Exhibit 4.2
EXECUTION COPY
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The Kansas City Southern Railway Company,
Issuer
and
U.S. Bank National Association,
Trustee
-------------------
Indenture
Dated as of May 30, 2008
-------------------
8.0% Senior Notes due 2015
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions..................................................... 1
SECTION 1.02 Other Definitions ..............................................21
SECTION 1.03 Incorporation by Reference of Trust Indenture Act ..............21
SECTION 1.04 Rules of
Construction..................................................................22
ARTICLE 2
THE SECURITIES
SECTION 2.01 Amount of Securities; Issuable in Series........................22
SECTION 2.02 Form and Dating.................................................23
SECTION 2.03 Execution and Authentication....................................24
SECTION 2.04 Registrar and Paying Agent......................................24
SECTION 2.05 Paying Agent to Hold Money in Trust.............................25
SECTION 2.06 Holder Lists....................................................25
SECTION 2.07 Transfer and Exchange...........................................25
SECTION 2.08 Replacement Securities..........................................26
SECTION 2.09 Outstanding Securities..........................................26
SECTION 2.10 Temporary Securities............................................27
SECTION 2.11 Cancellation....................................................27
SECTION 2.12 Defaulted Interest..............................................27
SECTION 2.13 CUSIP Numbers...................................................27
ARTICLE 3
REDEMPTION
SECTION 3.01 Notices to Trustee..............................................28
SECTION 3.02 Selection of Securities to Be Redeemed..........................28
SECTION 3.03 Notice of Redemption............................................28
SECTION 3.04 Effect of Notice of Redemption..................................29
SECTION 3.05 Deposit of Redemption Price.....................................29
SECTION 3.06 Securities Redeemed in Part.....................................29
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Securities...........................................29
SECTION 4.02 SEC Reports.....................................................30
SECTION 4.03 Limitation on Indebtedness......................................30
SECTION 4.04 Limitation on Restricted Payments...............................32
SECTION 4.05 Limitation on Restrictions on Distributions from Restricted
Subsidiaries.............................................................35
SECTION 4.06 Limitation on Sales of Assets and Capital Stock.................36
SECTION 4.07 Limitation on Transactions with Affiliates......................40
SECTION 4.08 Change of Control...............................................41
SECTION 4.09 Compliance Certificate..........................................42
SECTION 4. 10 Further Instruments and Acts...................................42
SECTION 4.11 Future Note Guarantors..........................................42
SECTION 4.12 Limitation on Lines of Business.................................43
SECTION 4.13 Limitation on Liens.............................................43
SECTION 4.14 Limitation on Sale/Leaseback Transactions.......................43
SECTION 4.15 Covenant Suspension.............................................44
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01 When Company May Merge or Transfer Assets
........................................................44
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default
...............................................................................46
SECTION 6.02 Acceleration
...............................................................................47
SECTION 6.03 Other Remedies
...............................................................................48
SECTION 6.04 Waiver of Past Defaults
..........................................................................48
SECTION 6.05 Control by Majority
..............................................................................48
SECTION 6.06 Limitation on Suits
..............................................................................48
SECTION 6.07 Rights of Holders to Receive Payment
.............................................................49
SECTION 6.08 Collection Suit by Trustee
.......................................................................49
SECTION 6.09 Trustee May File Proofs of Claim
.................................................................49
SECTION 6.10 Priorities
...............................................................................49
SECTION 6.11 Undertaking for Costs
............................................................................50
SECTION 6.12 Waiver of Stay or Extension Laws
.................................................................50
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee
...............................................................................50
SECTION 7.02 Rights of Trustee
...............................................................................51
SECTION 7.03 Individual Rights of Trustee
.....................................................................52
SECTION 7.04 Trustee's Disclaimer
.............................................................................52
SECTION 7.05 Notice of Defaults
...............................................................................53
SECTION 7.06 Reports by Trustee to Holders
.....................................................................53
SECTION 7.07 Compensation and Indemnity
........................................................................53
SECTION 7.08 Replacement of Trustee
............................................................................54
SECTION 7.09 Successor Trustee by Merger
.......................................................................55
SECTION 7.10 Eligibility; Disqualification
.....................................................................55
SECTION 7.11 Preferential Collection of Claims Against Company
.................................................55
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Discharge of Liability on Securities; Defeasance
..................................................55
SECTION 8.02 Conditions to Defeasance
..........................................................................57
SECTION 8.03 Application of Trust Money
........................................................................58
SECTION 8.04 Repayment to Company
..............................................................................58
SECTION 8.05 Indemnity for Government Obligations
..............................................................58
SECTION 8.06 Reinstatement
...............................................................................58
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders
........................................................................59
SECTION 9.02 With Consent of Holders
...........................................................................59
SECTION 9.03 Compliance with Trust Indenture Act
...............................................................60
SECTION 9.04 Revocation and Effect of Consents and Waivers
.....................................................60
SECTION 9.05 Notation on or Exchange of Securities
.............................................................61
SECTION 9.06 Trustee to Sign Amendments
........................................................................61
SECTION 9.07 Payment for Consent
...............................................................................61
ARTICLE 10
NOTE GUARANTEES
SECTION 10.01 Note Guarantees
...............................................................................61
SECTION 10.02 Limitation on Liability
..........................................................................63
SECTION 10.03 Successors and Assigns
...........................................................................64
SECTION 10.04 No Waiver
...............................................................................64
SECTION 10.05 Modification
...............................................................................64
SECTION 10.06 Execution of Supplemental Indenture for Future Note Guarantors
...................................64
SECTION 10.07 Non-Impairment
...............................................................................65
ARTICLE I I
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls
.....................................................................65
SECTION 11.02 Notices
...............................................................................65
SECTION 11.03 Communication by Holders with Other Holders
......................................................66
SECTION 11.04 Certificate and Opinion as to Conditions Precedent
...............................................66
SECTION 11.05 Statements Required in Certificate or Opinion
....................................................66
SECTION 11.06 When Securities Disregarded
......................................................................66
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar
.....................................................67
SECTION 11.08 Legal Holidays
...............................................................................67
SECTION 11.09 GOVERNING LAW
...............................................................................67
SECTION 11.10 No Recourse Against Others
.......................................................................67
SECTION 11.11 Successors
...............................................................................67
SECTION 11.12 Multiple Originals
...............................................................................67
SECTION 11.13 Table of Contents; Headings
......................................................................67
Appendix A - Provisions Relating to Original Securities and Additional
Securities
Exhibit A - Form of Security
Exhibit B - Form of Supplemental Indenture
Exhibit C - Form of Note Guarantee
INDENTURE dated as of May 30, 2008, among The Kansas City Southern Railway
Company, a Missouri corporation (the "Company"), Kansas City Southern (the
"Parent"), Gateway Eastern Railway Company, PABTEX GP, LLC, PABTEX I, L.P., SIS
Bulk Holding, Inc., Southern Development Company, Southern Industrial Services,
Inc., and Trans-Serve, Inc. (collectively, including the Parent, the "Note
Guarantors") and U.S. Bank National Association, a national banking association,
as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of (a) the Company's 8.0% Senior
Notes due 2015 issued on the date hereof (the "Original Securities") and (b) any
Additional Securities (as defined herein) that may be issued on any Issue Date
(all such Securities in clauses (a) and (b) being referred to collectively as
the "Securities"). Except as otherwise provided herein, the Securities will be
unlimited in aggregate principal amount outstanding, of which $275,000,000 in
aggregate principal amount will be initially issued on the date hereof. Subject
to the conditions and in compliance with the covenants set forth herein, the
Company may issue an unlimited aggregate principal amount of Additional
Securities.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01 Definitions.
"Additional Assets" means (a) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Parent or a Restricted
Subsidiary in a Permitted Business; (b) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Parent or another Restricted Subsidiary; or (c) additional Capital
Stock of a Restricted Subsidiary that is not a Wholly Owned Restricted
Subsidiary; provided, however, that any such Restricted Subsidiary described in
clauses (b) or (c) above is primarily engaged in a Permitted Business.
"Additional Securities" means an unlimited aggregate principal amount of
8.0% Senior Notes due 2015 issued under the terms of this Indenture subsequent
to the Closing Date.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Parent or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation, or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(a) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Parent or a Restricted Subsidiary),
(b) all or substantially all the assets of any division or line of
business of the Parent or any Restricted Subsidiary, or
(c) any other assets of the Parent or any Restricted Subsidiary
outside of the ordinary course of business of the Parent or such Restricted
Subsidiary,
other than, in the case of (a), (b) or (c) above,
(i) disposition by a Restricted Subsidiary to the Parent or by
the Parent or a Restricted Subsidiary to a Wholly Owned Restricted
Subsidiary,
(ii) for purposes of Section 4.06 only, a disposition that
constitutes a Restricted Payment permitted by Section 4.04,
(iii) a disposition of assets with a Fair Market Value of less
than $5,000,000,
(iv) any exchange of like property pursuant to Section 1031 of
the Code for use in a Permitted Business,
(v) Permitted Property Swaps, and
(vi) sales or dispositions of obsolete locomotives, rolling stock
and other equipment.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Securities, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
scheduled redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by (b) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Parent or any
committee thereof duly authorized to act on behalf of the Board of Directors of
the Parent.
"Business Day" means each day other than a Saturday, Sunday or other day on
which banking institutions are not required by law or regulation to be open in
the State of New York.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease.
"Change of Control" means the occurrence of any of the following events:
(a) at any time, less than 75% of the members of the Board of
Directors of the Parent shall be (1) individuals who are members of such
board on May 27, 2008 or (2) individuals whose election, or nomination for
election by the Parent's stockholders, was approved by a vote of at least
75% of the members of the Board of Directors of the Parent then
2
still in office who are members of such board on May 27, 2008 (or whose
election or nomination has been approved as provided in this clause (a));
(b) at any time, any Person, or any two or more Persons acting as a
partnership, limited partnership, syndicate or other group for the purpose
of acquiring, holding or disposing of Voting Stock of the Parent, shall
become, according to public announcement or filing, the "beneficial owner"
(as defined in Rule 13d-3 issued under the Exchange Act), directly or
indirectly, of securities of the Parent representing 30% or more
(calculated in accordance with such Rule 13d-3) of the combined voting
power of the Parent's then outstanding Voting Stock;
(c) any Person other than the Parent shall acquire ownership, directly
or indirectly, beneficially or of record of more than 30% of the Voting
Stock of the Company; or
(d) the merger or consolidation of the Parent or the Company with or
into another Person or the merger of another Person with or into the Parent
or the Company, or the sale of all or substantially all the assets of the
Parent or the Company to another Person, and, in the case of any such
merger or consolidation, the securities of the Parent or the Company that
are outstanding immediately prior to such transaction and that represent
100% of the aggregate voting power of the Voting Stock of the Parent or the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving Person or transferee that represent immediately after such
transaction at least a majority of the aggregate voting power of the Voting
Stock of the surviving Person or transferee.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Securities.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (a) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
for which financial information is publicly available to (b) Consolidated
Interest Expense for such four fiscal quarters; provided, however, that:
(i) if the Parent or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period (other than Indebtedness
under a revolving credit facility) that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period;
(ii) if the Parent or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness (other than
Indebtedness under a revolving credit facility) since the beginning of such
period or if any Indebtedness is to be repaid, repurchased, defeased or
otherwise discharged on the date of the transaction giving rise to the need
to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated
Interest Expense for such period shall be calculated on a pro forma basis
as if such discharge had occurred on the first day of such
3
period and as if the Parent or such Restricted Subsidiary had not earned
the interest income actually earned during such period in respect of cash
or Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(iii) if since the beginning of such period the Parent or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets that are the subject of such Asset
Disposition for such period or increased by an amount equal to the EBITDA
(if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Parent or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Parent
and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Parent and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(iv) if since the beginning of such period the Parent or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and
(v) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Parent or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (iii) or
(iv) above if made by the Parent or a Restricted Subsidiary during such
period, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition of assets occurred on the first day
of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets or other Investment, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be determined in good faith by a responsible financial or accounting
Officer of the Parent and shall comply with the requirements of Rule 11-02 of
Regulation S-X promulgated by the SEC. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness during such
period). For purposes of making the computation referred to above, interest on
any Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period.
"Consolidated Current Liabilities" as of the date of determination means
the aggregate amount of liabilities of the Parent and its Consolidated
Restricted Subsidiaries that may properly be classified as current liabilities
(including taxes accrued as estimated), on a Consolidated basis, after
eliminating (a) all intercompany items between the Parent and any Restricted
Subsidiary and (b) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
4
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Parent and its Consolidated Restricted Subsidiaries, plus, to the
extent Incurred by the Parent and its Consolidated Restricted Subsidiaries in
such period but not included in such interest expense, without duplication (a)
interest expense attributable to Capitalized Lease Obligations and the interest
expense attributable to leases constituting part of a Sale/Leaseback
Transaction, (b) amortization of debt discount, (c) capitalized interest, (d)
commissions, discounts and other fees and charges attributable to letters of
credit and bankers' acceptance financing, (e) interest accruing on any
Indebtedness of any other Person to the extent such Indebtedness is Guaranteed
by the Parent or any Restricted Subsidiary, (f) net costs or benefit associated
with Interest Rate Agreements, and (g) dividends in respect of all Disqualified
Stock of the Parent or the Company and all Preferred Stock of any of the
Restricted Subsidiaries of the Parent (other than the Company), to the extent
held by Persons other than the Parent or a Wholly Owned Restricted Subsidiary;
provided, however, that Consolidated Interest Expense shall exclude (A) the
interest expense of any Restricted Subsidiary in the same proportion as the net
income of that Restricted Subsidiary is excluded from Consolidated Net Income,
and (B) any amounts related to amortization of costs associated with issuance of
Indebtedness.
"Consolidated Net Income" means, for any period, the net income of the
Parent and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(a) any net income of any Person (other than the Parent) if such
Person is not a Restricted Subsidiary, except that, subject to the
limitations contained in clause (c) below and to the extent not already
included, (A) the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Parent or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution made to a Restricted Subsidiary,
to the limitations contained in clause (b) below), and (B) the amounts so
included shall be decreased by the amount of the Parent or such Restricted
Subsidiary's equity in a net loss of any such Person for such period to the
extent that Parent or Restricted Subsidiary has funded such loss;
(b) any net income of any Restricted Subsidiary that is not a Note
Guarantor other than the Company, if such Restricted Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or
indirectly, except that subject to the limitations contained in clause (c)
below, the Parent's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could be distributed by such
Restricted Subsidiary during such period to the Parent or another
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution made to another Restricted
Subsidiary, to the limitation contained in this clause);
(c) any gain or loss realized upon the sale or other disposition of
any asset of the Parent or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any
Person;
(d) any extraordinary gain or loss; and
(e) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
the Parent or a Restricted Subsidiary to the extent
5
such dividends, repayments or transfers increase the amount of Restricted
Payments permitted under such Section pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Tangible Assets" as of any date of determination, means
the total amount of assets (less accumulated depreciation and amortization,
allowances for doubtful receivables, other applicable reserves and other
properly deductible items) that would appear on a Consolidated balance sheet of
the Parent and its Consolidated Restricted Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of: (a) minority interests in
Consolidated Subsidiaries held by Persons other than the Parent or a Restricted
Subsidiary; (b) excess of cost over fair value of assets of businesses acquired;
(c) any revaluation or other write-up in book value of assets subsequent to the
Closing Date as a result of a change in the method of valuation in accordance
with GAAP consistently applied; (d) unamortized debt discount and expenses and
other unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, licenses, organization or developmental expenses
and other intangible items; (e) cash set apart and held in a sinking or other
analogous fund established for the purpose of redemption or other retirement of
Capital Stock to the extent such obligation is not reflected in Consolidated
Current Liabilities; and (g) Investments in and assets of Unrestricted
Subsidiaries.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Parent in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Parent or any Restricted Subsidiary in an Unrestricted Subsidiary will be
accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the Credit Agreement dated as of April 28, 2006,
among the Parent, the Company, the subsidiary guarantors named therein, the
lenders party thereto, and The Bank of Nova Scotia, as Administrative Agent and
Collateral Agent, as amended by amendment No. 1 thereto dated as of May 31, 2007
and as further amended, restated, supplemented, waived, replaced (whether or not
upon termination, and whether with the original lenders or otherwise),
refinanced, restructured or otherwise modified from time to time (except to the
extent that any such amendment, restatement, supplement, waiver, replacement,
refinancing, restructuring or other modification thereto would be prohibited by
the terms of this Indenture unless otherwise agreed to by the Holders of at
least a majority in aggregate principal amount of Securities at the time
outstanding).
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event (a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (b) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Capital Stock convertible or exchangeable solely
at the option of the Parent or a Restricted Subsidiary; provided, however, that
any such conversion or exchange shall be deemed an Incurrence of Indebtedness or
Disqualified Stock, as applicable) or (c) is redeemable at the option of the
holder thereof, in whole or in part, in the case of each of clauses (a), (b) and
(c), on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.08.
6
"EBITDA" for any period means the Consolidated Net Income for such period,
plus, without duplication, the following to the extent deducted in calculating
such Consolidated Net Income: (a) income tax expense of the Parent and its
Consolidated Restricted Subsidiaries, (b) Consolidated Interest Expense, (c)
depreciation expense of the Parent and its Consolidated Restricted Subsidiaries,
(d) amortization expense of the Parent and its Consolidated Restricted
Subsidiaries, and (e) any fees and expenses, or any amortization or write-off
thereof, incurred in connection with any acquisition, investment, asset
disposition, issuance or repayment, defeasance or discharge of debt, issuance of
equity securities, refinancing transaction (including the termination of
existing Interest Rate Agreements in connection therewith) or amendment or other
modification of any debt instrument, and any charges incurred as a result of any
such transaction. Notwithstanding the foregoing, if any part of the net income
of any Restricted Subsidiary was required to be excluded from the calculation of
Consolidated Net Income, the items referred to in the foregoing clauses (a)
through (e) in respect of such Restricted Subsidiary shall be included in EBITDA
in the same proportion as the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income.
"Equity Offering" means an underwritten primary public offering of common
stock of the Parent or the Company pursuant to an effective registration
statement under the Securities Act or a bona fide private placement of the
common stock of the Parent or the Company on arm's-length terms to unaffiliated
third parties.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Contributions" means Net Cash Proceeds received by the Parent or
the Company from the issue or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Closing Date (other than an issuance or sale to (x) a
Restricted Subsidiary of the Parent or (y) an employee stock ownership plan or
other trust established by the Parent or any of its Restricted Subsidiaries), in
each case designated as Excluded Contributions pursuant to an Officers'
Certificate executed on the date such Capital Stock is issued or sold, which are
excluded from the calculation set forth in Section 4.04(a)(3).
"Fair Market Value" means, with respect to any asset or property, the price
that could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including those set forth in (a)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (b) statements and
pronouncements of the Financial Accounting Standards Board, (c) such other
statements by such other entities as approved by a significant segment of the
accounting profession and (d) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (b) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness or
other
7
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing
any obligation.
"Holder" means the Person in whose name a Security is registered on the
Registrar's books.
"Incur" means issue, assume Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Restricted Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. The accretion
of principal of a non-interest bearing or other discount security shall not be
deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination, without duplication:
(a) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
(b) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(c) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto);
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than twelve months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services;
(e) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(f) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person that is not a Note Guarantor,
any Preferred Stock (but excluding, in each case, any accrued dividends);
(g) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
the lesser of (i) the Fair Market Value of such asset at such date of
determination and (ii) the amount of such Indebtedness of such other
Persons;
(h) Interest Rate Agreements of such Person; and
(i) all obligations of the type referred to in clauses (a) through (h)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee.
8
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement to which such Person is party or of which it is a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04, (a) (1) in the case of a Restricted
Subsidiary being designated an Unrestricted Subsidiary, "Investment" shall
include the portion of the Fair Market Value of such Subsidiary's net assets
which is proportionate to the Parent's equity interest in such Subsidiary, and
(2) in the case of an Unrestricted Subsidiary being designated a Restricted
Subsidiary, "Investment" shall include the lesser of (i) the Parent's Investment
in such Subsidiary at the time of such designation, and (ii) the portion of the
Fair Market Value of such Subsidiary's net assets which is proportionate to the
Parent's equity interest in such Subsidiary; and (b) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at
the time of such transfer.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's Investors Service, Inc. or BBB- (or the equivalent)
by Standard & Poor's Ratings Group, Inc.
"Issue Date", with respect to any Securities, means the date on which the
Securities are originally issued.
"KCSM" means Kansas City Southern de Mexico, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of the United Mexican
States.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other noncash form) therefrom, in each case net
of (a) all legal, title and recording tax expenses, commissions and other fees
and expenses incurred, and all federal, state, provincial, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (b) all payments made on any Indebtedness that is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (c) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset
9
Disposition and (d) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and retained by
the Parent or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means each Guarantee of the obligations with respect to
the Securities issued by a Person pursuant to the terms of this Indenture.
"Note Guarantor" means any Person that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or the
Secretary of the Parent or the Company. "Officer" of a Note Guarantor has a
correlative meaning.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Parent, the Company, a Note Guarantor or the Trustee.
"Parent" means Kansas City Southern, a Delaware corporation, until a
successor replaces it and, thereafter, means such successor.
"Permitted Business" means any business engaged in by the Parent or any
Restricted Subsidiary on the Closing Date or such date as any Person becomes a
Restricted Subsidiary, and any business related, ancillary or complementary
thereto.
"Permitted Investment" means an Investment by the Parent or any Restricted
Subsidiary in (a) the Parent, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Permitted
Business; (b) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Parent or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Permitted Business;
(c) Temporary Cash Investments; (d) receivables owing to the Parent or any
Restricted Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Parent or any such Restricted Subsidiary deems reasonable under the
circumstances; (e) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(f) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Parent or such Restricted Subsidiary and
not exceeding $5 million in the aggregate outstanding at any one time; (g) Stock
Purchase Loans not exceeding $3 million in the aggregate outstanding at any one
time; (h) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Parent or any
Restricted Subsidiary or in satisfaction of judgments; (i) any Person to the
extent such Investment represents the noncash portion of the consideration
received for an Asset Disposition that was made pursuant to and in compliance
with Section 4.06; (j) The Panama Canal Railway Company; provided, however, that
the aggregate amount of all such Investments in Panama Canal Railway Company
made after the Closing Date and at any time outstanding shall not exceed $15
million; (k) any company that is engaged in the same line of business as
10
the Company or a related line of business in the form of Guarantees for the
benefit of, or capital contributions or loans to, or sale/leaseback transactions
with, such company; provided, however, that the aggregate amount of such capital
contributions, loans and guaranteed Indebtedness and sale/leaseback transactions
made after the Closing Date and at any time outstanding shall not exceed $25
million; (l) Southern Capital LLC or a similar joint venture; provided, however,
that the aggregate amount of all such Investments in Southern Capital LLC or
other joint venture made after the Closing Date and at any time outstanding
shall not exceed $50 million, not more than $10 million of which shall be for
purposes other than rehabilitation of locomotives and rolling stock; (m)
Permitted Property Swaps; or (n) KCSM and its Subsidiaries; provided, however,
that the aggregate amount of all such Investments in KCSM and its Subsidiaries
made after the Closing Date shall not exceed $50 million.
"Permitted Liens" means, with respect to any Person:
(a) (i) Liens to secure Indebtedness permitted pursuant to clauses
(b)(i) and (b)(vi) of Section 4.03 and (ii) Liens to secure Indebtedness
(other than Indebtedness described in clause (b)(ii) of Section 4.03) such
that the maximum principal amount of such Indebtedness, as of any date,
after giving effect to the Incurrence of such Indebtedness and application
of proceeds therefrom on such date, would not cause the Secured
Indebtedness Leverage Ratio to be greater than 3.0 to 1.0;
(b) Liens for taxes, assessments or governmental charges or levies on
such Person's property if the same shall not at the time be delinquent or
thereafter can be paid without penalty or are being contested in good faith
and by appropriate proceedings;
(c) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business that secure payment of obligations (i) that are being contested in
good faith by appropriate proceedings or (ii) for which such Person or any
of its Subsidiaries, as applicable, has posted a bond supported only by
cash;
(d) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, laws providing for old age
pensions or other social security or retirement benefits, or similar
legislation or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which
such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of business;
(e) utility easements, building restrictions and such other
encumbrances or charges against real property and defects and
irregularities in the title thereto or facts an accurate survey of the
property would show and landlords' and lessors' liens under leases to which
such Person or any of its Subsidiaries is a party, none of which in any
material way affect the marketability of the same or interfere with the use
thereof in the ordinary course of the business of such Person or its
Subsidiaries;
(f) Liens existing on the Closing Date;
(g) any Lien on any property or asset prior to the acquisition thereof
by such Person or any of its Subsidiaries or existing on any property or
asset of any other Person that becomes a Subsidiary of such Person after
the Closing Date prior to the time such other Person becomes a Subsidiary
of such Person; provided, however, that (i) such Lien is not created,
Incurred or assumed in contemplation of or in connection with such
acquisition or such other Person becoming a Subsidiary of such Person, as
the case may be, (ii) such Lien shall not apply to any
11
other property or assets of such Person or its Subsidiaries and (iii) such
Lien shall secure only those obligations which it secures on the date of
such acquisition or the date such other Person becomes a Subsidiary of such
Person, as the case may be;
(h) Liens on fixed or capital assets acquired, constructed or improved
by such Person or any of its Subsidiaries; provided, however, that (i) such
Liens secure Indebtedness permitted pursuant to Section 4.03(b)(vi), (ii)
such Liens and the Indebtedness secured thereby are Incurred prior to or
within 180 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such Liens shall not apply to any other property or
assets of such Person or any of its Subsidiaries;
(i) judgment Liens in respect of judgments that do not constitute an
Event of Default pursuant to Section 6.01(h);
(j) Liens securing Indebtedness or other obligations of a Subsidiary
of such Person owing to such Person or a Wholly Owned Restricted Subsidiary
of such Person;
(k) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of business;
(l) Liens securing obligations under Interest Rate Agreements so long
as such obligations relate to Indebtedness that is, and is permitted under
this Indenture to be, secured by a Lien on the same property securing such
obligations;
(m) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clauses (a), (f), (g) and (h); provided, however, that:
(i) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements to or on
such property) and
(ii) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of: (1) the outstanding
principal amount or, if greater, committed amount of Indebtedness
secured by Liens described under clauses (a), (f), (g) or (h) at the
time the original Lien became a Permitted Lien under this Indenture
and (2) an amount necessary to pay any fees and expenses, including
premiums, related to such Refinancings; and
(n) Liens to secure Indebtedness permitted under this Indenture
Incurred to fund or refinance the reconstruction of the line between
Victoria and Rosenberg, Texas, so long as the amount of outstanding
Indebtedness secured by Liens pursuant to this clause (n) does not exceed
$150 million.
"Permitted Property Swap" means a swap of locomotives, rolling stock, track
materials or real property (including any fixtures or improvements thereon)
where the Fair Market Value of the locomotives, rolling stock, track materials,
real property (including any fixtures or improvements thereon) or other
consideration received is at least equal to the Fair Market Value of the
locomotives, rolling stock, track materials, real property (including any
fixtures or improvements thereon) or other consideration transferred, in each
case, as such Fair Market Value is determined in good faith by a responsible
financial or accounting Officer of the Parent.
12
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security that is due or overdue or is to become
due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness (a) consisting of the
deferred purchase price of an asset, conditional sale obligations, obligations
under any title retention agreement and other purchase money obligations, in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the asset being financed, and (b) Incurred to finance
the acquisition by the Parent or a Restricted Subsidiary of such asset,
including additions and improvements; provided, however, that such Indebtedness
is incurred within 180 days after the acquisition by the Parent or such
Restricted Subsidiary of such asset.
"Rating Agency" means each of Standard & Poor's Ratings Group, Inc. and
Moody's Investors Service, Inc. or if either of the foregoing shall not make a
rating on the Securities publicly available, a nationally recognized statistical
rating agency or agencies, as the case may be, selected by the Parent which
shall be substituted for Standard & Poor's Ratings Group, Inc. or Moody's
Investors Service, Inc. or both, as the case may be.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) any Indebtedness of the Parent or any Restricted
Subsidiary existing on the Closing Date or Incurred in compliance with this
Indenture (including Indebtedness of the Parent that Refinances Refinancing
Indebtedness) including any premiums, accrued interest, fees and expenses
related to such refinancing, replacement, renewal, repayment or extension;
provided, however, that (a) the Refinancing Indebtedness has a Stated Maturity
no earlier than the earlier of (1) the Stated Maturity of the Indebtedness being
Refinanced and (2) the first anniversary of the Stated Maturity of the
Securities, (b) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced, (c) such Refinancing
Indebtedness is Incurred in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to or less than
the aggregate principal amount (or if issued with original issue discount, the
aggregate accreted value) then outstanding of the Indebtedness being Refinanced
plus any premiums, accrued interest, fees and expenses related to such
refinancing, replacement, renewal, repayment or extension, and (d) if the
Indebtedness being refinanced is subordinated in right of payment to the
Securities, such Refinancing Indebtedness is subordinated in right of payment to
the Securities at least to the same extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (i)
Indebtedness of a Restricted Subsidiary that is not a Note Guarantor and that
Refinances Indebtedness of the Company or (ii) Indebtedness of the Parent or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Restricted Subsidiary" means the Company and any other Subsidiary of the
Parent other than an Unrestricted Subsidiary.
13
"Sale/Leaseback Transaction" means an arrangement entered into after the
Closing Date relating to property now owned or hereafter acquired by the Parent
or a Restricted Subsidiary whereby the Parent or a Restricted Subsidiary
transfers such property to a Person and the Parent or such Restricted Subsidiary
leases it from such Person, other than leases between the Parent and a Wholly
Owned Restricted Subsidiary or between Wholly Owned Restricted Subsidiaries.
Notwithstanding the preceding sentence, any such arrangement that would
otherwise be included in this definition of a Sale/Leaseback Transaction that is
concluded within 180 days following the date of the acquisition of the property
being transferred shall not be considered a Sale/Leaseback Transaction.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means Indebtedness of the Company secured by a Lien.
"Secured Indebtedness Leverage Ratio", as of any date of determination,
means the ratio of (i) any Indebtedness secured by a Lien to (ii) the aggregate
amount of EBITDA for the period of the most recent four consecutive fiscal
quarters ending prior to such date for which financial information is publicly
available.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" of the Company or any Note Guarantor means the
principal of, premium (if any), and fees and other amounts owing in respect of,
the Credit Agreement and all other Indebtedness of the Company or any Note
Guarantor, as applicable, whether outstanding on the Closing Date or thereafter
Incurred, unless in the instrument creating or evidencing the same or pursuant
to which the same is outstanding it is provided that such obligations are
subordinated in right of payment to the Securities or such Note Guarantor's Note
Guarantee, as applicable; provided, however, that Senior Indebtedness of the
Company or any Note Guarantor shall not include (a) any obligation of the
Company to the Parent or any other Subsidiary of the Parent or any obligation of
such Note Guarantor to the Parent or any other Subsidiary of the Parent, (b) any
liability for federal, state, local or other taxes owed or owing by the Company
or such Note Guarantor, as applicable, (c) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (d)
any Indebtedness or obligation of the Company or such Note Guarantor, as
applicable (and any accrued and unpaid interest in respect thereof), that by its
terms is subordinate or junior in any respect to any other Indebtedness or
obligation of the Company or such Note Guarantor, as applicable, including any
Subordinated Obligations of the Company or such Note Guarantor, as applicable,
(e) any obligations with respect to any Capital Stock, or (f) any Indebtedness
Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary other than the
Company that would be a "Significant Subsidiary" of the Parent within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Stock Purchase Loans" means loans or advances made by the Parent or any
Restricted Subsidiary in the ordinary course of business to employees for the
purpose of purchasing restricted shares of common stock of the Parent.
14
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the Securities pursuant to a written agreement.
"Subordinated Obligation" of a Note Guarantor has a correlative meaning.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership or membership
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
owned or controlled, directly or indirectly, by (a) such Person, (b) such Person
and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of
such Person.
"Temporary Cash Investments" means any of the following: (a) any investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(b) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company that is organized under the laws of the United
States of America, any state thereof or any foreign country recognized by the ,
United States of America having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose long-term debt is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act), (c) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above, (d) investments in commercial
paper, maturing not more than 270 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Parent) organized and in existence
under the laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's Investors
Services, Inc. or "A-1 " (or higher) according to Standard and Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), and (e)
investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A" by Moody's Investors
Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the Closing Date.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the corporate trust department of
the Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
15
"Unrestricted Subsidiary" means KCSM and each of its Subsidiaries and (a)
any Subsidiary of the Parent that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors in the manner
provided below and (b) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors may designate any Subsidiary of the Parent (including any newly
acquired or newly formed Subsidiary of the Parent but excluding the Company) to
be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any
property of, the Parent or any other Subsidiary of the Parent that is not a
Subsidiary of the Subsidiary to be so designated; provided, however, that either
(i) the Subsidiary to be so designated has total assets consolidated with those
of its subsidiaries in accordance with GAAP consistently applied of $1,000 or
less or (ii) if such Subsidiary has assets consolidated with those of its
subsidiaries in accordance with GAAP consistently applied greater than $1,000,
then such designation would be permitted under Section 4.04. The Board of
Directors may designate KCSM or any other Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (a) the Parent could Incur $1.00 of additional Indebtedness
under Section 4.03(a), and (b) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted
Subsidiary by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership or membership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary of the
Parent all the Capital Stock of which (other than directors' qualifying shares)
is owned by the Parent or another Wholly Owned Restricted Subsidiary.
SECTION 1.02 Other Definitions.
Defined in
Term Section
- ---- ----------
"Affiliate Transaction".................................. 4.07(a)
"Bankruptcy Law"......................................... 6.01
"Change of Control Offer"................................ 4.08(b)
"covenant defeasance option"............................. 8.01 (b)
"Custodian".............................................. 6.01
"Definitive Securities".................................. Appendix A
"Event of Default"....................................... 6.01
"Global Securities"...................................... Appendix A
"Guaranteed Obligations"................................. 10.01
"incorporated provision"................................. 11.01
"legal defeasance option"................................ 8.01(b)
"Legal Holiday".......................................... 11.08
"Notice of Default"...................................... 6.01
"Offer".................................................. 4.06(b)
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"Offer Amount"........................................... 4.06(c)(ii)
"Offer Period"........................................... 4.06(c)(ii)
"Paying Agent"........................................... 2.04
"protected purchaser".................................... 2.08
"Purchase Date".......................................... 4.06(c)(i)
"Registrar".............................................. 2.04(a)
"Restricted Payment"..................................... 4.04(a)
"Securities Custodian"................................... Appendix A
"Successor Company"...................................... 5.01(a)
SECTION 1.03 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Note Guarantees.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Note
Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) the principal amount of any non-interest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP; and
(g) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
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ARTICLE 2
The Securities
SECTION 2.01 Amount of Securities; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued in one or more series.
All Securities of any one series shall be substantially identical except as to
denomination.
With respect to any Additional Securities issued after the Closing Date
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
2.07, 2.08, 2.09, 2.10 or 3.06 or the Appendix), there shall be (a) established
in or pursuant to a resolution of the Board of Directors and (b) (i) set forth
or determined in the manner provided in an Officers' Certificate or (ii)
established in one or more indentures supplemental hereto, prior to the issuance
of such Additional Securities:
(1) whether such Additional Securities shall be issued as part of a
new or existing series of Securities and the title of such Additional
Securities (which shall distinguish the Additional Securities of the series
from Securities of any other series);
(2) the issue price and issuance date of such Additional Securities,
including the date from which interest on such Additional Securities shall
accrue; provided, however, that no Additional Securities may be issued at a
price that would cause such Additional Securities to have "original issue
discount" within the meaning of Section 1273 of the Code; and
(3) if applicable, that such Additional Securities shall be issuable
in whole or in part in the form of one or more Global Securities and, in
such case, the respective depositaries for such Global Securities, the form
of any legend or legends which shall be borne by such Global Securities in
addition to or in lieu of those set forth in Exhibit A hereto and any
circumstances in addition to or in lieu of those set forth in Section 2.3
of the Appendix in which any such Global Security may be exchanged in whole
or in part for Additional Securities registered, or any transfer of such
Global Security in whole or in part may be registered, in the name or names
of Persons other than the depositary for such Global Security or a nominee
thereof.
If any of the terms of any Additional Securities are established by action
taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the indenture supplemental hereto
setting forth the terms of the Additional Securities.
SECTION 2.02 Form and Dating. Provisions relating to the Securities are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Indenture. The Securities, including any Additional Securities issued,
and the Trustee's certificate of authentication shall each be substantially in
the form of Exhibit A hereto, which is hereby incorporated in and expressly made
a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Parent, the Company or any Note Guarantor is subject, if any, or usage (provided
that any such notation, legend or endorsement is in a form acceptable to the
Company). Each Security shall be dated the date of its authentication. The
Securities shall be issuable only in registered form without interest coupons
and only in denominations of $1,000 and integral multiples thereof.
SECTION 2.03 Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature.
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If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
signs the certificate of authentication on the Security by manual signature. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery Securities
as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04 Registrar and Paying Agent. (a) The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent, and the term
"Registrar" includes any co-registrars. The Company initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian with respect to the Global Securities.
(b) The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Parent or any of its domestically organized
Wholly Owned Restricted Subsidiaries, including the Company, may act as
Paying Agent or Registrar.
(c) The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided,
however, that no such removal shall become effective until (i) acceptance
of an appointment by a successor as evidenced by an appropriate agreement
entered into by the Company and such successor Registrar or Paying Agent,
as the case may be, and delivered to the Trustee or (ii) notification to
the Trustee that the Trustee shall serve as Registrar or Paying Agent until
the appointment of a successor in accordance with clause (i) above.
Thereupon the removal shall become effective and the successor or Trustee,
as the case may be, shall have all the rights, powers and duties of the
Registrar or Paying Agent under this Indenture. The Registrar or Paying
Agent may resign at any time upon written notice to the Company and the
Trustee.
SECTION 2.05 Paying Agent to Hold Money in Trust. On or prior to each due
date of the principal of and interest on any Security, the Company shall deposit
with the Paying Agent (or if the Company or a Wholly Owned Restricted Subsidiary
is acting as Paying Agent, segregate and hold in trust for the benefit of the
Persons entitled thereto) a sum sufficient to pay such principal and interest
when so becoming due. The Company shall require each Paying Agent (other than
the Trustee) to agree in writing that the Paying Agent shall hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of and interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. If the Parent,
the Company or a Subsidiary of
19
the Parent acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.06 Holder Lists. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish, or cause the Registrar to furnish, to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders.
SECTION 2.07 Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer and in compliance with the Appendix. When a
Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if its requirements
therefor are met. When Securities are presented to the Registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or any Securities for a period of
15 days before the mailing of a notice of redemption of Securities.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Note Guarantors, the Trustee, the Paying Agent, and the
Registrar may deem and treat the Person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and (subject to paragraph 2 of the Securities) interest, if any, on
such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, any Note Guarantor, the Trustee,
the Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (a) the Holder of
such Global Security (or its agent) or (b) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the terms
of this Indenture shall evidence the same debt and shall be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
SECTION 2.08 Replacement Securities. If a mutilated Security is surrendered
to the Registrar or if the Holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405 of the Uniform Commercial Code are met, such that the Holder (a) satisfies
the Company or the Trustee within a reasonable time after such Holder has notice
of such loss, destruction or wrongful taking and the Registrar does not register
a transfer prior to receiving such notification, (b) makes such request to the
Company or the Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (c) satisfies any other reasonable requirements of
the Trustee. Such Holder shall furnish
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an indemnity bond sufficient in the judgment of the Trustee to protect the
Company, the Trustee, the Paying Agent and the Registrar from any loss that any
of them may suffer if a Security is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Security. In the event any
such mutilated, lost, destroyed or wrongfully taken Security has become or is
about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.09 Outstanding Securities. Securities outstanding at any time are
all Securities authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. Subject to Section 11.06, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced or paid pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced or paid Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal, interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, then on and
after that date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
SECTION 2.10 Temporary Securities. In the event that Definitive Securities
are to be issued under the terms of this Indenture, until such Definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall, upon the written order of the
Company, authenticate Definitive Securities and deliver them in exchange for
temporary Securities upon surrender of such temporary Securities at the office
or agency of the Company, without charge to the Holder.
SECTION 2.11 Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and shall dispose of cancelled Securities in accordance with its
customary procedures or deliver cancelled Securities to the Company pursuant to
written direction by an Officer. The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation. The Trustee shall not authenticate Securities in place of
cancelled Securities other than pursuant to the terms of this Indenture.
SECTION 2.12 Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, the Company shall pay the defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the Persons who are Holders on a
subsequent special record date. The Company shall fix or cause to be fixed any
such special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail or
21
cause to be mailed to each Holder a notice that states the special record date,
the payment date and the amount of defaulted interest to be paid.
SECTION 2.13 CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3
Redemption
SECTION 3.01 Notices to Trustee. If the Company elects to redeem Securities
pursuant to paragraph 5 of the Securities, it shall notify the Trustee in
writing of the redemption date and the principal amount of Securities to be
redeemed.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02 Selection of Securities to Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by a method that the Trustee in its sole
discretion shall deem to be fair and appropriate. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption. (a) At least 30 days but not more than
60 days before a date for redemption of Securities, the Company shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price and the amount of accrued interest to the
redemption date;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(v) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
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(vi) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(vii) the CUSIP number, if any, printed on the Securities being
redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
(b) At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04 Effect of Notice of Redemption. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued and unpaid interest to the redemption date;
provided, however, that if the redemption date is after a regular record date
and on or prior to the interest payment date, the accrued interest shall be
payable to the Holder of the redeemed Securities registered on the relevant
record date. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.
SECTION 3.05 Deposit of Redemption Price. Prior to 10:00 a.m., New York
City time, on the redemption date, the Company shall deposit with the Paying
Agent (or, if the Parent, the Company or a Wholly Owned Restricted Subsidiary is
the Paying Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest on all Securities or portions thereof
to be redeemed on that date other than Securities or portions of Securities
called for redemption that have been delivered by the Company to the Trustee for
cancellation. On and after the redemption date, interest shall cease to accrue
on Securities or portions thereof called for redemption so long as the Company
has deposited with the Paying Agent funds sufficient to pay the principal of,
plus accrued and unpaid interest on the Securities to be redeemed, unless the
Paying Agent is prohibited from making such payment pursuant to the terms of
this Indenture.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01 Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Holders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
23
SECTION 4.02 SEC Reports. At all times from and after the Closing Date,
whether or not the Parent is then required to file reports with the Commission,
for so long as any Securities are outstanding, the Parent shall file with the
Commission all such reports and other information when and as the Parent would
be required to file with the Commission by Sections 13(a) or 15(d) under the
Exchange Act if the Parent were subject thereto, unless the Commission does not
permit such filings, in which case the Parent shall provide such reports and
other information to the Trustee (within the same time periods that would be
applicable if the Parent were required and permitted to file reports with the
Commission) and instruct the Trustee to mail such reports and other information
to Holders at their addresses set forth on the Securities Register. The Parent
shall supply the Trustee and each Holder or shall supply to the Trustee for
forwarding to each such Holder, without cost to such Holder, copies of such
reports and other information. Notwithstanding the foregoing, as long as the
Parent is subject to informational requirements of the Exchange Act and in
accordance therewith files reports and other information with the Commission,
each Holder shall be deemed to have been supplied the foregoing reports and
forms at the time such Holder may electronically access such reports and forms
by means of the Commission's homepage on the internet or at the Parent's
homepage on the internet. Notwithstanding any language in this Section, nothing
in this Section 4.02 shall be interpreted to limit or reduce the Company's
obligations under Section 314(a) of the TIA.
SECTION 4.03 Limitation on Indebtedness. (a) The Parent will not, and will
not permit any Restricted Subsidiary to, Incur, directly or indirectly, any
Indebtedness; provided, however, that the Parent, the Company, or any Restricted
Subsidiary that is a Note Guarantor may Incur Indebtedness if on the date of
such Incurrence and after giving effect thereto the Consolidated Coverage Ratio
would be greater than 2.0:1.
(b) Notwithstanding Section 4.03(a), the Parent, the Company and the
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness under the Credit Agreement in an aggregate principal
amount not to exceed $500 million, less the aggregate amount of all
prepayments of principal from the proceeds of Asset Dispositions applied to
permanently reduce any such Indebtedness;
(ii) Indebtedness of the Parent owed to and held by any Wholly Owned
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to
and held by the Parent or any Wholly Owned Restricted Subsidiary; provided,
however, that (1) any subsequent issuance or transfer of any Capital Stock
or any other event that results in any such Wholly Owned Restricted
Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any
subsequent transfer of any such Indebtedness (except to the Parent or a
Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof, and
(2) if the Company or a Note Guarantor is the obligor on such Indebtedness
and such Indebtedness is owed to and held by a Wholly Owned Restricted
Subsidiary that is not a Note Guarantor, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all obligations of
such Note Guarantor with respect to its Note Guarantee;
(iii) Indebtedness (1) represented by the Securities (not including
any Additional Securities) and the Note Guarantees, (2) outstanding on the
Closing Date (other than the Indebtedness described in clauses (i) and (ii)
above), (3) consisting of Refinancing Indebtedness Incurred in respect of
any Indebtedness described in this clause (iii) (including Indebtedness
that is Refinancing Indebtedness) or Section 4.03(a) and (4) consisting of
Guarantees of any Indebtedness permitted under clauses (i) and (ii) of this
paragraph (b);
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary was
acquired by the Parent (other than
24
Indebtedness Incurred in contemplation of, in connection with, as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Subsidiary of or was otherwise acquired by the Parent); provided, however,
that on the date that such Restricted Subsidiary is acquired by the Parent,
the Parent would have been able to Incur $1.00 of additional Indebtedness
pursuant to Section 4.03(a) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (iv) and (2) Refinancing Indebtedness
Incurred by a Restricted Subsidiary in respect of Indebtedness Incurred by
such Restricted Subsidiary pursuant to this clause (iv);
(v) Indebtedness (1) in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided by the
Parent and the Restricted Subsidiaries in the ordinary course of their
business, and (2) under Interest Rate Agreements entered into for bona fide
hedging purposes in the ordinary course of business;
(vi) Purchase Money Indebtedness and Capitalized Lease Obligations in
an aggregate principal amount at any time outstanding not to exceed the
greater of (A) $300 million, or (B) 10% of Consolidated Net Tangible
Assets, such percentage to be calculated after giving effect to the
proposed Purchase Money Indebtedness or Capitalized Lease Obligations and
the related asset acquired or retained on a pro forma basis;
(vii) Attributable Debt in respect of Sale/Leaseback Transactions
after the Closing Date in an aggregate principal amount not to exceed $100
million;
(viii) Indebtedness of the Parent or the Company owed to an
Unrestricted Subsidiary consisting of Refinancing Indebtedness Incurred in
respect of any Indebtedness described in clause (vi) above; provided,
however, that any such Refinancing Indebtedness shall be included in
computing the maximum amount of Indebtedness permitted under such clause;
or
(ix) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to Section 4.03(a) or any other clause of this Section 4.03(b)) in
an aggregate principal amount on the date of Incurrence that, when added to
all other Indebtedness Incurred pursuant to this clause (ix) and then
outstanding, will not exceed $100 million.
(c) Notwithstanding any other provision of this Section 4.03, the maximum
amount of Indebtedness that the Parent or any Restricted Subsidiary may Incur
pursuant to this Section 4.03 shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies.
(d) For purposes of determining the outstanding principal amount of any
particular Indebtedness Incurred pursuant to this Section 4.03:
(i) Indebtedness Incurred pursuant to the Credit Agreement prior to or
on the Closing Date shall be treated as Incurred pursuant to Section
4.03(b)(i);
(ii) Indebtedness permitted by this Section 4.03 need not be permitted
solely by reference to one provision permitting such Indebtedness but may
be permitted in part by one such provision and in part by one or more other
provisions of this Section 4.03 permitting such Indebtedness; and
(iii) in the event that Indebtedness meets the criteria of more than
one of the types of Indebtedness described in this Section 4.03, the
Parent, in its sole discretion, may classify and from time to time
reclassify such Indebtedness and only be required to include the amount of
such Indebtedness in one of such clauses as so classified or reclassified.
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SECTION 4.04 Limitation on Restricted Payments. (a) The Parent will not,
and will not permit any Restricted Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend, make any distribution on or in
respect of its Capital Stock or make any similar payment (including any
payment in connection with any merger or consolidation involving the
Parent, or any Subsidiary of the Parent) to the direct or indirect holders
of its Capital Stock, except (x) dividends or distributions payable solely
in its Capital Stock (other than Disqualified Stock) and (y) dividends or
distributions payable to the Parent or a Restricted Subsidiary (and, if
such Restricted Subsidiary has holders of its Capital Stock other than the
Parent or other Restricted Subsidiaries, to such holders on a pro rata
basis);
(ii) purchase, repurchase, redeem, retire or otherwise acquire for
value any Capital Stock of the Parent or any Restricted Subsidiary held by
Persons other than the Parent or a Restricted Subsidiary;
(iii) purchase, repurchase, redeem, retire, defease or otherwise
acquire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations (other than
the purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value of Subordinated Obligations acquired in anticipation
of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition); or
(iv) make any Investment (other than a Permitted Investment) in any
Person,
(any such dividend, distribution, payment, purchase, redemption, repurchase,
defeasance, retirement, or other acquisition or Investment being herein referred
to as a "Restricted Payment") if at the time the Parent or such Restricted
Subsidiary makes such Restricted Payment:
(1) a Default will have occurred and be continuing (or would
result therefrom);
(2) after giving effect to the proposed Restricted Payment on a
pro forma basis, the Parent could not Incur at least $1.00 of
additional Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Closing Date
would exceed the sum, without duplication, of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from January 1, 2008 to
the end of the most recent fiscal quarter ending prior to the
date of such Restricted Payment for which financial information
is publicly available (or, in case such Consolidated Net Income
will be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Parent
or the Company from the issue or sale of its Capital Stock (other
than Disqualified Stock or in respect of Excluded Contributions)
subsequent to the Closing Date (other than an issuance or sale to
(x) a Restricted Subsidiary of the Parent or (y) an employee
stock ownership plan or other trust established by the Parent or
any of its Restricted Subsidiaries);
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(C) the amount by which Indebtedness of the Parent or the
Restricted Subsidiaries is reduced on the Parent's Consolidated
balance sheet upon the conversion or exchange (other than by a
Restricted Subsidiary of the Parent) subsequent to the Closing
Date of any Indebtedness of the Parent or the Restricted
Subsidiaries issued after the Closing Date which is convertible
or exchangeable for Capital Stock (other than Disqualified Stock)
of the Parent (less the amount of any cash or the Fair Market
Value of other property distributed by the Parent or any
Restricted Subsidiary upon such conversion or exchange);
(D) the amount equal to the net reduction in Investments
(other than Permitted Investments) resulting from (x) payments of
dividends, repayments of the principal of loans or advances or
other transfers of assets to the Parent or any Restricted
Subsidiary in respect of such Investments or (y) the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition
of "Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the
Parent or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the
amount of Restricted Payments;
(E) 100% of any cash dividends and other cash distributions
received by the Parent, the Company and any Restricted Subsidiary
from an Unrestricted Subsidiary subsequent to March 31, 2008, to
the extent not included in Consolidated Net Income pursuant to
Section 4.04(a)(3)(A) or taken into account pursuant to Section
4.04(a)(3)(D); and
(F) $300 million.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, repurchase, redemption, retirement or other
acquisition for value of any Subordinated Obligations, or any Capital Stock
of the Parent made by exchange for, or out of the proceeds of the
substantially concurrent sale or issuance of, Capital Stock of the Parent
(other than Disqualified Stock and other than Capital Stock issued or sold
to a Restricted Subsidiary of the Parent or an employee stock ownership
plan or other trust established by the Parent or any of its Subsidiaries);
provided, however, that:
(1) such purchase, repurchase, redemption, retirement or other
acquisition for value will be excluded in the calculation of the
amount of Restricted Payments, and
(2) the Net Cash Proceeds from such sale applied in the manner
set forth in this clause (i) will be excluded from the calculation of
amounts under Section 4.04(a)(3)(B);
(ii) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of any Subordinated
Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Subordinated Obligations that are
permitted to be Incurred pursuant to Section 4.03; provided, however, that
such prepayment, repayment, purchase, repurchase, redemption, retirement,
defeasance or other acquisition for value will be excluded in the
calculation of the amount of Restricted Payments;
(iii) any prepayment, repayment, any purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of Subordinated
Obligations from Net Available Cash to the extent permitted by Section
4.06; provided, however, that such prepayment, repayment,
27
purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value will be excluded in the calculation of the amount of
Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividends would have complied
with this Section 4.04; provided, however, that such dividends will be
included in the calculation of the amount of Restricted Payments;
(v) (1) dividends paid by the Parent with respect to outstanding
shares of its Preferred Stock outstanding on the Closing Date in amounts
each year which do not exceed $20 million; provided, however, that such
dividends will be included in the calculation of the amount of Restricted
Payments; and (2) dividends payable on Disqualified Stock Incurred in
accordance with the terms of this Indenture and which are included as
interest expense in the calculation of Consolidated Interest Expense;
provided, however, that such dividends will be exluded in the calculation
of the amount of Restricted Payments;
(vi) Investments that are made with Excluded Contributions; provided,
however, that such Investments will be excluded in the calculation of the
amount of Restricted Payments; or
(vii) any purchase, repurchase, redemption, retirement or other
acquisition for value of shares of, or options to purchase shares of,
common stock of the Parent or any of its Subsidiaries from employees,
former employees, directors or former directors of the Parent or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors) pursuant to the terms of agreements
(including employment agreements) or plans (or amendments thereto) approved
by the Board of Directors under which such individuals purchase or sell, or
are granted the option to purchase or sell, shares of such common stock;
provided, however, that the aggregate amount of such purchases,
repurchases, redemptions, retirements and other acquisitions for value as
of any date shall not exceed the amount obtained by multiplying the number
of 12 month periods from and after the Closing Date by $10 million (with a
proration for any period of less than 12 months); and provided further,
however, that such purchases, repurchases, redemptions, retirements and
other acquisitions for value shall be excluded in the calculation of the
amount of Restricted Payments.
(c) Any amount referred to in this Section 4.04 which is not cash shall be
valued in good faith by a responsible financial or accounting officer of the
Company or the Parent if less than $25 million and by the Board of Directors if
$25 million or more.
SECTION 4.05 Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Parent will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(a) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to the Parent or any
Restricted Subsidiary;
(b) make any loans or advances to the Parent or any Restricted
Subsidiary; or
(c) transfer any of its property or assets to the Parent or any
Restricted Subsidiary, except:
(i) any encumbrance or restriction pursuant to applicable law or
an agreement in effect at or entered into on the Closing Date;
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(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Parent or another Restricted
Subsidiary (other than Indebtedness Incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or
credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was otherwise acquired by the
Parent) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this Section 4.05(c) or
this clause (iii) or contained in any amendment to an agreement
referred to in clause (i) or (ii) of this Section 4.05(c) or this
clause (iii); provided, however, that the encumbrances and
restrictions contained in any such Refinancing agreement or amendment
are no less favorable to the Holders than the encumbrances and
restrictions contained in such predecessor agreements;
(iv) in the case of this clause (c), any encumbrance or
restriction
(A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject
to a lease, license or similar contract, or
(B) contained in security agreements securing Indebtedness
of a Restricted Subsidiary to the extent such encumbrance or
restriction restricts the transfer of the property subject to
such security agreements; and
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition.
SECTION 4.06 Limitation on Sales of Assets and Capital Stock. (a) The
Parent will not, and will not permit any Restricted Subsidiary to, make any
Asset Disposition unless:
(i) the Parent or any Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the Fair Market Value of the
shares and assets subject to such Asset Disposition;
(ii) at least 75% of the consideration thereof received by the Parent
or any Restricted Subsidiary is in the form of cash; and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Parent (or any Restricted Subsidiary):
(1) first, to the extent the Company elects (or is required by
the terms of any Indebtedness) to prepay, repay, purchase, repurchase,
redeem, retire, defease or otherwise acquire for value Indebtedness
outstanding under the Credit Agreement within 360 days after the later
of the date of such Asset Disposition or the receipt of such Net
Available Cash;
29
(2) second, to the extent of the balance of Net Available Cash
after application in accordance with clause (1), to the extent the
Parent or any Restricted Subsidiary elects, to reinvest in Additional
Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Parent
or another Restricted Subsidiary) within 360 days from the later of
such Asset Disposition or the receipt of such Net Available Cash;
(3) third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (1) and (2), to make
an Offer as defined in Section 4.06(b) to purchase Securities pursuant
to and subject to the conditions set forth in Section 4.06(b);
provided, however, that if the Parent or the Company elects (or is
required by the terms of any other Senior Indebtedness), such Offer
may be made ratably to purchase the Securities and other Senior
Indebtedness of the Parent, the Company or any Note Guarantor; and
(4) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (1), (2) and (3),
for any general corporate purpose permitted by the terms of this
Indenture;
provided, however, that in connection with any prepayment, repayment, purchase,
repurchase, redemption, retirement, defeasance or other acquisition for value of
Indebtedness pursuant to clause (1) or (3) above, the Parent or such Restricted
Subsidiary will retire such Indebtedness and will cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid, purchased, repurchased, redeemed, retired,
defeased or otherwise acquired for value.
Notwithstanding the foregoing provisions of this Section 4.06(a), the
Parent and the Restricted Subsidiaries will not be required to apply any Net
Available Cash in accordance with this Section 4.06(a) except to the extent that
the aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 4.06(a) exceeds $50 million.
For the purposes of this Section 4.06(a), the following are deemed to be
cash: (A) the assumption of Indebtedness of the Parent or any Restricted
Subsidiary (other than any Preferred Stock, including Disqualified Stock,
constituting Indebtedness) and the release of the Parent or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition, and (B) securities received by the Parent or any Restricted
Subsidiary from the transferee that are promptly converted by the Parent or such
Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Indebtedness) pursuant to Section 4.06(a)(iii)(3),
the Parent or the Company will be required (i) to purchase Securities tendered
pursuant to an offer by the Company for the Securities (the "Offer") at a
purchase price of 100% of their principal amount plus accrued and unpaid
interest thereon, if any, to the date of purchase (subject to the right of
Holders of record on the relevant date to receive interest due on the relevant
interest payment date) in accordance with the procedures (including prorating in
the event of oversubscription) set forth in Section 4.06(c) and (ii) to purchase
other Senior Indebtedness of the Parent, the Company or any Note Guarantor on
the terms and to the extent contemplated thereby (provided that in no event
shall the Parent or the Company offer to purchase such other Senior Indebtedness
at a purchase price in excess of 100% of its principal amount, plus accrued and
unpaid interest thereon). If the aggregate purchase price of Securities (and
other Senior Indebtedness) tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase of the Securities (and other Senior
Indebtedness), the Parent or the Company will apply the remaining Net Available
Cash in accordance with Section 4.06(a)(iii)(4). The Parent and the Company will
not be required to make an Offer for Securities (and other Senior Indebtedness)
pursuant to this Section 4.06 if the Net Available Cash
30
available therefor (after application of the proceeds as provided in clauses (1)
and (2) of Section 4.06(a)(iii)) is less than $25 million in the aggregate for
all Asset Dispositions after the Closing Date.
(c) (i) Promptly, and in any event within 10 days after the Parent or
the Company becomes obligated to make an Offer, the Parent or the Company
shall be obligated to deliver to the Trustee and send, by first-class mail
to each Holder, a written notice stating that the Holder may elect to have
his Securities purchased by the Parent or the Company either in whole or in
part (subject to prorating as hereinafter described in the event the Offer
is oversubscribed) in integral multiples of $1,000 of principal amount, at
the applicable purchase price. The notice shall specify a purchase date not
less than 30 days nor more than 60 days after the date of such notice (the
"Purchase Date") and shall contain or incorporate by reference such
information concerning the business of the Parent and the Company as the
Parent and the Company in good faith believe will enable such Holders to
make an informed decision (which at a minimum shall include (1) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Parent, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the
Parent filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (2) a description of
material developments in the Parent's business subsequent to the date of
the latest of such reports, and (3) if material, appropriate pro forma
financial information) and all instructions and materials necessary to
tender Securities pursuant to the Offer, together with the address referred
to in clause (iii).
(ii) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Parent shall deliver to the
Trustee an Officers' Certificate as to (1) the amount of the Offer (the
"Offer Amount"), (2) the allocation of the Net Available Cash from the
Asset Dispositions pursuant to which such Offer is being made and (3) the
compliance of such allocation with the provisions of Section 4.06(a). On or
prior to the purchase date, the Parent or the Company shall irrevocably
deposit with the Trustee or with a paying agent (or, if the Parent or the
Company is acting as its own paying agent, segregate and hold in trust) an
amount equal to the Offer Amount to be invested in Temporary Cash
Investments according to the directions of the Company and to be held for
payment in accordance with the provisions of this Section. Upon the
expiration of the period for which the Offer remains open (the "Offer
Period"), the Parent or the Company shall deliver to the Trustee for
cancellation the Securities or portions thereof that have been properly
tendered to and are to be accepted by the Parent or the Company. The
Trustee (or the Paying Agent, if not the Trustee) shall, on the date of
purchase, mail or deliver payment to each tendering Holder in the amount of
the purchase price. In the event that the Offer Amount delivered by the
Parent or the Company to the Trustee is greater than the purchase price of
the Securities tendered, the Trustee shall deliver the excess to the Parent
or the Company, as applicable, immediately after the expiration of the
Offer Period for application in accordance with this Section 4.06.
(iii) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Parent or the Company, as applicable, at the address specified in the
notice at least three Business Days prior to the Purchase Date. Holders
shall be entitled to withdraw their election if the Trustee or the Parent
or the Company, as applicable, receives not later than one Business Day
prior to the Purchase Date a telegram, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
which was delivered by the Holder for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased. If at
the expiration of the Offer Period the aggregate principal amount of
Securities included in the Offer surrendered by Holders thereof exceeds the
Offer Amount, the Parent or the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Parent or the Company so that only Securities in
denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered.
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(iv) At the time the Parent or the Company delivers to the Trustee
Securities which are to be accepted for purchase, the Parent shall also
deliver an Officers' Certificate stating that such Securities are to be
accepted by the Parent or the Company pursuant to and in accordance with
the terms of this Section. A Security shall be deemed to have been accepted
for purchase at the time the Trustee, directly or through an agent, mails
or delivers payment therefor to the surrendering Holder.
(v) The Parent and the Company will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 4.06. To the extent that the provisions
of any securities laws or regulations conflict with provisions of this
Section 4.06, the Parent and the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached
their obligations under this Section 4.06 by virtue thereof.
SECTION 4.07 Limitation on Transactions with Affiliates. (a) The Parent
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, enter into or conduct any transaction or series of related
transactions with any Affiliate of the Parent, including the Incurrence of
Indebtedness by the Parent or any Restricted Subsidiary owing to any such
Affiliate which is permitted to be Incurred pursuant to Section 4.03 (a
"Borrowing from an Affiliate"), and including the purchase, sale, lease or
exchange of any property or the rendering of any service (together with a
Borrowing from an Affiliate, an "Affiliate Transaction") unless such transaction
is on terms:
(i) that are no less favorable to the Parent or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate, as determined by a responsible financial or accounting
Officer of the Parent,
(ii) that, in the event such Affiliate Transaction, other than a
Borrowing from an Affiliate, involves an aggregate amount in excess of $25
million, or in the event a Borrowing from an Affiliate involves an
aggregate amount in excess of $100 million,
(1) are set forth in writing, and
(2) have been approved by a majority of the members of the Board
of Directors having no personal stake in such Affiliate Transaction,
and
(iii) that, in the event such Affiliate Transaction other than a
Borrowing from an Affiliate involves an amount in excess of $100 million,
have been determined by a nationally recognized appraisal or investment
banking firm to be fair, from a financial standpoint, to the Parent and its
Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) will not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to Section
4.04;
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors;
(iii) the grant of stock options or similar rights to employees and
directors of the Parent pursuant to plans approved by the Board of
Directors;
32
(iv) loans or advances to employees in the ordinary course of business
in accordance with past practices of the Parent, but in any event not to
exceed $5.0 million in the aggregate outstanding at any one time;
(v) Stock Purchase Loans, but in any event not to exceed $3.0 million
in the aggregate outstanding at any one time;
(vi) the payment of reasonable fees to directors of the Parent and its
Subsidiaries who are not employees of the Parent or its Subsidiaries;
(vii) any transaction between the Parent and a Wholly Owned Restricted
Subsidiary or between Wholly Owned Restricted Subsidiaries;
(viii) Permitted Property Swaps; or
(ix) any lease of locomotives or rolling stock, and any transaction
relating to the provision of transportation or transportation-related
services, between the Company or any Restricted Subsidiaries on the one
hand and KCSM or any of its Affiliates on the other hand, if such lease or
transaction meets the requirements of Section 4.07(a)(i), as determined in
good faith by a responsible financial or accounting officer of the Parent.
SECTION 4.08 Change of Control. (a) Upon a Change of Control, each Holder
will have the right to require the Company to purchase all or any part of such
Holder's Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest thereon to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), in accordance with
the terms contemplated in Section 4.08(b); provided, however, that
notwithstanding the occurrence of a Change of Control, the Company shall not be
obligated to purchase the Securities pursuant to this Section 4.08 in the event
that it has exercised its right to redeem all the Securities under paragraph 5
of the Securities.
(b) Within 30 days following any Change of Control (except as provided in
the proviso to the first sentence of Section 4.08(a)), the Company shall mail a
notice to each Holder with a copy to the Trustee (the "Change of Control Offer")
stating:
(i) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase all or a portion of such Holder's
Securities at a purchase price in cash equal to 101 % of the principal
amount thereof, plus accrued and unpaid interest thereon to the date of
purchase (subject to the right of Holders of record on the relevant record
date to receive interest on the relevant interest payment date);
(ii) the circumstances and relevant facts and financial information
regarding such Change of Control;
(iii) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent with this
Section 4.08, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company,
at the address specified in the notice, at least three Business Days prior to
the purchase date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives, not later than one Business Day prior to the
purchase date, a
33
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing his election to have
such Security purchased. Holders whose Securities are purchased only in part
shall be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
(d) On the purchase date, all Securities purchased by the Company under
this Section shall be delivered to the Trustee for cancellation, and the Company
shall pay the purchase price plus accrued and unpaid interest to the Holders
entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the Company
will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times,
and otherwise in compliance with the requirements set forth in Section 4.08(b)
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) At the time the Company delivers Securities to the Trustee which are to
be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.08. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(g) Prior to any Change of Control Offer, the Company shall deliver to the
Trustee an Officers' Certificate stating that all conditions precedent contained
herein to the right of the Company to make such offer have been complied with.
(h) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.08 by virtue
thereof.
SECTION 4.09 Compliance Certificate. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signers of which shall be the principal
executive, principal accounting or principal financial officer of the Company
stating that in the course of the performance by the signers of their duties as
Officers of the Company they would normally have knowledge of any Default and
whether or not the signers know of any Default that occurred during such period.
If they do, the certificate shall describe the Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10 Future Note Guarantors. The Parent will cause (i) at any time
that the Credit Agreement is in effect, each Subsidiary of the Parent (other
than the Company, KCS Holdings I, Inc., KCS Ventures I, Inc., The Kansas City
Northern Railway Company and Veals, Inc.) that enters into a Guarantee of any
Indebtedness that may be Incurred under the Credit Agreement and (ii) at any
time that the Credit Agreement is not in effect, each domestic Restricted
Subsidiary of the Parent (other than the Company, KCS Holdings I, Inc., KCS
Ventures I, Inc., The Kansas City Northern Railway Company and Veals, Inc.) that
enters into a Guarantee of any other obligations of the Parent or any of its
domestic Subsidiaries, to execute and deliver to the Trustee a supplemental
indenture substantially in the form of Exhibit B pursuant to which such
Subsidiary will Guarantee payment of the Securities. Each Note Guarantee will be
limited to an amount not to exceed the maximum amount that can be Guaranteed by
that Note Guarantor without rendering the Note Guarantee, as it relates to such
Note Gurantor,
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voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, or similar laws affecting the rights of creditors generally.
SECTION 4.11 [Intentionally Omitted]
SECTION 4.12 Further Instruments and Acts. Upon request of the Trustee, the
Company shall execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
SECTION 4.13 Limitation on Liens. The Parent will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist
any Lien of any nature whatsoever on any of its property or assets (including
Capital Stock of a Restricted Subsidiary), whether owned at the Closing Date or
thereafter acquired, other than Permitted Liens, without effectively providing
that the Securities shall be secured equally and ratably with (or prior to) the
obligations so secured for so long as such obligations are so secured; provided,
however, that the Parent and any Restricted Subsidiary may Incur other Liens to
secure Indebtedness as long as the amount of outstanding Indebtedness secured by
Liens Incurred pursuant to this proviso does not exceed the greater of $100
million or 5% of Consolidated Net Tangible Assets, as determined based on the
Consolidated balance sheet of the Parent as of the end of the most recent fiscal
quarter prior to such Incurrence for which financial information is publicly
available.
SECTION 4.14 Limitation on Sale/Leaseback Transactions. The Parent will
not, and will not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless:
(a) the Parent or such Restricted Subsidiary would be entitled to Incur
Indebtedness in an amount equal to the Attributable Debt with respect to such
Sale/Leaseback Transaction pursuant to Section 4.03; and
(b) the net proceeds received by the Parent or such Restricted Subsidiary
in connection with such Sale/Leaseback Transaction are at least equal to the
Fair Market Value of such property; and
(c) the transfer of such property is permitted by, and the Parent applies
the proceeds of such transaction in compliance with, Section 4.06.
SECTION 4.15 Covenant Termination. From and after any time that (a) the
Securities have an Investment Grade Rating from both of the Rating Agencies and
(b) no Default or Event of Default has occurred and is continuing under this
Indenture, the Parent and the Restricted Subsidiaries will not be subject to the
following provisions of the Indenture: Sections 4.03, 4.04, 4.05, 4.06, 4.07,
4.14 and 5.01(a)(iii). The Parent shall provide prompt written notice to the
Trustee of any such change in the ratings of the Securities by the Ratings
Agencies. The Trustee shall not be required to notify the Holders of any such
changes.
ARTICLE 5
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets. (a) Neither the
Company nor any Note Guarantor will consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to, any Person,
unless:
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(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation, partnership or limited liability company
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia (or in the case of a Note
Guarantor, a corporation, partnership or limited liability company
organized and existing under the laws of the jurisdiction under which such
Note Guarantor was organized) and the Successor Company (if not the Company
or a Note Guarantor) shall expressly assume, by a supplemental indenture
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company or such Note Guarantor, as the
case may be, under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company, the
Parent or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company, the Parent or such
Restricted Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the Parent
(or the Successor Company to the Parent, as applicable) would be able to
Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a);
(iv) the Parent shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; and
(v) the Parent shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such transaction
and will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
transaction had not occurred.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of the Company or Note Guarantro, as the case may
be, under the Indenture, but the predecessor in the case of a conveyance,
transfer or lease of all or substantially all of its assets will not be released
from the obligation to pay the principal of and interest on the Securities.
(b) Notwithstanding the foregoing, (i) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or any Note Guarantor; (ii) any Restricted Subsidiary that
is not a Note Guarantor may consolidate with, merge into or transfer all or part
of its properties and assets to any other Restricted Subsidiary that is not a
Note Guarantor; and (iii) the Parent or the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Parent or the
Company, as the case may be, in another jurisdiction to realize tax or other
benefits.
ARTICLE 6
Defaults and Remedies
SECTION 6.01 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in any payment of interest on any Security when
the same becomes due and payable, and such default continues for a period of 30
days;
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(b) the Company defaults in the payment of the principal of any Security
when the same becomes due and payable at its Stated Maturity, upon required
redemption or repurchase, upon declaration or otherwise;
(c) the Parent or any Restricted Subsidiary fails to comply with Section
5.01 or Section 4.08;
(d) the Parent or any Restricted Subsidiary fails to comply with any of its
covenants (other than those contained in Section 5.01 or 4.08) contained in the
Securities or this Indenture (other than a failure to purchase Securities) and
such failure continues for 60 days after the notice specified below;
(e) Indebtedness of the Parent or any Significant Subsidiary is not paid
within any applicable grace period after final maturity or the acceleration by
the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $50 million or its foreign currency
equivalent and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration;
(f) the Parent, the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case;
(iii) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(iv) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(g) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Parent, the Company or any Significant
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Parent, the Company or any
Significant Subsidiary or for any substantial part of its property; or
(iii) orders the winding up or liquidation of the Parent, the Company
or any Significant Subsidiary;
or any similar relief is granted under any foreign laws; and the order or decree
remains unstayed and in effect for 60 days;
(h) any final judgment or decree for the payment of money in excess of $50
million or its foreign currency equivalent (after deducting any amount of the
final judgment or decree that may be covered under any insurance policies of the
Parent or Subsidiary) is rendered against the Parent or any Significant
Subsidiary and either (i) an enforcement proceeding has been commenced by any
creditor upon such judgment or
37
decree or (ii) there is a period of 60 days following the entry of such judgment
or decree during which such judgment or decree is not discharged, waived or the
execution thereof stayed, provided a stay of enforcement of such final judgment
or order by reason of a pending appeal or otherwise shall not be in effect at
the end of such 60 day period; or
(i) any Note Guarantee ceases to be in full force and effect (except
as contemplated by the terms hereof) or any Note Guarantor or Person acting
by or on behalf of such Note Guarantor denies or disaffirms such Note
Guarantor's obligations under this Indenture or any Note Guarantee and such
Default continues for 10 days after receipt of the notice specified below.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A default under clauses (d) or (i) will not constitute an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
principal amount of the outstanding Securities notify the Company and the
Trustee of the Default and the Company or the Note Guarantor, as applicable,
does not cure such Default within the time specified in clauses (d) or (i)
hereof after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which is, or with the giving of notice or the lapse of time or both
would become, an Event of Default, its status and what action the Company is
taking or proposes to take with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(f) or (g) with respect to the Parent or the
Company) occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities, by notice to the Company, may
declare the principal of and accrued but unpaid interest on all the Securities
to be due and payable. Upon such a declaration, such principal and interest will
be due and payable immediately. In the event a declaration of acceleration
because an Event of Default set forth in Section 6.01(e) has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to Section 6.01(e) shall be remedied or cured by the Parent or its Significant
Subsidiary or waived by the holders of the Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in Section 6.01(f) or (g) with respect to the Parent or the Company
occurs, the principal of and interest on all the Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders. The Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may
rescind any such acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
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The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of the
principal of or interest on a Security, (b) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (c) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05 Control by Majority. The Holders of a majority in principal
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other Holders
or would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 6.06 Limitation on Suits. (a) Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no Holder
may pursue any remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(ii) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer to the Trustee security or
indemnity satisfactory to it in its reasonable discretion against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(v) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
(b) A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed or provided for in the Securities, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
39
SECTION 6.08 Collection Suit by Trustee. If an Event of Default specified
in Section 6.01 (a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount then due and owing
(together with interest on overdue principal and (to the extent lawful) on any
unpaid interest at the rate provided for in the Securities) and the amounts
provided for in Section 7.07.
SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Holders allowed in any
judicial proceedings relative to the Company, any Subsidiary or Note Guarantor,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10 Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, and without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section. At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and the amount to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a suit by
the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12 Waiver of Stay or Extension Laws. Neither the Company nor any
Note Guarantor (to the extent it may lawfully do so) shall at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company and each Note Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE 7
Trustee
40
SECTION 7.01 Duties of Trustee. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 7.02 Rights of Trustee. (a) In the absence of bad faith, the
Trustee may conclusively rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
41
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at the
time outstanding, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
(g) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder and each agent, custodian and other Person employed to act hereunder.
(h) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture.
SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent or Registrar may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture,
any Note Guarantee or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company or any Note Guarantor in this
Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication. Delivery of reports, information and documents to the Trustee
under Article 4 is for informational purposes only and the Trustee's receipt of
the foregoing shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely conclusively on Officers' Certificates). Except with
respect to Sections 4.01, 4.02 and 4.09, the Trustee shall have no duty to
inquire as to the performance of the Company with respect to the covenants
contained in Article Four. The Trustee shall not be charged with
42
knowledge of any Default or Event of Default other than under Section 6.01 (a)
or (b) or of the identity of any Significant Subsidiary unless either (a) a
Trust Officer shall have actual knowledge thereof or (b) the Trustee shall have
received notice thereof in accordance with Section 11.02 hereof from the
Company, any Note Guarantor or any Holder.
SECTION 7.05 Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder notice of
the Default within the earlier of 90 days after it occurs or 30 days after it is
known to a Trust Officer or written notice is received by the Trustee. Except in
the case of a Default in payment of principal of, premium (if any) or interest
on any Security (including payments pursuant to the redemption provisions of
such Security), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Holders.
SECTION 7.06 Reports by Trustee to Holders. As promptly as practicable
after each May 15 beginning with the May 15 following the Issue Date, and in any
event prior to July 15 in each year, the Trustee shall mail to each Holder a
brief report dated as of such May 15 that complies with Section 313(a) of the
TIA if and to the extent required thereby. The Trustee shall also comply with
Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange (if any) on which the Securities are
listed. The Company agrees to promptly notify the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time such compensation as the Company and the Trustee shall
from time to time agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company and each Note
Guarantor, jointly and severally, shall indemnify the Trustee against any and
all loss, liability, damage, claim or expense (including reasonable attorneys'
fees and expenses) incurred by or in connection with the acceptance or
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Company of any claim for which it may seek indemnity
promptly upon obtaining actual knowledge thereof; provided, however, that any
failure to so notify the Company shall not relieve the Company or any Note
Guarantor of its indemnity obligations hereunder. The Company shall defend the
claim and the indemnified party shall provide reasonable cooperation at the
Company's expense in the defense. Such indemnified parties may have separate
counsel and the Company and the Note Guarantors, as applicable, shall pay the
fees and expenses of such counsel; provided, however, that the Company shall not
be required to pay such fees and expenses if it assumes such indemnified
parties' defense and, in such indemnified parties' reasonable judgment, there is
no conflict of interest between the Company and the Note Guarantors, as
applicable, and such parties in connection with such defense. The Company need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by an indemnified party through such party's own willful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall survive
the satisfaction or discharge of this Indenture, any rejection or termination of
this Indenture under any bankruptcy law or the resignation or removal of the
Trustee. Without prejudice to any other rights
43
available to the Trustee under applicable law, when the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(f) or (g) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. (a) The Trustee may resign at any time
by so notifying the Company. The Holders of a majority in principal amount of
the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
(c) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
(d) If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may, at the expense of the Company,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(e) If the Trustee fails to comply with Section 7.10, unless the Trustee's
duty to resign is stayed as provided in Section 310(b) of the TIA, any Holder
who has been a bona fide holder of a Security for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(f) Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the
44
successor to the Trustee; and in all such cases such certificates 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.
SECTION 7. 10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the TIA, subject to its right to apply for a stay of its duty
to resign under the penultimate paragraph of Section 310(b) of the TIA;
provided, however, that there shall be excluded from the operation of Section
310(b)(1) of the TIA any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in Section
310(b)(1) of the TIA are met.
SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee
shall comply with Section 311(a) of the TIA, excluding any creditor relationship
listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed
shall be subject to Section 311(a) of the TIA to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance. (a) When (i)
all outstanding Securities (other than Securities replaced or paid pursuant to
Section 2.08) have been cancelled or delivered to the Trustee for cancellation
or (ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant to
Article 3 hereof, and the Company irrevocably deposits with the Trustee funds in
an amount sufficient, or U.S. Government Obligations, the principal of and
interest on which will be sufficient, or a combination thereof sufficient, in
the written opinion of a nationally recognized firm of independent public
accountants delivered to the Trustee (which delivery shall only be required if
U.S. Government Obligations have been so deposited), to pay the principal of and
interest on the outstanding Securities when due at maturity or upon redemption
of such Securities, including interest thereon to maturity or such redemption
date (other than Securities replaced or paid pursuant to Section 2.08) and if in
either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Section 8.01(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Parent and the Company at any
time may terminate (i) all of their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.03, 4.04, 4.05, 4.06, 4.07, 4.10, 4.12, 4.13 and 4.14; and the operation of
Sections 6.01(d), 6.01 (e), 6.01 (f), 6.01 (g) and 6.01(h), in each case, with
respect only to Significant Subsidiaries, and Section 6.01(i) and the operations
of Section 5.01(a)(iii) ("covenant defeasance option"). The Parent and the
Company may exercise their legal defeasance option notwithstanding their prior
exercise of their covenant defeasance option. In the event that the Parent and
the Company terminate all of their obligations under the Securities and this
Indenture by exercising their legal defeasance option, the obligations under the
Note Guarantees shall each be terminated simultaneously with the termination of
such obligations.
If the Parent and the Company exercise their legal defeasance option,
payment of the Securities may not be accelerated because of an Event of Default.
If the Parent and the Company exercise their covenant defeasance option, payment
of the Securities may not be accelerated because of an Event of Default
specified in Section 6.01(d); Sections 6.01(e), 6.01(f) or 6.01(g) (with respect
only to
45
Significant Subsidiaries); or 6.01(h) or because of the failure of the Company
to comply with clause (iii) of Section 5.01(a).
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07 and 7.08 and in this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive.
SECTION 8.02 Conditions to Defeasance. (a) The Parent and the Company may
exercise their legal defeasance option or their covenant defeasance option only
if:
(i) the Parent and the Company irrevocably deposit in trust with the
Trustee money in an amount sufficient, or U.S. Government Obligations, the
principal of and interest on which will be sufficient, or a combination
thereof sufficient, to pay the principal of, and premium (if any) and
interest on, the Securities when due at maturity or redemption, as the case
may be, including interest thereon to maturity or such redemption date;
(ii) the Parent and the Company deliver to the Trustee a certificate
from a nationally recognized firm of independent accountants expressing
their opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal, premium, if any, and
interest if any, when due on all the Securities to maturity or redemption,
as the case may be;
(iii) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(f) or (g) with respect to the
Company occurs which is continuing at the end of the period;
(iv) the deposit does not constitute a default under any other
agreement binding on the Company;
(v) the Parent and the Company deliver to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940;
(vi) in the case of the legal defeasance option, the Parent and the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (1) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (2) since the date of this Indenture
there has been a change in the applicable U.S. federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such deposit and defeasance
and will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the Parent and
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and
will be subject to U.S. federal income tax on the same amounts, in the same
46
manner and at the same times as would have been the case if such deposit
and defeasance had not occurred; and
(viii) the Parent and the Company deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as contemplated
by this Article 8 have been complied with.
(b) Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03 Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04 Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any money or U.S. Government
Obligations held by it as provided in this Article which, in the written opinion
of a nationally recognized firm of independent public accountants delivered to
the Trustee (which delivery shall only be required if U.S. Government
Obligations have been so deposited), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent discharge or
defeasance in accordance with this Article.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money must look to the Company
for payment as general creditors, and the Trustee and the Paying Agent shall
have no further liability with respect to such monies.
SECTION 8.05 Indemnity for Government Obligations. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06 Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article 8
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 8 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Article 8; provided, however, that, if the Company has made any
payment of principal of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01 Without Consent of Holders. (a) The Company, the Note
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
47
(ii) to comply with Article 5;
(iii) to add additional Guarantees with respect to the Securities;
(iv) to secure the Securities;
(v) to add to the covenants of the Parent and the Restricted
Subsidiaries for the benefit of the Holders or to surrender any right or
power conferred upon the Parent or the Company;
(vi) to make any change that does not adversely affect the rights of
any Holder;
(vii) to provide for the issuance of Additional Securities, which
shall have terms substantially identical in all material respects to the
Original and which shall be treated, together with any outstanding Original
Securities, as a single issue of securities; or
(viii) to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.
(b) After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02 With Consent of Holders. (a) The Company, the Note Guarantors
and the Trustee may amend this Indenture or the Securities without notice to any
Holder but with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding (including consents obtained
in connection with a tender offer or exchange for the Securities). However,
without the consent of each Holder affected, an amendment may not:
(i) reduce the amount of Securities whose Holders must consent to an
amendment;
(ii) reduce the rate of or extend the time for payment of interest on
any Security;
(iii) reduce the principal of or extend the Stated Maturity of any
Security;
(iv) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may be redeemed;
(v) make any Security payable in money other than that stated in the
Security;
(vi) make any change in Section 6.04 or 6.07 or this sentence of
Section 9.02; or
(vii) modify the Note Guarantees in any manner adverse to the Holders.
(b) It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
(c) After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all
48
Holders, or any defect therein, shall not impair or affect the validity of an
amendment under this Section 9.02.
SECTION 9.03 Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents and Waivers. (a) A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or any portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or such portion of the Security if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officers' Certificate from the
Company certifying that the requisite number of consents have been received.
After an amendment or waiver becomes effective, it shall bind every Holder. An
amendment or waiver becomes effective upon the (i) receipt by the Company or the
Trustee of the requisite number of consents, (ii) satisfaction of conditions to
effectiveness as set forth in this Indenture and any indenture supplemental
hereto containing such amendment or waiver and (iii) execution of such amendment
or waiver (or supplemental indenture) by the Company and the Trustee.
(b) The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed then, notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05 Notation on or Exchange of Securities. If an amendment changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security regarding the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, in exchange for the Security the
Company shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment.
SECTION 9.06 Trustee to Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company and the Note
Guarantors enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03).
SECTION 9.07 Payment for Consent. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
49
ARTICLE 10
Note Guarantees
SECTION 10.01 Note Guarantees. (a) Each Note Guarantor hereby jointly and
severally irrevocably and unconditionally guarantees, as a primary obligor and
not merely as a surety, to each Holder and to the Trustee and its successors and
assigns (i) the full and punctual payment when due, whether at Stated Maturity,
by acceleration, by redemption or otherwise, of all obligations of the Company
under this Indenture (including obligations to the Trustee) and the Securities,
whether for payment of principal of or interest on in respect of the Securities
and all other monetary obligations of the Company under this Indenture and the
Securities, and (ii) the full and punctual performance within applicable grace
periods of all other obligations of the Company, whether for fees, expenses,
indemnification or otherwise, under this Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Guaranteed Obligations").
Each Note Guarantor further agrees that the Guaranteed Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
each such Note Guarantor, and that each such Note Guarantor shall remain bound
under this Article 10 notwithstanding any extension or renewal of any Guaranteed
Obligation.
(b) Each Note Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Note Guarantor waives notice of any
default under the Securities or the Guaranteed Obligations. The obligations of
each Note Guarantor hereunder shall not be affected by: (i) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (ii) any extension or renewal
thereof; (iii) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(iv) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; (v) the failure of any Holder or Trustee
to exercise any right or remedy against any other guarantor of the Guaranteed
Obligations; or (vi) any change in the ownership of such Note Guarantor, except
as provided in Section 10.02(b).
(c) Each Note Guarantor hereby waives any right to which it may be entitled
to have its obligations hereunder divided among the Note Guarantors, such that
such Note Guarantor's obligations would be less than the full amount claimed.
Each Note Guarantor hereby waives any right to which it may be entitled to have
the assets of the Company first be used and depleted as payment of the Company's
or such Note Guarantor's obligations hereunder prior to any amounts being
claimed from or paid by such Note Guarantor hereunder. Each Note Guarantor
hereby waives any right to which it may be entitled to require that the Company
be sued prior to an action being initiated against such Note Guarantor.
(d) Each Note Guarantor further agrees that its Note Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee 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
Guaranteed Obligations.
(e) Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the
obligations of each Note 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
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Note Guarantor herein shall not be discharged
or impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any
50
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification thereof, by any default,
failure or delay, willful or otherwise, in the performance of the obligations,
or by any other 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 any Note
Guarantor or would otherwise operate as a discharge of any Note Guarantor as a
matter of law or equity.
(f) Each Note Guarantor agrees that its Note Guarantee shall remain in full
force and effect until payment in full of all the Guaranteed Obligations. Each
Note Guarantor further agrees that its Note Guarantee 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 Guaranteed Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
(g) 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 any Note
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Guaranteed Obligation, each Note Guarantor
hereby promises to and shall, 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 Guaranteed
Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
obligations of the Company to the Holders and the Trustee.
(h) Each Note Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. Each Note Guarantor further agrees that, as between it, on the one
hand, and the Holders and the Trustee, on the other hand, (i) the maturity of
the Guaranteed Obligations guaranteed hereby may be accelerated as provided in
Article 6 for the purposes of any Note Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of such Guaranteed Obligations as provided in
Article 6, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Note Guarantor for the purposes of this
Section 10.01.
(i) Each Note Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section 10.01.
(j) Upon request of the Trustee, each Note Guarantor shall execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 10.02 Limitation on Liability. (a) Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Guaranteed Obligations guaranteed hereunder by any Note Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Note Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) A Note Guarantee of any Restricted Subsidiary which is a Note Guarantor
shall be released and terminated (i) upon the sale (including by means of a
merger) of all of the Capital Stock of such Note Guarantor made in compliance
with the terms of this Indenture and (2) upon any release and termination of the
Guarantee of the Indebtedness outstanding under the Credit Agreement (other than
by
51
reason of repayment and satisfaction of all of the Indebtedness outstanding
under the Credit Agreement) or any other obligations pursuant to Section
4.10(ii). At the request of the Company, the Trustee shall execute and deliver
an appropriate instrument evidencing such release (in the form provided by the
Company).
SECTION 10.03 Successors and Assigns. This Article 10 shall be binding upon
each Note 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 10.04 No Waiver. 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 10 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 or benefits which either may have under this Article 10 at law,
in equity, by statute or otherwise.
SECTION 10.05 Modification. No modification, amendment or waiver of any
provision of this Article 10, nor the consent to any departure by any Note
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, 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 any Note Guarantor in any case shall entitle such Note
Guarantor to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.06 Execution of Supplemental Indenture for Future Note
Guarantors. Each Subsidiary which is required to become a Note Guarantor
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit B hereto pursuant to which such
Subsidiary shall become a Note Guarantor under this Article 10 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Note Guarantee of such Note Guarantor
is a legal, valid and binding obligation of such Note Guarantor, enforceable
against such Note Guarantor in accordance with its terms, and/or to such other
effect as the Trustee may reasonably request.
SECTION 10.07 Non-Impairment. The failure to endorse a Note Guarantee on
any Security shall not affect or impair the validity thereof.
ARTICLE 11
Miscellaneous
SECTION 11.01 Trust Indenture Act Controls. If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "incorporated provision") included in
this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such
imposed duties or incorporated provision shall control.
SECTION 11.02 Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
52
if to the Company:
Overnight delivery address:
The Kansas City Southern Railway Company
427 West 12th Street
Kansas City, Missouri 64105
First-class mail address:
The Kansas City Southern Railway Company
P.O. Box 219335
Kansas City, Missouri 64121
Attention: Treasurer
if to the Trustee:
U.S. Bank National Association
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Attention of Corporate Trust Administration
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed, first-class
mail, to the Holder at the Holder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Holder or any defect therein
shall not affect the sufficiency thereof with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03 Communication by Holders with Other Holders. Holders may
communicate pursuant to Section 312(b) of the TIA with other Holders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of Section
312(c) of the TIA.
SECTION 11.04 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent have
been complied with.
53
SECTION 11.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture (other than pursuant to Section 4.09) shall
include:
(a) a statement that the individual 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 individual, 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 individual,
such covenant or condition has been complied with.
SECTION 11.06 When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Parent, the Company or any
Note Guarantor or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Parent, the Company or
any Note Guarantor shall be disregarded and deemed not to be outstanding, except
that, for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which (i) a
Trust Officer of the Trustee actually knows are so owned or (ii) as to which the
Trustee shall have received notice of ownership in accordance with Section 11.02
hereof shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar. The Trustee may
make reasonable rules for action by, or a meeting of, Holders. The Registrar and
the Paying Agent may make reasonable rules for their functions.
SECTION 11.08 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
any other day on which banking institutions are not required by law or
regulation to be open in the State of New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 11.10 No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Parent, the Company or any of the Note Guarantors
shall not have any liability for any obligations of the Parent, the Company or
any of the Note Guarantors under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
54
SECTION 11.11 Successors. All agreements of the Company and each Note
Guarantor in this Indenture and the Securities shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12 Multiple Originals. The parties may sign any number of copies
of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 11.13 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE KANSAS CITY SOUTHERN RAILWAY
COMPANY
By
---------------------------------------
Name:
Title:
KANSAS CITY SOUTHERN
By
---------------------------------------
Name:
Title:
GATEWAY EASTERN RAILWAY COMPANY
By
---------------------------------------
Name:
Title:
PABTEX GP, LLC
By
--------------------------------------
Name:
Title:
PABTEX, L.P.
By
---------------------------------------
Name:
Title:
SIS BULK HOLDING, INC.
By
---------------------------------------
Name:
Title:
SOUTHERN DEVELOPMENT COMPANY
By
---------------------------------------
Name:
Title:
SOUTHERN INDUSTRIAL SERVICES, INC.
By
---------------------------------------
Name:
Title:
TRANS-SERVE, INC.
By
---------------------------------------
Name:
Title:
U.S. BANK NATIONAL
ASSOCIATION, as trustee
By
---------------------------------------
Name:
Title:
APPENDIX A
PROVISIONS RELATING TO ORIGINAL SECURITIES AND ADDITIONAL SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Definitive Security" means a certificated Security that does not include
the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Global Securities Legend" means the legend set forth under that caption in
Exhibit A to this Indenture.
"Underwriters" means Morgan Stanley & Co. Incorporated, Banc of America
Securities LLC, BMO Capital Markets Corp. and Scotia Capital (USA) Inc.
"Underwriting Agreement" means (a) the Underwriting Agreement dated May 27,
2008 among the Company, the Note Guarantors and the Underwriters and (b) any
other similar Underwriting Agreement relating to Additional Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
1.2 Other Definitions
Term: Defined in Section:
"Agent Members" .........................................................2.1(c)
"Global Security" .......................................................2.1(b)
2. The Securities
2.1 Form and Dating
(a) The Original Securities. The Original Securities issued on the date
hereof will be offered and sold by the Company pursuant to the Underwriting
Agreement. Additional Securities offered after the date hereof may be offered
and sold by the Company from time to time pursuant to one or more Underwriting
Agreements in accordance with applicable law.
(b) Global Securities. Securities shall be issued on the Closing Date in
the form of one or more permanent global Securities in fully registered form
without interest coupons and bearing the Global Securities Legend (each such
Security a "Global Security"), which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee and on the schedules thereto as
hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only to a Global
Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(c) and Section 2.2 and pursuant to an order of the Company signed by
two Officers, authenticate and deliver initially one or more Global Securities
that (i) shall be registered in the name of the Depositary for such Global
Security or Global Securities or the nominee of such Depositary and (ii) shall
be delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as Securities Custodian or under such
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(d) Definitive Securities. Except as provided in Section 2.3 or 2.4, owners
of beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available for
delivery upon a written order of the Company signed by two Officers Original
Securities for original issue on the date hereof in an aggregate principal
amount of $275,000,000 and, subject to the terms of this Indenture, Additional
Securities in an unlimited amount and such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated. The aggregate principal amount of Securities
outstanding at any time is unlimited under this Indenture. Notwithstanding
anything to the contrary in this Appendix or otherwise in this Indenture, any
issuance of Additional Securities after the Closing Date shall be in a principal
amount of at least $10,000,000, whether such Additional Securities are of the
same or a different series than the Original Securities.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar with a request:
(i) to register the transfer of such Definitive Securities; or
(ii) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
(b) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall cause to be reflected on its books and records the date
and an increase in the principal amount of the Global Security to which
such interest is being transferred in an amount equal to the principal
amount of the interest to be so transferred, and the Registrar shall cause
to be reflected on its books and records the date and a corresponding
decrease in the principal amount of Global Security from which such
interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary, or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(c) Legend. (i) Each Definitive Security shall bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, 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 OF SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE FOREGOING RESTRICTIONS.
(d) Cancellation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or cancelled, such
Global Security shall be returned by the Depositary to the Trustee for
cancellation or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or cancelled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(e) Obligations with Respect to Transfers and Exchanges of Securities. (i)
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate, Definitive Securities and Global Securities
at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchanges pursuant to Sections
2.07, 3.06, 4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent and the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the tenns of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, the Depositary or any other Person with respect
to the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of any amount,
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners of any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary. The
Trustee may conclusively rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its members, its
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants or members or beneficial owners of any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depositary or with the Trustee as
Securities Custodian pursuant to Section 2.1 shall be transferred to the
beneficial owner thereof in the form of Definitive Securities in an aggregate
principal amount equal to the principal amount of such Global Security, in
exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) the Depositary notifies the Company that it is unwilling or unable
to continue as a Depositary for such Global Security or if at any time the
Depositary ceases to be a "clearing agency" registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days of
such notice or after the Company becomes aware of such cessation, or (ii) an
Event of Default has occurred and is continuing or (iii) the Company, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
(c) Subject to the provisions of Section 2.4(b), the registered Holder of a
Global Security may grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Indenture or the
Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
EXHIBIT A
[FORM OF FACE OF SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
No. $
---------
8.0% Senior Note due 2015
CUSIP No. 485188 AG1
THE KANSAS CITY SOUTHERN RAILWAY COMPANY, a Missouri corporation, promises
to pay to Cede & Co., or its registered assigns, the principal sum of Dollars
listed on the Schedule of Increases or Decreases in Global Security attached
hereto on June 1, 2015.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
The Kansas City Southern Railway Company
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U. S. Bank National Association,
as Trustee, certifies
that this is one of the
Securities referred to
in the Indenture.
By:
-------------------------
Authorized Signatory
*/ If the Security is to be issued in global form, add the Global
Securities Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO
GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
[FORM OF REVERSE SIDE OF SECURITY]
8.0% Senior Note due 2015
1. Interest
THE KANSAS CITY SOUTHERN RAILWAY COMPANY, a Missouri corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
shall pay interest semiannually on June 1 and December 1 of each year, beginning
December 1, 2008. Interest on the Securities shall accrue from the most recent
date to which interest has been paid or duly provided for or, if no interest has
been paid or duly provided for, from May 30, 2008 until the principal hereof is
due. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders at the close of business on
the May 15 and November 15 next preceding the interest payment date even if the
Securities are cancelled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, if any, and
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company or any successor depositary.
The Company will make all payments in respect of a certificated Security
(including principal, premium, if any, and interest) at the office of the Paying
Agent, except that, at the option of the Company, payment of interest may be
made by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, U.S. Bank National Association, a national banking association
(the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent or Registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Restricted Subsidiaries may act as
Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May 30,
2008 (the "Indenture") among the Company, the Note Guarantors and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Holders (as defined in the Indenture) are referred to the
Indenture and the TIA for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company unlimited in
aggregate principal amount at any one time outstanding, subject to the
conditions and in compliance with the covenants set forth in the Indenture. This
Security is one of the Securities referred to in the Indenture. The Securities
include the Original Securities and any Additional Securities issued pursuant to
the Indenture. The Original Securities and the Additional Securities are treated
as a single class of securities under the Indenture. The Indenture imposes
certain limitations on the ability of the Parent, the Company and the Parent's
Restricted Subsidiaries to, among other things, make certain Investments and
other Restricted Payments, pay dividends and other distributions, incur
Indebtedness, enter into consensual restrictions upon the payment of certain
dividends and distributions by such Restricted Subsidiaries, issue or sell
shares of capital stock of such Restricted Subsidiaries, enter into or permit
certain transactions with Affiliates, create or incur Liens and make Asset
Sales. The Indenture also imposes limitations on the ability of the Parent, the
Company and each Note Guarantor to consolidate or merge with or into any other
Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest, if
any, on the Securities and all other amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Note Guarantors have, jointly and severally,
unconditionally guaranteed the Guaranteed Obligations on a senior basis pursuant
to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph, the Company may not redeem the
Securities. The Securities will be redeemable, at the option of the Company, in
whole at any time or in part from time to time, before June 1, 2012, at a
redemption price equal to the greater of (1) 101% of the principal amount of the
Securities to be redeemed or (2) the sum of the present values of the remaining
scheduled payments of principal and interest on the Securities to be redeemed
(not including the portion of any payments of interest accrued to the redemption
date) discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate
(determined on the third business day preceding the redemption date), plus, in
each case, accrued and unpaid interest thereon to the redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date, plus .50%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Company's choice of Morgan Stanley & Co. Incorporated or Banc of
America Securities LLC, and its successors, or, if such firm is unwilling or
unable to select the applicable Comparable Treasury Issue,
another Reference Treasury Dealer, as having a maturity comparable to the
remaining term of the notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such notes.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of the Reference Treasury Dealer Quotations (as defined below) for that
redemption date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co. Incorporated
and Banc of America Securities LLC, and their respective successors, and three
other primary U.S. government securities dealers in New York City selected by
the Company (each, a "Primary Treasury Dealer"); provided however, that if any
of the foregoing shall cease to be a Primary Treasury Dealer or is no longer
quoting prices for United States Treasury securities, the Company will
substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by that Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third business day preceding the redemption date.
The Company may also redeem some or all of the Securities on or after June
1, 2012, at the following redemption prices (expressed as percentages of the
principal amount thereof) if redeemed in the 12-month period commencing on June
1 of the year set forth below, plus, in each case, accrued and unpaid interest,
if any, to the date of redemption (subject to the right of holders of record on
a record date to receive interest due on an interest payment date that is on or
prior to such date of redemption):
Year Percentage
---- ----------
2012................................................ 104.000%
2013................................................ 102.000%
2014 and thereafter................................. 100.000%
In addition, at any time prior to June 1, 2011, the Company may, on or more
occasion, redeem up to a maximum of 35% of the original aggregate principal
amount of the Securities (calculated giving effect to any issuance of Additional
Securities) with the Net Cash Proceeds of one or more Equity Offerings (i) by
the Company or (ii) by Parent to the extent the Net Cash Proceeds thereof are
contributed to the Company or used to purchase Capital Stock (other than
Disqualified Stock) of the Company from the Company, at a redemption price equal
to 108.000% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Securities remains outstanding. Any such redemption shall be made within 60 days
of such Equity Offering and must be made in accordance with the procedures set
forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 maybe redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of, and
accrued and unpaid interest on all Securities (or portions thereof) to be
redeemed on the redemption date is deposited with the Paying Agent on or before
the redemption date and certain other conditions are satisfied, on and after
such date interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
and Asset Dispositions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions specified in the Indenture, to cause the Company
to repurchase all or any part of the Securities of such Holder at a purchase
price equal to 101% of the principal amount of the Securities to be repurchased
plus accrued and unpaid interest to the date of repurchase (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of purchase) as
provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be
required to offer to purchase Securities upon the occurrence of certain events.
9. Denominations Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or transfer or exchange any Securities for a period of 15 days prior to the
mailing of a notice of redemption of Securities or 15 days before an interest
payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee and the Paying Agent shall pay the money back to the Company
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look to the
Company for payment as general creditors and the Trustee and the Paying Agent
shall have no further liability with respect to such money.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal of and interest on, the Securities to redemption or maturity, as
the case may be.
13. Amendments, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended without prior notice to any Holder but with the
written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities and (ii) any default may be waived with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company, the Note Guarantors
and the Trustee may amend the Indenture or the Securities (i) to cure any
ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of
the Indenture; (iii) to add Note Guarantees with respect to the Securities; (iv)
to secure the Securities; (v) to add additional covenants or to surrender rights
and powers conferred on the Company; (vi) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; (vii) to make any change that does not adversely affect the rights of any
Holder; or (viii) to provide for the issuance of Additional Securities.
14. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company) and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities may declare the principal of, and accrued but unpaid
interest on, all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs, the principal of, and interest on, all the Securities shall
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders. Under certain circumstances, the Holders of
a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and the consequences of any
such acceleration.
If an Event of Default occurs and is continuing, the Trustee shall be under
no obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee indemnity or security satisfactory to it in its reasonable
discretion against any loss, liability or expense and certain other conditions
are complied with. Except to enforce the right to receive payment of principal,
premium (if any) or interest when due, no Holder may pursue any remedy with
respect to the Indenture or the Securities unless (i) such Holder has previously
given the Trustee notice that an Event of Default is continuing, (ii) Holders of
at least 25% in principal amount of the outstanding Securities have requested
the Trustee in writing to pursue the remedy, (iii) such Holders have offered the
Trustee security or indemnity satisfactory to it in its reasonable discretion
against any loss, liability or expense, (iv) the Trustee has not complied with
such request within 60 days after the receipt of the request and the offer of
security or indemnity and (v) the Holders of a majority in principal amount of
the outstanding Securities have not given the Trustee a direction inconsistent
with such request within such 60-day period. Subject to certain restrictions,
the Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Parent, the Company or its
Affiliates and may otherwise deal with the Parent, the Company or its Affiliates
with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Parent, the
Company or any Note Guarantor shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Holder or an assignee,
such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with rights of survivorship and not as tenants in common),
CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
20. CUSIP Numbers
The Company has caused CUSIP numbers to be printed on the Securities and
has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Securities or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
The Company will furnish to any Holder of Securities, upon written request
and without charge to the Holder, a copy of the Indenture which has in it the
text of this Security.