Cool Springs Township
Forest City, Rutherford County, North Carolina
4. Granite Plant
122 East Main Street
Haw River Township
Haw River, Alamance County, North Carolina
5. Haynes Plant
2401 Ellenboro/Henrietta Road
High Shoals Township
Henrietta, Rutherford County, North Carolina
6. Jacquard Plant
3400 Highway 221-A
High Shoals Township
Cliffside, Rutherford County, North Carolina
7. Print Works
1800 Fairview Street
Greensboro, Guilford County, North Carolina
8. Raytex Plant
Highway 576 By-Pass
Marion, Marion County, South Carolina
9. Rebond and Central Lift Truck
1601 Yanceyville Street
Greensboro, Guilford County, North Carolina
10. Salisbury Plant
705 South Railroad Street
Salisbury, Rowan County, North Carolina
74
11. Warehouse and Transportation
1005 Maple Street
Greensboro, Guilford County, North Carolina
12. White Oak Plant
2420 Fairview Street
Greensboro, Guilford County, North Carolina
75