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JFL-EEC MERGER SUB CO.,
as Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
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INDENTURE
Dated as February 3, 1998
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up to $150,000,000
9 7/8% Senior Notes due 2008, Series A
9 7/8% Senior Notes due 2008, Series B
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10;
11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06; 4.08;
11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04(1)
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04(2)
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means Not Applicable.
_________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02. Incorporation by Reference of TIA.. . . . . . . . . . . . . . . . 33
SECTION 1.03. Rules of Construction.. . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.. . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount. . . . . 37
SECTION 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . 39
SECTION 2.04. Paying Agent To Hold Assets in Trust. . . . . . . . . . . . . . . 40
SECTION 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.14. Deposit of Monies . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.15. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.16. Book-Entry Provisions for Global Security . . . . . . . . . . . . 48
SECTION 2.17. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . 50
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.02. Selection of Notes To Be Redeemed . . . . . . . . . . . . . . . . 53
SECTION 3.03. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.04. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 3.05. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . 56
SECTION 3.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . 57
SECTION 3.07. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 3.08. Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . 58
SECTION 4.03. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.04. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . 59
SECTION 4.05. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.06. Compliance Certificate; Notice of Default . . . . . . . . . . . . 59
SECTION 4.07. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.08. Reports to Holders. . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.09. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . 61
SECTION 4.10. Limitation on Restricted Payments . . . . . . . . . . . . . . . . 61
SECTION 4.11. Limitations on Transactions with Affiliates . . . . . . . . . . . 64
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness . . . . . . . 66
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . 67
SECTION 4.14. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 4.15. Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . 70
SECTION 4.16. Limitation on Preferred Stock of Restricted Subsidiaries. . . . . 74
SECTION 4.17. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 4.18. Limitation of Guarantees by Restricted Subsidiaries . . . . . . . 75
SECTION 4.19 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets. . . . . . . . . . . . . 76
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . 77
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . 81
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . 81
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SECTION 6.07. Right of Holders To Receive Payment . . . . . . . . . . . . . . . 82
SECTION 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . 82
SECTION 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . 83
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . 87
SECTION 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . 88
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . 88
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . 90
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . 91
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . 91
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . 92
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Company's Obligations. . . . . . . . . . . . . . . 92
SECTION 8.02. Application of Trust Money. . . . . . . . . . . . . . . . . . . . 95
SECTION 8.03. Repayment to the Company. . . . . . . . . . . . . . . . . . . . . 95
SECTION 8.04. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 8.05. Acknowledgment of Discharge by Trustee. . . . . . . . . . . . . . 96
ARTICLE NINE
MODIFICATION OF THE INDENTURE
SECTION 9.01. Without Consent of Holders. . . . . . . . . . . . . . . . . . . . 97
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . 98
SECTION 9.03. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . .100
SECTION 9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . . . . .100
SECTION 9.06. Trustee To Sign Amendments, Etc.. . . . . . . . . . . . . . . . .101
ARTICLE TEN
GUARANTEE OF NOTES
SECTION 10.01. Unconditional Guarantee.. . . . . . . . . . . . . . . . . . . . .101
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SECTION 10.02. Limitations on Guarantees.. . . . . . . . . . . . . . . . . . . .103
SECTION 10.03. Execution and Delivery of Note Guarantee. . . . . . . . . . . . .103
SECTION 10.04. Release of Subsidiary Guarantors. . . . . . . . . . . . . . . . .104
SECTION 10.05. Waiver of Subrogation.. . . . . . . . . . . . . . . . . . . . . .105
SECTION 10.06. Immediate Payment.. . . . . . . . . . . . . . . . . . . . . . . .106
SECTION 10.07. Obligations Continuing. . . . . . . . . . . . . . . . . . . . . .106
SECTION 10.08. Obligations Reinstated. . . . . . . . . . . . . . . . . . . . . .106
SECTION 10.09. Obligations Not Affected. . . . . . . . . . . . . . . . . . . . .106
SECTION 10.10. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
SECTION 10.11. No Obligation To Take Action Against the Company. . . . . . . . .107
SECTION 10.12. Dealing with the Company and Others.. . . . . . . . . . . . . . .107
SECTION 10.13. Default and Enforcement.. . . . . . . . . . . . . . . . . . . . .108
SECTION 10.14. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 10.15. Acknowledgment. . . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 10.16. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . .109
SECTION 10.17. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . .109
SECTION 10.18. Survival of Obligations.. . . . . . . . . . . . . . . . . . . . .109
SECTION 10.19. Note Guarantee in Addition to Other Obligations.. . . . . . . . .109
SECTION 10.20. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .110
SECTION 10.21. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . .110
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls. . . . . . . . . . . . . . . . . . . . . . . . . . .110
SECTION 11.02. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
SECTION 11.03. Communications by Holders with Other Holders. . . . . . . . . . .112
SECTION 11.04. Certificate and Opinion as to Conditions Precedent. . . . . . . .112
SECTION 11.05. Statements Required in Certificate or Opinion.. . . . . . . . . .112
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.. . . . . . . . . . . .113
SECTION 11.07. Business Days.. . . . . . . . . . . . . . . . . . . . . . . . . .113
SECTION 11.08. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . .113
SECTION 11.09. No Adverse Interpretation of Other Agreements.. . . . . . . . . .113
SECTION 11.10. No Personal Liability.. . . . . . . . . . . . . . . . . . . . . .113
SECTION 11.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . .114
SECTION 11.12. Duplicate Originals.. . . . . . . . . . . . . . . . . . . . . . .114
SECTION 11.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .114
SECTION 11.14. Independence of Covenants.. . . . . . . . . . . . . . . . . . . .114
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Exhibit A - Form of Initial Note . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Exchange Note. . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors. . . . . . C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S . . . . . . . . . D-1
Exhibit E - Form of Note Guarantee . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F - Form of Certification To Be Given by Holders of Beneficial
Interest in a Temporary Regulation S Global Security
to Euroclear or CEDEL. . . . . . . . . . . . . . . . F-1
Exhibit G - Form of Certification To Be Given by the Euroclear Operator
or CEDEL Bank, Societe Anonyme . . . . . . . . . . . G-1
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture
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INDENTURE, dated as of February 3, 1998, between JFL-EEC MERGER SUB
CO., a Delaware corporation ("MergerCo"), and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York banking corporation, as Trustee (the "Trustee").
MergerCo has duly authorized the creation of an issue of 9 7/8% Senior
Notes due 2008, Series A, to be issued initially in the principal amount of
$90,000,000 and thereafter in an additional principal amount, if any, up to
$60,000,000 subject to the terms and conditions contained herein, and 9 7/8%
Senior Notes due 2008, Series B, to be issued in exchange for the 9 7/8% Senior
Notes due 2008, Series A, pursuant to the Registration Rights Agreement and, to
provide therefor, MergerCo has duly authorized the execution and delivery of
this Indenture. All things necessary to make the Notes, when duly issued and
executed by MergerCo and authenticated and delivered hereunder, the valid and
binding obligations of MergerCo and to make this Indenture a valid and binding
agreement of MergerCo, have been done.
The Notes are being sold in connection with the recapitalization (the
"Recapitalization") of Carlyle-EEC Holdings, Inc., a Delaware corporation to be
renamed Elgar Holdings, Inc. ("EHI") pursuant to the Agreement and Plan of
Merger dated as of January 2, 1998 by and among JFL-EEC LLC, a Delaware limited
liability company, Carlyle-EEC Holdings, Inc., a Delaware corporation, TC Group,
L.L.C., a Delaware limited liability company, and MergerCo (as it may be amended
through the date hereof and together with all ancillary agreements entered into
in connection therewith, the "Recapitalization Agreement"). The
Recapitalization Agreement provides for the merger (the "Merger") of MergerCo
with and into Carlyle-EEC Holdings, Inc., which shall survive the merger and
change its name to EHI. The time of the consummation of the Recapitalization
and the Merger is referred to herein as the "Effective Time."
Immediately after the Effective Time, (A) EHI and Elgar Electronics
Corporation, a California corporation and a wholly owned subsidiary of EHI
("Elgar"), will execute an assumption agreement (the "Assumption Agreement")
pursuant to which EHI, as survivor of the Merger, will assume all of the
obligations of MergerCo under the Purchase Agreement and the Registration Rights
Agreement, and Elgar will become a party to the Purchase Agreement and the
Registration Rights Agreement as a subsidiary guarantor and unconditionally
guarantee the Notes on a senior unsecured basis; and (B) EHI, Elgar (as a
subsidiary guarantor), and the Trustee will enter into a first supplemental
indenture to this Indenture (the "Supplemental Inden-
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ture") providing for the express assumption by EHI, as survivor of the Merger,
of the covenants, agreements and undertakings of MergerCo in this Indenture and
under the Notes, and the guarantee of the Notes by Elgar, as subsidiary
guarantor.
As used herein, the "Company" shall mean MergerCo prior to the
Effective Time and EHI as of and after the execution and delivery of the
Supplemental Indenture. References to this Indenture as of and after the
execution and delivery of the Supplemental Indenture will refer to this
Indenture and the Supplemental Indenture and references to each of the Purchase
Agreement and the Registration Rights Agreement as of and after the Effective
Time will refer to that agreement together with the Assumption Agreement.
Each party hereto agrees as follows for the benefit of the other and
for the equal and ratable benefit of the Holders of the Notes:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCELERATION NOTICE" has the meaning provided in Section 6.02.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Subsidiaries or assumed in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, merger or consolidation.
"ADDITIONAL INTEREST" has the meaning provided in the Registration
Rights Agreement.
"AFFILIATE" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
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direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"AFFILIATE TRANSACTION" has the meaning provided in Section 4.11.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"AGENT MEMBER" means any member of, or participant in, the Depository.
"APPLICABLE PREMIUM" means, with respect to a Note, the greater of (i)
1% of the then outstanding principal amount of such Note and (ii) the excess of
(A) the present value of the remaining required interest and principal payments
due on such Note (exclusive of accrued and unpaid interest), computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (B) the then
outstanding principal amount of such Note.
"APPLICABLE PROCEDURES" means the rules and procedures of the
Depository, Euroclear and CEDEL, in each case to the extent applicable and as in
effect from time to time.
"ASSET ACQUISITION" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in the
ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any
other property
-4-
or assets of the Company or any Restricted Subsidiary of the Company other than
in the ordinary course of business; PROVIDED, HOWEVER, that Asset Sale shall not
include (i) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $500,000, (ii) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company and the Restricted
Subsidiaries of the Company (determined on a consolidated basis), or the
consolidation or merger of the Company with any other Person, in each case as
permitted under Section 5.01, (iii) any disposition of property of the Company
or any of its Restricted Subsidiaries that, in the reasonable judgment of the
Company, has become uneconomic, obsolete or worn out, (iv) a Restricted Payment
or Permitted Investment that is permitted by Section 4.10 (including, without
limitation, any formation of or contribution of assets to a joint venture), (v)
leases or subleases, in the ordinary course of business, to third parties of
real property owned in fee or leased by the Company or its Subsidiaries,
(vi) the sale of inventory in the ordinary course of business, (vii) the sale of
Cash Equivalents or (viii) the sale or discount, in each case without recourse
(other than recourse for a breach of a representation or warranty), of accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof.
"AUTHENTICATING AGENT" has the meaning provided in Section 2.02.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"BORROWING BASE" means, as of any date, an amount equal to the sum of
(a) 85% of the face amount of all accounts receivable owned by the Company and
its Restricted Subsidiaries as of such date that are not more than 90 days past
due, and
-5-
(b) 60% of the book value of all inventory owned by the Company and its
Restricted Subsidiaries as of such date, all calculated on a consolidated basis
and in accordance with GAAP. To the extent that information is not available as
to the amount of accounts receivable or inventory as of a specific date, the
Company may utilize the most recent available information for the purpose of
calculating the Borrowing Base.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which banking institutions in the City of New York or the city in
which the Trustee is located are required or authorized by law or other
governmental action to be closed.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's ("S&P") or Moody's Investors Service,
Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit,
Euro-dollar deposits or bankers' acceptances maturing within one year from the
date of acquisition thereof issued by any bank organized under the laws of the
United States of Amer-
-6-
ica or any state thereof or the District of Columbia or any U.S. branch of a
foreign bank or any foreign branch of a U.S. bank, in each case, having at the
date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds with assets at least equal to $500.0
million.
"CEDEL" means Cedel Bank, Societe Anonyme (or any successor securities
clearing agency).
"CERTIFICATED SECURITIES" means Notes in definitive registered form
that are registered in the name of a Person other than the Depository or its
nominee.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof (whether or not otherwise in compliance with the provisions of this
Indenture) other than to a Subsidiary of the Company, the Principals and their
Related Parties; (ii) the liquidation or dissolution of the Company, other than
in a transaction that complies with Section 5.01; (iii) any Person or Group
(other than the Principals and their Related Parties) shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company; or (iv) the replacement of a majority
of the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of
at least a majority of the Board of Directors of the Company then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.14.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning provided in
Section 4.14.
-7-
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"COMPANY" has the meaning provided in the fifth introductory paragraph
hereto.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries accrued in accordance with
GAAP for such period, (B) Consolidated Fixed Charges and (C) Consolidated
Non-cash Charges LESS any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a PRO
FORMA basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales, discon-
-8-
tinuance of operations (as determined in accordance with GAAP) or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of such Person or one of its
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any PRO FORMA expense and cost reductions as
determined in accordance with Regulation S-X under the Exchange Act)
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale, discontinuance or
Asset Acquisition (including the incurrence, assumption or liability for any
such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. If since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Asset Acquisition or Asset Sale that would
have required adjustment pursuant to this definition, then the Consolidated
Fixed Charge Coverage Ratio shall be calculated giving PRO FORMA effect thereto
as if such Asset Acquisition or Asset Sale had occurred at the beginning of the
applicable Four Quarter Period. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and (2) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements and (3) if it bears, at the
option of the Company or the relevant Restricted Subsidiary of the Company, a
fixed or floating rate of interest, interest thereon will be computed by
applying, at the option of the Company, either the fixed or floating rate. For
-9-
purposes of this definition, whenever PRO FORMA effect is to be given to a
transaction, the PRO FORMA calculation shall be made in good faith by the Chief
Financial Officer of the Company and ratified by the Board of Directors of the
Company.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local
income tax rate of such Person, expressed as a decimal, PROVIDED that
Consolidated Fixed Charges shall not include (x) gain or loss from
extinguishment of debt, including write off of debt issuance costs, commissions,
fees and expenses, (y) amortization of debt issuance costs, commissions, fees
and expenses, or (z) customary commitment, administrative and transaction fees
or charges.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-off
deferred financing costs, (b) the net costs under Interest Swap Obligations,
(c) all capitalized interest and (d) the interest portion of any deferred
payment obligation; and (ii) the interest component of Capitalized Lease
Obligations accrued by such Person and its Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; PROVIDED that there shall be excluded therefrom (a) after-tax gains
or losses from Asset Sales or other sales of assets outside the ordinary course
of business or abandonments or reserves relating thereto, (b) after-tax items
classified as extraordinary or nonrecurring gains or losses, (c) solely for
purposes of Section 4.10, the net income or loss of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of the referent Person or is merged or consolidated with
the referent Person or
-10-
any Restricted Subsidiary of the referent Person, (d) the net income or loss of
any Restricted Subsidiary of the referent Person to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is restricted by a contract, operation of law or otherwise,
except to the extent that such net income is actually paid to the Company or a
Restricted Subsidiary thereof by loans, advances, intercompany transfers,
principal payments or otherwise, (e) the net income of any Person, other than a
Restricted Subsidiary of the referent Person, except to the extent of cash
dividends or distributions paid to the referent Person or subject to clause (d),
to a Restricted Subsidiary of the referent Person by such Person, and (f) the
fees, expenses and other costs incurred in connection with the Recapitalization,
including payments to management contemplated by the Recapitalization Agreement;
PROVIDED, HOWEVER, that Net Income shall be deemed to include any increases
during such period to consolidated shareholder's equity of such Person
attributable to tax benefits from net operating losses and the exercise of stock
options that are not otherwise included in Net Income for such period.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for
any period, the (a) sum of (i) aggregate depreciation, amortization and other
non-cash expenses or charges of such Person and its Restricted Subsidiaries
reducing Consolidated Net Income of such Person and its Restricted Subsidiaries
for such period (including amortization of goodwill, the non-cash costs of
agreements evidencing Interest Swap Obligations, Currency Agreements, license
agreements, non-competition agreements, non-cash amortization of Capitalized
Lease Obligations or management fees, and organization costs), (ii) expenses and
charges related to any equity offering or incurrence of Indebtedness permitted
to be incurred by this Indenture (including any such expenses or charges
relating to the Recapitalization), (iii) the amount of any restructuring charge
or reserve, (iv) unrealized gains and losses from hedging, foreign currency or
commodities translations and transactions, and (v) the amount of any reduction
representing a minority interest in Subsidiary Guarantors, MINUS (b) any cash
payment with respect to which a charge or reserve referred to in clause (a) was
taken in a prior period, in each case, determined on a consolidated basis in
accordance with GAAP.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the
-11-
date of execution of this Indenture is located at 114 West 47th Street, New
York, New York 10036.
"COVENANT DEFEASANCE" has the meaning provided in Section 8.01.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"DEFAULT INTEREST PAYMENT DATE" has the meaning provided in
Section 2.12.
"DEPOSITORY" means The Depository Trust Company, its nominees and
successors and any institution that succeeds The Depository Trust Company as
depository and Holder of Global Notes hereunder.
"DISQUALIFIED CAPITAL STOCK" means that portion of 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 upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes; PROVIDED that (i)
any Capital Stock that would not constitute Disqualified Capital Stock but for
provisions therein giving holders thereof the right to cause the issuer thereof
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the Stated Maturity of the Notes
will constitute Disqualified Capital Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions described under
Section 4.14 and (ii) the Redeemable Preferred Stock shall not constitute
Disqualified Capital Stock.
-12-
"EFFECTIVE TIME" means the time of the consummation of the
Recapitalization and the Merger.
"EHI" means Elgar Holdings, Inc., a Delaware corporation.
"ELGAR" means Elgar Electronics Corporation, a California corporation.
"EUROCLEAR" means the Euroclear Clearance System (or any successor
securities clearing agency).
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"EXCHANGE NOTES" means the 9 7/8% Senior Notes due 2008, Series B to
be issued pursuant to the Registration Rights Agreement in exchange for the
Initial Notes issued under this Indenture on the Issue Date or Initial Notes
issued under this Indenture subsequent to the Issue Date pursuant to
Section 2.02.
"EXCHANGE OFFER" has the meaning provided in the Registration Rights
Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means the registration
statement filed by the Company pursuant to the Registration Rights Agreement.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which 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. For purposes of
Section 4.15, fair market value shall be determined by the Board of Directors of
the Company acting in good faith and shall be evidenced by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the ac-
-13-
counting profession of the United States, which are in effect as of the Issue
Date.
"GLOBAL NOTE" has the meaning provided in Section 2.01.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HOLDER" means a registered holder of Notes.
"INCUR" has the meaning provided in Section 4.12.
"INDEBTEDNESS" means with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business), (v) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (i) through (v) above and clause
(viii) below, (vii) all obligations of any other Person of the type referred to
in clauses (i) through (vi) above which are secured by any lien on any property
or asset of such Person, the amount of such obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
obligation so secured, (viii) all obligations under currency agreements and
interest swap agreements of such Person and (ix) all Disqualified Capital Stock
issued by such Person with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebt-
-14-
edness shall be required to be determined pursuant to this Indenture, and if
such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. Subject to the directly preceding sentence, the amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness that does not require current payments of
interests, and (ii) the principal amount thereof in the case of any other
Indebtedness. Notwithstanding the foregoing, (i)(a) Obligations of such Persons
other than principal, (b) any liability for federal, state or local taxes or
other taxes owed by such Person and (c) obligations with respect to performance
and surety bonds and completion guarantees in the ordinary course of business
will not be considered Indebtedness for purposes of this definition and (ii) the
accretion of original issue discount will not be considered the incurrence of
Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, own more than 5%
of the Capital Stock of the Company and (ii) which, in the judgment of the Board
of Directors of the Company, is otherwise independent and qualified to perform
the task for which it is to be engaged.
"INITIAL NOTES" means, collectively, (i) the 9 7/8% Senior Notes due
2008, Series A, of the Company issued on the Issue Date and (ii) one or more
series of 9 7/8% Senior Notes due 2008 that are issued under this Indenture
subsequent to the Issue Date pursuant to Section 2.02, in an aggregate principal
amount up to $60,000,000, in each case for so long as such securities constitute
Restricted Securities.
"INITIAL PURCHASERS" means BT Alex. Brown Incorporated or any other
original purchasers of any Initial Notes issued after the Issue Date.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1)(2),(3) or (7)
under the Securities Act.
"INTEREST" when used with respect to any Note means the amount of all
interest accruing on such Note, including any
-15-
applicable defaulted interest pursuant to Section 2.12 and any Additional
Interest pursuant to the Registration Rights Agreement.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment of
interest on the Notes.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
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 by such Person of any Capital Stock,
bonds, debentures or other securities or evidences of Indebtedness issued by,
any other Person. "Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of Section 4.10, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of and the fair market value of Investments (other than common
stock) in any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of interest, dividends or distributions in connection with
-16-
such Investment or any other amounts or assets received in respect of such
Investment; PROVIDED that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such Restricted Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"ISSUE DATE" means February 3, 1998.
"LEGAL DEFEASANCE" has the meaning provided in Section 8.01.
"LEHMAN" means J.F. Lehman & Company.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement and any lease in the nature thereof).
"MANAGEMENT AGREEMENT" means the management agreement to be entered
into among EHI, Elgar and Lehman at the Effective Time.
"MATURITY DATE" means February 1, 2008.
"MERGER" has the meaning provided in the third introductory paragraph
hereto.
"MERGERCO" has the meaning provided in the introductory paragraph
hereto.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest or dividends) received by the Company or any of its Restricted
Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses
and fees relating to such Asset
-17-
Sale (including, without limitation, legal, accounting and investment banking
fees and sales commissions), (b) taxes paid or payable, (c) repayment of
Indebtedness that is secured by the subject assets or required to be repaid in
connection with such Asset Sale, (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale and (e) amounts required to be paid to any Person (other than
the Company or any Restricted Subsidiary) owning a beneficial interest (by way
of Capital Stock of the Person owning such assets or otherwise) in the assets
that are subject to the Asset Sale.
"NET PROCEEDS OFFER" has the meaning provided in Section 4.15.
"NET PROCEEDS OFFER AMOUNT" has the meaning provided in Section 4.15.
"NET PROCEEDS OFFER PAYMENT DATE" has the meaning provided in
Section 4.15.
"NET PROCEEDS OFFER TRIGGER DATE" has the meaning provided in
Section 4.15.
"NEW CREDIT FACILITY" means the Credit Agreement dated as of
February 3, 1998, among EHI, Elgar, the lenders party thereto in their
capacities as lenders thereunder and Bankers Trust Company, as agent, together
with the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
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"NOTE GUARANTEE" means the guarantee of the Obligations of the Company
with respect to the Notes by each Subsidiary Guarantor pursuant to the terms of
this Indenture.
"NOTES" means, collectively, the Initial Notes, the Private Exchange
Notes, if any, and the Exchange Notes, treated as a single class of securities,
as amended or supplemented from time to time in accordance with the terms of
this Indenture, that are issued pursuant to this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements and other liabilities payable
under the documentation governing any Indebtedness.
"OFFERING MEMORANDUM" means the confidential Offering Memorandum dated
January 30, 1998 of EHI relating to the offering of the Notes.
"OFFICER" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors in a
Board Resolution serving in a similar capacity.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of
Sections 11.04 and 11.05, as they relate to the giving of an Opinion of Counsel.
"PAYING AGENT" has the meaning provided in Section 2.03.
"PERMANENT REGULATION S GLOBAL NOTE" has the meaning provided in
Section 2.01.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the
following:
(i) Indebtedness under the Notes issued in the Offering and any
Note Guarantees;
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(ii) Indebtedness incurred pursuant to the New Credit Facility
and/or one or more other credit facilities (including any guarantees of
such Indebtedness) in an aggregate principal amount at any time outstanding
not to exceed the greater of (x) $15 million, and (y) the amount of the
Borrowing Base; less, in the case of preceding clause (x), any amount
applied to the permanent reduction of such credit facilities pursuant to
Section 4.15;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(iv) Indebtedness in respect of Interest Swap Obligations of the
Company or any of its Restricted Subsidiaries; PROVIDED, HOWEVER, that such
Interest Swap Obligations are entered into to protect the Company and its
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; PROVIDED that in the
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of the Company to
the Company or to a Wholly Owned Restricted Subsidiary of the Company for
so long as such Indebtedness is held by the Company or a Wholly Owned
Restricted Subsidiary of the Company or the lenders or collateral agent
under the New Credit Facility; PROVIDED that if as of any date any Person
other than the Company, a Wholly Owned Restricted Subsidiary of the Company
or the lenders or collateral agent under the New Credit Facility owns or
holds any such Indebtedness, such date shall be deemed the incurrence of
Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company or the lenders or
collateral agent under the New Credit Facility; PROVIDED that (a) any
Indebt-
-20-
edness of the Company to any Wholly Owned Restricted Subsidiary of the
Company which is not a Subsidiary Guarantor is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under this
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness, such date shall be deemed the incurrence of Indebtedness;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; PROVIDED, HOWEVER, that such
Indebtedness is extinguished within three Business Days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, issued in the
ordinary course of business, including without limitation letters of credit
in respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations regarding
worker's compensation claims; PROVIDED, HOWEVER, that upon the drawing of
such letters of credit or other obligations, such obligations are
reimbursed within 30 days following such drawing;
(x) Indebtedness (A) represented by Capitalized Lease
Obligations and Purchase Money Indebtedness of the Company and its
Restricted Subsidiaries or (B) Indebtedness under purchase money mortgages
or secured by purchase money security interests, in the case of (A) or (B)
incurred for the purpose of leasing or financing or refinancing all or any
part of the purchase price or cost of construction or improvement of any
property (real or personal) or other assets that are used or useful in the
business of the Company or such Restricted Subsidiary (whether through the
direct purchase of assets or the Capital Stock of any Person owning such
assets and whether such Indebtedness is owed to the seller or Person
carrying out such construction or improvement or to any third party), so
long as (x) such Indebtedness is not secured by any property or assets of
the Company or any Restricted Subsidiary other than the property or assets
so leased, acquired (directly or indirectly), constructed or improved and
(y) such Indebtedness is created within 90 days of the
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acquisition or completion of construction or improvement of the related
property or asset, provided that the aggregate principal amount of
Indebtedness under clause (A) and (B) does not exceed the greater of (a)
$8.0 million or (b) 7.5% of Total Assets and, any Refinancing of
Indebtedness permitted under clause (A) or (B) the aggregate amount of
which does not exceed the greater of (a) $8.0 million or (b) 7.5% of Total
Assets;
(xi) Refinancing Indebtedness;
(xii) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets, including, without limitation, shares of Capital Stock;
(xiii) guarantees of Indebtedness otherwise permitted under this
Indenture; and
(xiv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $10.0 million
at any one time outstanding (which amount may, but need not, be incurred in
whole or in part under the New Credit Facility).
"PERMITTED INVESTMENTS" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Restricted Subsidiary of the Company or that
will merge or consolidate into the Company or a Restricted Subsidiary of the
Company, (ii) Investments in the Company by any Restricted Subsidiary of the
Company; PROVIDED that any Indebtedness evidencing such Investment made by a
Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and this Indenture; (iii) investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and its Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes not in excess of $250,000 at any one time outstanding;
(v) Currency Agreements and Interest Swap Obligations entered into in the
ordinary course of the Company's or its Restricted Subsidiaries' businesses and
otherwise in compliance with this Indenture; (vi) Investments in securities of
trade creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers or otherwise in settlement of debts;
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(vii) Investments made by the Company or its Restricted Subsidiaries as a result
of consideration received in connection with an Asset Sale or other disposition
of assets made in compliance with Section 4.15; (viii) Investments in existence
on the Issue Date; (ix) any acquisition of assets solely in exchange for the
issuance of Qualified Equity Interests of the Company; (x) commission, travel,
payroll, entertainment, relocation and similar advances to officers and
employees made in the ordinary course of business; (xi) guarantees of
Indebtedness otherwise permitted under this Indenture; and (xii) other
Investments that do not exceed the greater of $5.0 million or 10% of Total
Assets in the aggregate at any time outstanding.
"PERMITTED LIENS" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business in connection therewith,
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions, eminent domain
proceedings and other similar charges or encumbrances in respect of real
property not interfering in any material respect with the ordinary conduct
of the
-23-
business of the Company or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; PROVIDED that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance the acquisition, construction or
improvement of property or assets of the Company or any Restricted
Subsidiary of the Company; PROVIDED, HOWEVER, that the related Indebtedness
shall not exceed the cost of the acquisition, construction or improvement
of such property or assets and shall not be secured by any property or
assets of the Company or any Restricted Subsidiary of the Company other
than the property and assets so acquired whether through the direct
acquisition of such property or assets or indirectly through the
acquisition of the Capital Stock of any Person owning such property or
assets constructed or improved, and (B) the Lien securing such Indebtedness
shall be created within 90 days of such acquisition or completion of
construction or improvement;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Restricted Subsidiaries, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements;
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(xiii) Liens securing Acquired Indebtedness incurred in accordance with
Section 4.12; PROVIDED that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary of the Company and
were not granted in connection with, or in anticipation of, the incurrence
of such Acquired Indebtedness by the Company or a Restricted Subsidiary of
the Company and (B) such Liens do not extend to or cover any property or
assets of the Company or of any of its Restricted Subsidiaries other than
the property or assets that secured the Acquired Indebtedness prior to the
time such Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary of the Company;
(xiv) Liens on property or assets of the Company or any Restricted
Subsidiary securing Indebtedness under the New Credit Facility or one or
more other credit facilities in a principal amount not to exceed the sum of
(1) the principal amount of Indebtedness permitted by clause (ii) of the
definition of "Permitted Indebtedness" and (2) the principal amount of
Indebtedness permitted by clause (xiv) of the definition of "Permitted
Indebtedness" to the extent such Indebtedness is incurred under the New
Credit Facility;
(xv) Liens on property or assets of the Company or any Restricted
Subsidiary securing Indebtedness incurred under clause (xiv) of the
definition of "Permitted Indebtedness";
(xvi) Liens in favor of customs and revenues authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xvii) Liens incurred in the ordinary course of business of the Company
or any Restricted Subsidiary of the Company with respect to obligations
that do not exceed $5.0 million at any one time outstanding and that (a)
are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
the business of the Company or such Restricted Subsidiary;
(xviii) leases or subleases to third parties;
-25-
(xix) Liens in connection with workmen's compensation obligations and
general liability exposure of the Company and its Restricted Subsidiaries;
and
(xx) any extension, renewal or replacement, in whole or in part, of
any Lien described in the foregoing clauses (i) through (xix); provided
that the Lien so extended, renewed or replaced does not extend to any
additional property or assets.
"PERSON" means an individual, partnership, corporation, unincorporated
organization, limited liability company, trust or joint venture, or a
governmental agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"PRINCIPAL" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"PRINCIPALS" means (i) Lehman and each Affiliate of Lehman as of the
Issue Date, (ii) JFL-EEC LLC, J.F. Lehman Equity Investors I, L.P. and the other
members of JFL-EEC LLC on the Issue Date and their Affiliates, (iii) each
officer or employee of Lehman or any such member referred to in clause (ii) as
of the Issue Date and (iv) each of the foregoing's family members, legal
representatives or guardians, heirs and legatees and trusts, partnerships and
corporations the sole beneficiaries, partners or shareholders, as the case may
be, of which are family members.
"PRIVATE EXCHANGE NOTES" has the meaning provided in the Registration
Rights Agreement.
"PRIVATE PLACEMENT LEGEND" has the meaning provided in Section 2.15.
"PRO FORMA" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
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"PUBLIC EQUITY OFFERING" means an underwritten public offering of
Qualified Capital Stock of the Company pursuant to a registration statement
filed with the Commission in accordance with the Securities Act.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of
January 30, 1998 between MergerCo and the Initial Purchaser.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company and
its Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"QUALIFIED EQUITY INTEREST" means any Qualified Capital Stock and all
warrants, options or other rights to acquire Qualified Capital Stock (but
excluding any debt security or Disqualified Capital Stock that is convertible
into or exchangeable for Qualified Capital Stock).
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"RECAPITALIZATION" means the recapitalization of EHI pursuant to the
Recapitalization Agreement providing for the merger of MergerCo, a company
formed by Lehman, with and into EHI and related transactions contemplated
thereby.
"RECAPITALIZATION AGREEMENT" means the Agreement and Plan of Merger
dated as of January 2, 1998 by and among JFL-EEC LLC, MergerCo, Carlyle-EEC
Holdings, Inc. (which will change its name to EHI Holdings, Inc. upon
consummation of the Recapitalization) and TC Group, L.L.C.
"RECORD DATE" means the Record Date specified in the Notes.
"REDEEMABLE PREFERRED STOCK" means the Series A 10% Cumulative
Redeemable Preferred Stock of the Company, par value $.01 per share.
"REDEMPTION DATE," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
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"REDEMPTION PRICE," when used with respect to any Note to be redeemed,
means the price fixed for such redemption, including principal and premium, if
any, pursuant to this Indenture and the Notes.
"REFERENCE DATE" has the meaning provided in Section 4.10.
"REFINANCE" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
Section 4.12 (other than pursuant to clause (ii), (iv), (v), (vi), (vii),
(viii), (ix), (x) or (xiv) of the definition of Permitted Indebtedness), in each
case that does not (1) result in an increase in the aggregate principal amount
of Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable expenses incurred
by the Company in connection with such Refinancing) or (2) create Indebtedness
with (A) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (B) a final
maturity earlier than the final maturity of the Indebtedness being Refinanced;
PROVIDED that (x) if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness solely of the
Company and (y) if such Indebtedness being Refinanced is subordinate or junior
to the Notes, then such Refinancing Indebtedness shall be subordinate to the
Notes at least to the same extent and in the same manner as the Indebtedness
being Refinanced.
"REGISTRAR" has the meaning provided in Section 2.03.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the Issue Date between MergerCo and the Initial Purchaser
and any other registration rights agreement covering similar matters that may be
executed and delivered by the Company and the Subsidiary Guarantor in connection
with the issuance of any Initial Notes after the Issue Date.
-28-
"REGULATION S" means Regulation S under the Securities Act.
"RELATED PARTY" with respect to any Principal means (A) any
controlling stockholder or 80% (or more) owned Subsidiary of such Principal or
(B) trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"REPLACEMENT ASSETS" has the meaning provided in Section 4.15.
"RESTRICTED PAYMENT" has the meaning provided in Section 4.10.
"RESTRICTED PERIOD" means the period of 40 days commencing on the day
after the later of (a) the day on which the Notes are first offered to Persons
other than distributors (as defined in Regulation S) in reliance on Regulation S
and (b) the date of this Indenture; provided that promptly after the occurrence
of the date described in clause (a), the Company shall give written notice
thereof to the Trustee, identifying therein the day on which the Restricted
Period expires.
"RESTRICTED SECURITY" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; PROVIDED, HOWEVER, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such
Person which at the time of determination is not an Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
-29-
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"SENIOR OFFICER" means the Chief Executive Officer or the Chief
Financial Officer of the Company.
"SHELF REGISTRATION STATEMENT" has the meaning provided in the
Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY," with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Exchange Act.
"SPECIFIED AFFILIATE PAYMENTS" means: (i) the repurchase, redemption
or other acquisition or retirement for value of any Capital Stock of the Company
held by any future, present or former employee, director, officer or consultant
of the Company (or any of its Restricted Subsidiaries) pursuant to any
management equity subscription agreement, stock option agreement, put agreement,
stockholder agreement or similar agreement that may be in effect from time to
time; PROVIDED that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Capital Stock in any fiscal year shall not exceed the sum of
(a) $250,000, (b) the cash proceeds received by the Company after the Issue Date
from the sale of Qualified Capital Stock to employees, directors or officers of
the Company and its Subsidiaries that occurs in such fiscal year (to the extent
such proceeds do not provide the basis for any other Restricted Payment) and (c)
amounts referred to in clauses (a) through (b) that remain unused from the
immediately preceding fiscal year; (ii) repurchases of Capital Stock deemed to
occur upon exercise of stock options or warrants as a result of the payment of
all or a portion of the exercise price of such options or warrants with Capital
Stock; (iii) payments by the Company to members of management of the Company and
its Subsidiaries in connection with the Recapitalization to the extent disclosed
in the Offering Memorandum; and (iv) any transaction contemplated by any tax
sharing agreement or any other agreement as in effect on the Issue Date
(including, without limitation, the Recapitalization Agreement and the
Management Agreement) or any amendment thereto (so long as any such amendment is
not disadvantageous to the Holders in any material respect), including
distributions to effect the Recapitalization. Amounts referred to in clause
(i), but not other Specified Affiliate Payments, shall constitute Restricted
Payments for purposes of clause (iii) of the first paragraph of Section 4.10.
-30-
"STATED MATURITY" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness or any installment of interest
thereon is due and payable.
"SUBSIDIARY," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"SUBSIDIARY GUARANTOR" means any Restricted Subsidiary that is a party
to a Note Guarantee pursuant to the terms of this Indenture.
"SUPPLEMENTAL INDENTURE" has the meaning provided in the fourth
introductory paragraph hereto.
"SURVIVING ENTITY" has the meaning provided in Section 5.01.
"TEMPORARY REGULATION S GLOBAL NOTE" has the meaning provided in
Section 2.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except
as otherwise provided in Section 9.03; PROVIDED, HOWEVER, that, in the event the
Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
"TOTAL ASSETS" means, at any time, the total consolidated assets of
the Company and its Restricted Subsidiaries at such time. For the purposes of
paragraph (x) of the definition of "Permitted Indebtedness" and paragraph (xii)
of the definition of "Permitted Investments," Total Assets shall be determined
giving PRO FORMA effect to the lease, acquisition, construction or improvement
of the assets being leased, acquired, constructed or improved with the proceeds
of the relevant In-
-31-
debtedness or the making of such Permitted Investment, as the case may be.
"TREASURY RATE" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the date fixed
for prepayment (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining Weighted Average Life to Maturity of the Notes; PROVIDED, HOWEVER,
that if the Weighted Average Life to Maturity of the Notes is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Weighted Average Life to Maturity of the Notes is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"TRUST OFFICER" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"UNRESTRICTED SUBSIDIARY" of any Person means (i) any Subsidiary of
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; PROVIDED that (x) the
Company certifies to the Trustee that such designation complies with
Section 4.10 and (y) each Subsidiary to be
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so designated and each of its Subsidiaries has not at the time of designation,
and does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of the Company or any of
its Restricted Subsidiaries. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately
after giving effect to such designation, the Company is able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.12 and (y) immediately before and immediately after
giving effect to such designation, no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. GOVERNMENT OBLIGATIONS" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
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SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"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 or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP of any date of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(6) any reference to a statute, law or regulation means that statute,
law or regulation as amended and in effect from time to time and includes
any successor statute, law or regulation; PROVIDED, HOWEVER, that any
refer-
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ence to the Bankruptcy Law shall mean the Bankruptcy Law as applicable to
the relevant case.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of EXHIBIT A. The Exchange
Notes and the Trustee's certificate of authentication relating thereto shall be
substantially in the form of EXHIBIT B. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or depository rule or
usage. The Company and the Trustee shall approve the form of the Notes and any
notation, legend or endorsement on them. If required, the Notes may bear the
appropriate legend regarding any original issue discount for federal income tax
purposes. Each Note shall be dated the date of its issuance and shall show the
date of its authentication. Immediately after the Effective Time, the Company
shall cause each Note to have an executed Note Guarantee from each Subsidiary
Guarantor endorsed thereon or attached thereto substantially in the form of
EXHIBIT E hereto.
The terms and provisions contained in the Notes, annexed hereto as
EXHIBITS A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Notes offered and sold in their initial distribution to Qualified
Institutional Buyers in reliance on Rule 144A shall be issued in the form of one
or more global notes, substantially in the form set forth in EXHIBIT A (the
"Global Note"), which shall be registered in the name of the Depository or its
nominee and deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided, for credit by the Depository to the respective accounts of beneficial
owners of the Notes represented thereby (or such other accounts as they may
direct), and shall bear such applicable legends as are provided for in Section
2.15. The aggregate principal amount of the
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Global Note may be increased or decreased from time to time by adjustments made
on the records of the Trustee, as custodian for the Depository, in connection
with a corresponding decrease or increase in the aggregate principal amount of
the Temporary Regulation S Global Notes or the Permanent Regulation S Global
Note.
Notes offered and sold in reliance on Regulation S shall initially be
in the form of temporary Global Notes which shall be registered in the name of
the Depository or its nominee and deposited with the Trustee, as custodian for
the Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided, for credit by the Depository to the respective accounts of
the beneficial owners of the Notes represented thereby (or such other accounts
as they may direct), provided that upon such deposit all such Notes shall be
credited to or through accounts maintained at the Depository by or on behalf of
Euroclear or CEDEL. Until such time as the Restricted Period shall have
expired, such temporary Global Notes shall be referred to herein as a "Temporary
Regulation S Global Note." After such time as the Restricted Period shall have
expired and the certifications referred to below in the next succeeding
paragraph shall have been provided, interests in such Temporary Regulation S
Global Notes shall be exchanged (as initiated by the beneficial owners of
interests therein) for interests in like Global Notes, referred to herein
collectively as the "Permanent Regulation S Global Note," in substantially the
form set forth in EXHIBIT A, with such applicable legends as are provided for in
Section 2.15. Such Permanent Regulation S Global Notes shall be registered in
the name of the Depository or its nominee and deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated by
the Trustee as hereinafter provided, for credit to the respective accounts of
the beneficial owners of the Notes represented thereby (or such other accounts
as they may direct). The aggregate principal amount of the Temporary Regulation
S Global Note or the Permanent Regulation S Global Note may be increased or
decreased from time to time by adjustments made on the records of the Trustee,
as custodian for the Depository, as hereinafter provided.
Interests in a Temporary Regulation S Global Note may be exchanged for
interests in a Permanent Regulation S Global Note only after (a) the expiration
of the Restricted Period, (b) delivery by a beneficial owner of an interest
therein to Euroclear or CEDEL of a written certification (an "Owner Securities
Certification") substantially in the form of EXHIBIT F hereto, and (c) upon
delivery by Euroclear or CEDEL to the
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Trustee of a written certification (a "Depository Securities Certification")
substantially in the form attached hereto as EXHIBIT G. Upon receipt by the
Trustee of the Depository Securities Certification and the notification from the
Depository described in clause (iv) of the next succeeding paragraph, the
Trustee will exchange the portion of the Temporary Regulation S Global Note
covered by such certification for interests in a Permanent Regulation S Global
Note. The delivery by such holder of a beneficial interest in such Temporary
Regulation S Global Note of such certification shall constitute an irrevocable
instruction by such holder to Euroclear or CEDEL, as the case may be, to
exchange such holder's beneficial interest in the Temporary Regulation S Global
Note for a beneficial interest in the Permanent Regulation S Global Note upon
the expiration of the Restricted Period in accordance with the next succeeding
paragraph.
Upon:
(i) the expiration of the Restricted Period;
(ii) receipt by Euroclear or CEDEL, as the case may be, of Owner
Securities Certifications described in the preceding paragraph;
(iii) receipt by the Depository of:
(1) written instructions given in accordance with the
Applicable Procedures from an Agent Member directing the Depository
to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in a Permanent Regulation S Global Note
in a principal amount equal to that of the beneficial interest in a
corresponding Temporary Regulation S Global Note for which the
necessary certifications have been delivered; and
(2) a written order given in accordance with the Applicable
Procedures containing information regarding the account of the Agent
Member, and the Euroclear or CEDEL account for which such Agent
Member's account is held, to be credited with, and the account of the
Agent Member to be debited for, such beneficial interest; and
(iv) receipt by the Trustee of notification from the Depository
in accordance with the Applicable Procedures requesting the exchange of a
principal amount of the Tem-
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porary Regulation S Global Note identified therein for the same amount of
the Permanent Regulation S Global Note and from Euroclear or CEDEL, as the
case may be, of Depository Securities Certifications,
the Trustee, as Registrar, shall, or shall instruct the Depository to, reduce
the principal amount of such Temporary Regulation S Global Note, and increase
the principal amount of such Permanent Regulation S Global Note, by the
principal amount of the beneficial interest in such Temporary Regulation S
Global Note to be so transferred, and the Depository shall credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in such Permanent Regulation S Global Note having a
principal amount equal to the amount by which the principal amount of such
Temporary Regulation S Global Note was reduced upon such transfer.
Notes issued in exchange for interests in a Global Note pursuant to
Section 2.16 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in EXHIBIT A (the
"Certificated Securities") and, if required, shall bear the Private Placement
Legend set forth in Section 2.15. All Notes offered and sold in reliance on
Regulation S shall remain in the form of a Global Note until the consummation of
the Exchange Offer pursuant to the Registration Rights Agreement; PROVIDED,
HOWEVER, that all of the time periods specified in the Registration Rights
Agreement to be complied with by the Company have been so complied with.
SECTION 2.02. EXECUTION AND AUTHENTICATION;
AGGREGATE PRINCIPAL AMOUNT.
Two Officers, or an Officer and an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall sign the Notes for the Company, and the Note Guarantees for the
Subsidiary Guarantors, by manual or facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note or
a Note Guarantee, as the case may be, was an Officer or Assistant Secretary at
the time of such execution but no longer holds that office or position at the
time the Trustee authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authenti-
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cation on the Note. The signature shall be conclusive evidence that the Note
has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue
in the aggregate principal amount not to exceed $150,000,000 in one or more
series, provided that the aggregate principal amount of Initial Notes on the
Issue Date is $90,000,000, (ii) Private Exchange Notes from time to time only in
exchange for a like principal amount of Initial Notes and (iii) Exchange Notes
from time to time only in exchange for (A) a like principal amount of Initial
Notes or (B) a like principal amount of Private Exchange Notes, in each case
upon a written order of the Company in the form of an Officers' Certificate of
the Company. Each such written order shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be authenticated, whether
the Notes are to be Initial Notes, Private Exchange Notes or Exchange Notes and
whether (subject to Section 2.01) the Notes are to be issued as Certificated
Securities or Global Notes or such other information as the Trustee may
reasonably request. The aggregate principal amount of Notes outstanding at any
time may not exceed $150,000,000, except as provided in Sections 2.07 and 2.08.
In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (i) and (iii) of the first sentence of the immediately
preceding paragraph, the Company shall use its reasonable efforts to obtain the
same "CUSIP" number for such Notes as is printed on the Notes outstanding at
such time; PROVIDED, HOWEVER, that if any series of Notes issued under this
Indenture subsequent to the Issue Date is determined by the Company to be a
different class of security than the Notes outstanding at such time for federal
income tax purposes, the Company may obtain a "CUSIP" number for such Notes that
is different than the "CUSIP" number printed on the Notes then outstanding.
Notwithstanding the foregoing, all Notes issued under this Indenture
shall vote and consent together on all matters (as to which any of such Notes
may vote or consent) as one class and no series of Notes will have the right to
vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever
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the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such Authenticating Agent. An
Authenticating Agent has the same rights as an Agent to deal with the Company or
with any Affiliate of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York)
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Company may act as its
own Paying Agent, except that for the purposes of payments on the Notes pursuant
to Sections 4.14 and 4.15, neither the Company nor any Affiliate of the Company
may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days'
written notice to the Company.
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SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and the Company and the Paying Agent shall notify the Trustee of any Default by
the Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee five (5) Business Days before each
Interest Payment Date and at such other times as the Trustee may request in
writing a list as of such date and in such form as the Trustee may reasonably
require of the names and addresses of the Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall, subject to Section 2.17, register the transfer or make
the exchange as requested if its requirements for such transaction are met;
PROVIDED, HOWEVER, that the Notes presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee and the
Registrar or co-Registrar, duly executed by the Holder
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thereof or his attorney duly authorized in writing. To permit registration of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Notes (and each Subsidiary Guarantor shall execute a Note Guarantee
thereon). 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, fee or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchanges or transfers pursuant to Sections 2.10, 3.04, 4.14, 4.15 or 9.05, in
which event the Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes
(whether pursuant to a Change of Control Offer, a Net Proceeds Offer or
otherwise) and ending at the close of business on the day of such mailing,
(ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Note being redeemed in part or
(iii) between a Record Date and the next succeeding Interest Payment Date.
Any holder of a beneficial interest in a Global Note, by acceptance
of such Global Note, agrees that transfers of beneficial interests in such
Global Notes may be effected only through a book entry system maintained by the
Holder of such Global Note (or its agent), and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book entry system.
Neither the Company nor the Trustee shall be liable for any delay by
the Holder of a Global Note or the Depository in identifying the beneficial
owners of any Note and the Company and the Trustee may conclusively rely on
instructions from the Holder of a Global Note or the Depository for all
purposes.
SECTION 2.07. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note and
each Subsidiary Guarantor shall execute a Note Guarantee thereon if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide satisfactory evidence of such loss, destruction or taking,
and an indemnity bond or
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other indemnity of reasonable tenor, sufficient in the reasonable judgment of
the Company, the Subsidiary Guarantors and the Trustee, to protect the Company,
the Subsidiary Guarantors, the Trustee or any Agent from any loss which any of
them may suffer if a Note is replaced. Every replacement Note shall constitute
an obligation of the Company and the Subsidiary Guarantors. The Company and the
Trustee each may charge such Holder for its expenses in replacing such Note.
SECTION 2.08. OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because an Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date, the Maturity Date, the Change of Control
Payment Date or the Net Proceeds Offer Payment Date, the Paying Agent holds U.S.
Legal Tender sufficient to pay all of the principal, premium, if any, and
interest due on the Notes payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this Indenture, then
on and after that date such Notes shall be deemed not to be outstanding and
interest on them shall cease to accrue.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver, consent or notice, Notes owned
by the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Company shall notify the Trustee, in writing, when
it or, to its knowledge, any of its Affiliates repurchases or
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otherwise acquires Notes, of the aggregate principal amount of such Notes so
repurchased or otherwise acquired and such other information as the Trustee may
reasonably request and the Trustee shall be entitled to rely thereon.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes and the Subsidiary
Guarantors shall prepare temporary Note Guarantees thereon upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes and
so indicate in the Officers' Certificate. Without unreasonable delay, the
Company shall prepare and execute, the Trustee shall authenticate, and the
Subsidiary Guarantors shall execute Note Guarantees on, upon receipt of a
written order of the Company pursuant to Section 2.02, definitive Notes in
exchange for temporary Notes.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel and, at the written direction of the
Company, shall dispose, in its customary manner, of all Notes surrendered for
registration of transfer, exchange, payment or cancellation. Subject to Section
2.07, the Company may not issue new Notes to replace Notes that it has paid or
delivered to the Trustee for cancellation. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
The Company will pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Notes. The Company shall,
to the extent lawful, pay in-
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terest on overdue installments of interest (without regard to any applicable
grace periods) from time to time on demand at the rate of interest then borne by
the Notes. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; PROVIDED, HOWEVER, that in no event shall the Company deposit
monies proposed to be paid in respect of defaulted interest later than 11:00
a.m. New York City time on the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Company shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Company,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Company may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use one or more "CUSIP" numbers,
and, if so, the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience
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to Holders; PROVIDED, HOWEVER, that no representation is hereby deemed to be
made by the Trustee as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP numbers.
SECTION 2.14. DEPOSIT OF MONIES.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds
Offer Payment Date, the Company shall have (i) deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date, Maturity Date, Redemption Date, Change of
Control Payment Date or Net Proceeds Offer Payment Date, as the case may be, in
a timely manner which permits the Paying Agent to remit payment to the Holders
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date or Net Proceeds Offer Payment Date, as the case may be or (ii) at
the option of the Company, mailed to the registered address of each Holder of
Notes a check in the amount of the cash payment due in a timely manner which
permits the Holders to receive payment on the Interest Payment Date, Maturity
Date, Redemption Date, Change of Control Payment Date or Net Proceeds Offer
Payment Date, as the case may be.
SECTION 2.15. RESTRICTIVE LEGENDS.
Each Global Note and Certificated Security that constitutes a
Restricted Security or is sold in compliance with Regulation S shall bear the
following legend (the "Private Placement Legend") on the face thereof until
after the second anniversary of the later of the Issue Date and the last date on
which the Company or any Affiliate of the Company was the owner of such Note (or
any predecessor security) (or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder) (or such
longer period of time as may be required under the Securities Act or applicable
state securities laws in the Opinion of Counsel for the Company, unless
otherwise agreed by the Company and the Holder thereof):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
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FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED
TO UNDER 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER
THE SECURITIES ACT, IF APPLICABLE), UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF,
(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3),
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE
FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E), THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S.
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PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Each Global Note shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. 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 SECTION 2.17 OF THE INDENTURE GOVERNING THIS
NOTE.
Each Temporary Regulation S Global Note shall bear the following
legend on the face thereof:
THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL NOTE WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL NOTE MAY NOT BE OFFERED OR SOLD TO A U.S.
PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON PRIOR TO THE
EXPIRATION OF THE RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE), AND NO
TRANSFER OR EXCHANGE OF AN INTEREST IN THIS TEM-
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PORARY REGULATION S GLOBAL NOTE MAY BE MADE FOR AN INTEREST IN A RESTRICTED
GLOBAL NOTE OR IN A PERMANENT REGULATION S GLOBAL NOTE UNTIL AFTER THE
LATER OF THE DATE OF EXPIRATION OF THE RESTRICTED PERIOD AND THE DATE ON
WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITORY SECURITIES
CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR
OWNERS OF SUCH INTEREST ARE NOT U.S. PERSONS.
Each Permanent Regulation S Global Note or certificated Regulation S
security shall bear the following legend on the face thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, ANY U.S. PERSON, UNLESS THE SECURITIES ARE REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF IS AVAILABLE.
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Depository or its custodian and (iii) bear legends as set forth in Section 2.15.
Agent Members shall have no rights under this Indenture with respect
to any Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Company, the Trustee and any Agent of the Company or the Trustee as the absolute
owner of such Global Note 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 Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its
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successors or their respective nominees. Interests of beneficial owners in a
Global Note may be transferred or exchanged for Certificated Securities in
accordance with the rules and procedures of the Depository and the provisions of
Section 2.17. In addition, Certificated Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global Note if
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository for the Global Notes and a successor Depository is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a written
request from the Depository or the Trustee to issue Certificated Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Certificated Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute and the Trustee shall authenticate and deliver, one or more
Certificated Securities of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
the Subsidiary Guarantors shall execute Note Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Certificated Securities of authorized denominations
registered in the names of such beneficial owners.
(e) Any Certificated Security constituting a Restricted Security
delivered in exchange for an interest in a Global Note pursuant to paragraph (b)
or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.17, bear the Private Placement Legend applicable to the Certificated
Securities set forth in Section 2.15.
(f) The Holder of a Global Note 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 Notes.
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SECTION 2.17. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS AND
NON-U.S. PERSONS. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the second
anniversary of the Issue Date (PROVIDED, HOWEVER, that neither the Company
nor any Affiliate of the Company has held any beneficial interest in such
Note, or portion thereof, at any time on or prior to the second anniversary
of the Issue Date) or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of EXHIBIT C and any legal opinions and
certifications required thereby or (2) in the case of a transfer to a
Non-U.S. Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of EXHIBIT D; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Certificated
Securities) a decrease in the principal amount of such Global Note in an amount
equal to the principal amount of the beneficial interest in the Global Note to
be transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Certificated Securities of like tenor and
amount.
(b) TRANSFERS TO QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
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(i) the Registrar shall register the transfer of any Restricted
Security, whether or not such Note bears the Private Placement Legend, if
(x) the requested transfer is after the second anniversary of the Issue
Date; PROVIDED, HOWEVER, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion thereof,
at any time on or prior to the second anniversary of the Issue Date or
(y) if such transfer is being made by a proposed transferor who has checked
the box provided for on the form of Note stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to which
it exercises sole investment discretion and that it and any such account is
a QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Certificated Securities which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by the
Registrar of written instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of such Global
Note in an amount equal to the principal amount of the Certificated
Securities to be transferred, and the Trustee shall cancel the Certificated
Securities so transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date (PROVIDED, HOWEVER, that neither the Company nor
any Af-
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filiate of the Company has held any beneficial interest in such Note, or portion
thereof, prior to or on the second anniversary of the Issue Date), or (ii) there
is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to
the Company and the Trustee to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(d) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain in accordance with its customary procedure
copies of all letters, notices and other written communications received
pursuant to Section 2.16 or this Section 2.17. The Company shall have the right
to inspect and make copies of all such letters, notices or other written
communications at any reasonable time during the Registrar's normal business
hours upon the giving of reasonable written notice to the Registrar.
(e) TRANSFERS OF NOTES HELD BY AFFILIATES. Any certificate
(i) evidencing a Note that has been transferred to an Affiliate of the Company
within two years after the Issue Date, as evidenced by a notation on the
Assignment Form for such transfer or in the representation letter delivered in
respect thereof or (ii) evidencing a Note that has been acquired from an
Affiliate of the Company (other than by an Affiliate of the Company) in a
transaction or a chain of transactions not involving any public offering, shall,
until two years after the last date on which either the Company or any Affiliate
of the Company was an owner of such Note, in each case, bear a legend in
substantially the form set forth in Section 2.15, unless otherwise agreed by the
Company (with written notice thereof to the Trustee).
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ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Paragraph 5 of the
Notes and Section 3.03, it shall notify the Trustee and the Paying Agent in
writing of the Redemption Date and the principal amount of the Notes to be
redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 45 but not more than 60 days before the Redemption Date (unless a
shorter notice period shall be satisfactory to the Trustee, as evidenced in a
writing signed on behalf of the Trustee), together with an Officers' Certificate
stating that such redemption shall comply with the conditions contained herein
and in the Notes, the Redemption Date, the redemption price and the principal
amount of the Notes to be redeemed.
If the Company is required to make an offer to purchase Notes pursuant
to the provisions of Section 4.14 or 4.15 hereof, it shall furnish to the
Trustee at least 45 days but not more than 60 days before a Change of Control
Payment Date or the Net Proceeds Payment Date, as the case may be (or such
shorter period as may be agreed to by the Trustee in writing), an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the purchase shall occur, (ii) the Change of Control Payment Date or the Net
Proceeds Payment Date, as the case may be, (iii) the principal amount of Notes
to be purchased, (iv) the purchase price and (v) a statement to the effect that
(a) the Company or one of its Subsidiaries has effected an Asset Sale and the
conditions set forth in Section 4.15 have been satisfied or (b) a Change of
Control has occurred and the conditions set forth in Section 4.14 have been
satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a PRO RATA basis, by lot or by such method as
the Trustee shall deem fair and appropriate;
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PROVIDED, HOWEVER, that no Notes of a principal amount of U.S. $1,000 or less
shall be redeemed in part; PROVIDED, FURTHER, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a PRO RATA
basis or on as nearly a PRO RATA basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions thereof called for redemption as long
as the Company has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to this Indenture.
SECTION 3.03. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2003, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
Year Percentage
---- ----------
2003 . . . . . . . . . . . . . . . . . . . . . . . 104.938%
2004 . . . . . . . . . . . . . . . . . . . . . . . 103.292%
2005 . . . . . . . . . . . . . . . . . . . . . . . 101.646%
2006 and thereafter. . . . . . . . . . . . . . . . 100.000%
(b) OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time,
or from time to time, on or prior to February 1, 2001, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings to
redeem up to 35% of the sum of (i) the initial aggregate principal amount of
Notes issued in the Offering and (ii) the respective initial aggregate principal
amounts of Notes issued under this Indenture after the Issue Date, at a
redemption price equal to
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109.875% of the principal amount thereof plus accrued and unpaid interest
thereon and Additional Interest, if any, to the date of redemption; PROVIDED
that at least 65% of the sum of (i) the initial aggregate principal amount of
Notes issued in the Offering and (ii) the respective initial aggregate principal
amounts of Notes issued under this Indenture after the Issue Date remains
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 120 days after the consummation
of any such Public Equity Offering.
(c) OPTIONAL REDEMPTION UPON CHANGE OF CONTROL. Upon the occurrence
of a Change of Control prior to February 1, 2003, the Notes will be redeemable,
in whole or in part, at the option of the Company, upon not less than 30 nor
more than 60 days prior notice to each Holder of Notes to be redeemed, at a
redemption price equal to the sum of (i) the then outstanding principal amount
thereof plus (ii) accrued and unpaid interest thereon and Additional Interest,
if any, to the redemption date plus (iii) the Applicable Premium.
SECTION 3.04. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before the Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail to each Holder of Notes to be redeemed at its registered address,
with a copy to the Trustee and any Paying Agent. At the Company's request, the
Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. The Company shall provide such notices of redemption to the
Trustee at least three Business Days (or such shorter period as shall be agreed
to by the Trustee) before the intended mailing date. In any case, failure to
give such notice or any defect in the notice to the Holder of any Note shall not
affect the validity of the proceeding for the redemption of any other Note.
Each notice of redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
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(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes or applicable portions thereof called for
redemption ceases to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Notes is to receive payment of the
redemption price plus accrued interest as of the Redemption Date, if any,
upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption.
No representation is made as to the accuracy of the CUSIP numbers
listed in such notice or printed on the Notes.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date and at the redemption price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the redemption
price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity
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of which is on or prior to the Redemption Date, shall be payable to Holders of
record at the close of business on the relevant record dates referred to in the
Notes. Interest shall accrue on or after the Redemption Date and shall be
payable only if the Company defaults in payment of the redemption price. If
mailed in the manner herein, the notice shall be conclusively presumed to have
been given whether or not the Holder receives such notice. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of notice to any other Holder.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.
On or before 11:00 a.m. New York City time on the Redemption Date and
in accordance with Section 2.14, the Company shall deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the redemption price plus accrued interest,
if any, of all Notes to be redeemed on that date. The Paying Agent shall
promptly return to the Company any U.S. Legal Tender so deposited which is not
required for that purpose, except with respect to monies owed as obligations to
the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such redemption price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
SECTION 3.07. NOTES REDEEMED IN PART.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
SECTION 3.08. SINKING FUND.
There shall be no sinking fund for the payment of principal on the
Notes to the Holders.
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ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
(a) The Company shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay in a
timely manner the installment in full and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02.
SECTION 4.03. CORPORATE EXISTENCE.
Except as provided in Article Five, the Company shall do or shall
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Restricted Subsidiary and
the rights (charter and statutory) and material franchises of the Company and
each such Restricted Subsidiary;
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PROVIDED, HOWEVER, that the Company shall not be required to preserve, with
respect to itself, any material right or franchise and, with respect to any of
its Restricted Subsidiaries, any such existence, material right or franchise, if
the Board of Directors of the Company shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole.
SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of the
Restricted Subsidiaries or properties of the Company or any of the Restricted
Subsidiaries of the Company and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a Lien upon the
property of the Company or any of the Restricted Subsidiaries of the Company;
PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate negotiations or proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required under GAAP, have
been taken.
SECTION 4.05. [Intentionally Omitted]
SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each of the Company's fiscal years, an Officers' Certificate (signed
by the principal executive officer, principal financial officer or principal
accounting officer) stating that a review of its activities and the activities
of its Restricted Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officers with a view to determining whether
it has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such officer signing such certificate,
that to the best of such officers' knowledge the Company during such preceding
fiscal year has kept, observed, performed and fulfilled each and every such
obligation and no Default or Event of Default occurred during such year and at
the
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date of such certificate there is no Default or Event of Default that has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event of Default and
its status with particularity.
(b) So long as any of the Notes are outstanding, if any Default or
Event of Default has occurred and is continuing, the Company shall promptly
deliver to the Trustee by registered or certified mail or by telegram, telex or
facsimile transmission followed by hard copy by registered or certified mail an
Officers' Certificate specifying such event, notice or other action within five
Business Days of its actually becoming aware of such occurrence.
SECTION 4.07. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as could not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition or results of operations of the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.08. REPORTS TO HOLDERS.
The Company shall deliver to the Trustee within 15 days after the
filing of the same with the Commission, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the Commission from and after the commencement of an Exchange
Offer or the effectiveness of the Shelf Registration Statement, to the extent
permitted, and provide the Trustee and Holders with such annual reports and such
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act. The Company will also comply with the other provisions of TIA
Section 314(a).
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SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Equity Interests of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes (except the prepayment, purchase, repurchase or other
acquisition or retirement of Indebtedness in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of prepayment, purchase, repurchase or other
acquisition or retirement) or (d) make any Investment (other than Permitted
Investments) (each of the foregoing actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto, (i) a Default or
an Event of Default shall have occurred and be continuing or (ii) the Company is
not able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with
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Section 4.12 or (iii) the aggregate amount of Restricted Payments (including
such proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company from the first day of the Company's first fiscal
quarter commencing after the Issue Date to the last day of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such proposed Restricted Payment (the "Reference Date")
(treating such period as a single accounting period); plus (x) 100% of the
aggregate net cash proceeds received by the Company from any Person (other than
a Restricted Subsidiary of the Company) from (i) the issuance and sale
subsequent to the Issue Date and on or prior to the Reference Date of Qualified
Equity Interests of the Company and (ii) Indebtedness or Disqualified Capital
Stock that has been converted into or exchanged for Qualified Equity Interests
together with the aggregate net cash proceeds received by the Company at the
time of such conversion or exchange; plus (y) without duplication of any amounts
included in clause (iii)(x) above, 100% of the aggregate net cash proceeds of
any equity contribution received by the Company from a holder of the Company's
Capital Stock; plus (z) an amount equal to the net reduction in Investment made
pursuant to this first paragraph of Section 4.10 in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or any
Restricted Subsidiary (except to the extent any such payment is included in the
calculation of Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (determined and valued in each case as
provided in the definition of "Investments"), not to exceed the amount of
Investments previously made by the Company or any Restricted Subsidiary in such
Person.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
or the consummation of any purchase or redemption within 60 days after the date
of declaration of such dividend or the giving of any irrevocable notice in
respect of any such purchase or redemption if the dividend or purchase or
redemption would have been permitted on the date of declaration or the giving of
such irrevocable notice; (2) if no Default or Event of Default shall have
occurred and be continuing, the acquisition of any shares of Capital Stock of
the
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Company, either (i) solely in exchange for Qualified Equity Interests of the
Company or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Restricted Subsidiary of the Company)
of Qualified Equity Interests of the Company; (3) if no Default or Event of
Default shall have occurred and be continuing, the purchase, redemption,
defeasance or other acquisition or retirement for value of any Indebtedness of
the Company that is subordinate or junior in right of payment to the Notes
either (i) solely in exchange for Qualified Equity Interests of the Company, or
(ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Restricted Subsidiary of the Company) of (A) Qualified
Equity Interests of the Company or (B) Refinancing Indebtedness; (4) to the
extent constituting Restricted Payments, the Specified Affiliate Payments; (5)
(i) without limitation of the parenthetical in clause (a) of the preceding
paragraph, the payment of any regular quarterly dividends in respect of the
Redeemable Preferred Stock in the form of additional shares of Redeemable
Preferred Stock having the terms and conditions set forth in the Certificate of
Designations for the Redeemable Preferred Stock as in effect on the Issue Date;
and (ii) commencing January 31, 2001, the payment of regular quarterly cash
dividends (in the amount no greater than that provided for in the Certificate of
Designations for the Redeemable Preferred Stock as in effect on the Issue Date),
out of funds legally available therefor, on any of the shares of Redeemable
Preferred Stock issued and outstanding on the Issue Date and on any shares of
Redeemable Preferred Stock issued in payment of dividends made or subsequently
issued in payment of dividends thereon in respect of such shares of Redeemable
Preferred Stock outstanding on the Issue Date; PROVIDED that, at the time of and
immediately after giving effect to the payment of such cash dividend, the
Consolidated Fixed Charge Coverage Ratio, giving PRO FORMA effect to the payment
of such dividend as if it had occurred at the beginning of the four full fiscal
quarters immediately preceding the date on which the dividend is to be paid,
would have been equal to at least 2.0 to 1.0 and (6) Restricted Payments in an
aggregate amount not to exceed $2.5 million. In determining the aggregate
amount of Restricted Payments made subsequent to the Issue Date in accordance
with clause (iii) of the immediately preceding paragraph, amounts expended
pursuant to clauses (1) without duplication, (2)(ii), 3(ii)(A), (4) (to the
extent provided in the definition of "Specified Affiliate Payments"), (5)(ii)
and (6) shall be included in such calculation and all other Restricted Payments
permitted pursuant to this paragraph shall be excluded from such aggregate
amount of Restricted Payments.
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Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed.
In making the computations required by this Section 4.10, (i) the
Company may use audited financial statements for the portions of the relevant
period for which audited financial statements are available on the date of
determination and unaudited financial statements and other current financial
data based on the books and records of the Company for the remaining portion of
such period and (ii) the Company will be permitted to rely in good faith on the
financial statements and other financial data derived from its books and records
that are available on the date of determination. If the Company makes a
Restricted Payment that, at the time of the making of such Restricted Payment,
would in the good faith determination of the Company be permitted under the
requirements of this Indenture, such Restricted Payment will be deemed to have
been made in compliance with this Indenture notwithstanding any subsequent
adjustments made in good faith to the Company's financial statements affecting
Consolidated Net Income of the Company for any period. For the avoidance of
doubt, it is expressly agreed that no payment or other transactions permitted by
clause (i), (iv), (v), (vi) or (viii) of paragraph (b), or clause (i) of
paragraph (c), of Section 4.11 shall be considered a Restricted Payment for
purposes of, or otherwise restricted by, this Indenture.
SECTION 4.11. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are no less favorable
than those that might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are part of a common plan)
involving aggregate payments or other property with a fair mar-
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ket value in excess of $2.5 million shall be approved by the Board of Directors
of the Company or such Restricted Subsidiary, as the case may be, such approval
to be evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If the
Company or any Restricted Subsidiary of the Company enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $7.5 million,
the Company or such Restricted Subsidiary, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view, from
an Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in paragraph (a) above shall not apply
to (i) reasonable fees and compensation paid to and indemnity provided for the
benefit of officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company as determined in good faith by the
Company's Board of Directors or senior management; (ii) transactions exclusively
between or among the Company and any of its Restricted Subsidiaries or
exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by this Indenture; (iii) the
transactions and payments contemplated by any agreement as in effect as of the
Issue Date (including, without limitation, the Recapitalization Agreement and
the Management Agreement) or any amendment thereto or any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; (iv) the payment to the Principals or
their Related Parties and Affiliates of annual management and advisory fees and
related expenses; PROVIDED that the amount of such fees shall not exceed
$500,000 per fiscal year; (v) loans and advances (or guarantees of third party
loans) to officers or employees of the Company or any of its Restricted
Subsidiaries in the ordinary course of business not to exceed $250,000 at any
time outstanding; (vi) the payment of fees and expenses related to the
Recapitalization; (vii) Permitted Investments and Restricted Payments permitted
by this Indenture and (viii) any employment agreement, collective bargaining
agreement, employee benefit plan, related trust agreement, indemnification
agreement, benefit plan or similar arrangement for the benefit of directors or
officers entered into in the ordinary course of business.
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(c) In addition, the last sentence of paragraph (a) shall not apply
to (i) payments by the Company or any of its Restricted Subsidiaries to the
Principals or their Related Parties and Affiliates for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including in connection with acquisition or divestitures,
which payments are approved by the Board of Directors of the Company in good
faith, and (ii) Indebtedness permitted by paragraph (xiv) of the definition of
"Permitted Indebtedness."
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, or become liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (other than Permitted Indebtedness);
PROVIDED, HOWEVER, that if no Default or Event of Default shall have occurred
and be continuing at the time of or as a consequence of the incurrence of any
such Indebtedness, the Company and the Subsidiary Guarantors may incur
Indebtedness (including, without limitation, Acquired Indebtedness) if on the
date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than 2.0 to 1.0.
For the purposes of determining compliance with this Section 4.12, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness or is otherwise entitled to be incurred
pursuant to this Section 4.12, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this Section
4.12 and such items of indebtedness will be treated as having been incurred
pursuant to only one of such clauses or pursuant to the first paragraph hereof.
Accrual of interest and the accretion of accreted value will not be deemed to be
an incurrence of Indebtedness for purposes of this Section 4.12.
The Company will not incur any Indebtedness which by its terms (or by
the terms of any agreement governing such Indebtedness) is subordinated in right
of payment to any other Indebtedness of the Company unless such Indebtedness is
also by its terms (or by the terms of any agreement governing such Indebtedness)
made expressly subordinate in right of payment to the Notes pursuant to
subordination provisions that are sub-
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stantively identical to the subordination provisions of such Indebtedness (or
such agreement) that are most favorable to the holders of any other Indebtedness
of the Company.
SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock; (b) make
loans or advances or to pay any Indebtedness or other obligation owed to the
Company or any other Restricted Subsidiary of the Company; or (c) transfer any
of its property or assets to the Company or any other Restricted Subsidiary of
the Company, except for such encumbrances or restrictions existing under or by
reason of: (1) this Indenture; (2) any security or pledge agreements, leases or
options (or similar agreements) containing customary restrictions on transfers
of the assets encumbered thereby or leased or subject to option or on the
transfer or subletting of the leasehold interest represented thereby; (3) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired; (4)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (5) any contracts for the sale of
assets, including, without limitation, any restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all of the Capital Stock or assets of
such Restricted Subsidiary, pending the closing of such sale or disposition,
PROVIDED that any such restriction relates solely to the assets that are the
subject of such agreement; (6) restrictions on cash or other deposits or net
worth imposed by leases entered into in the ordinary course of business; (7)
customary provisions in joint venture agreements and other similar agreements;
(8) the New Credit Facility; (9) any agreement or instrument governing Capital
Stock of any Person that is acquired; and (10) any encumbrances or restrictions
imposed by any amendments, modifications, restatements, renewals,
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increases, supplements, refundings, replacements or refinancings of contracts,
instruments or obligations referred to in clauses (1) through (9); PROVIDED that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of the
Company, no more restrictive with respect to such dividend and other transfer
restrictions than those contained in the dividend or other transfer restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.
SECTION 4.14. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, unless irrevocable
notice of redemption for all of the Notes is given within 30 days after such
Change in Control in accordance with Section 3.03(c), each Holder shall have the
right to require that the Company purchase all or a portion of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer"), at
a purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, thereon to the date of purchase.
(b) Within 30 days following the date upon which the Change of
Control occurred, unless irrevocable notice of redemption for all of the Notes
is given within 30 days after such Change in Control in accordance with Section
3.03(c), the Company shall send, by first class mail, a notice to each Holder at
such Holder's last registered address, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Change of Control Offer. Such notice
shall state:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Notes tendered and not withdrawn shall be
accepted for payment;
(ii) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 45 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(iii) that any Note not tendered shall continue to accrue interest;
(iv) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to
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the Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(v) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(vi) that Holders shall be entitled to withdraw their election if
the Paying Agent receives, not later than the second Business Day prior to
the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in part shall be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; PROVIDED, HOWEVER, that each Note purchased and each
new Note issued shall be in an original principal amount of $1,000 or
integral multiples thereof; and
(viii) the circumstances and relevant facts regarding such Change of
Control.
On the Change of Control Payment Date, the Company shall, to the
extent permitted by law, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (iii) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that such Notes or portions thereof have
been tendered to and purchased by the Company. The Paying Agent will promptly
either (x) pay to the Holder against presentation and surrender (or, in the case
of partial payment, endorsement) of the Global Notes or (y) in the case of
Certificated Securities, mail to each Holder of Notes the Change of Control
Payment for such Notes, and the Trustee will promptly authenticate and deliver
to the Holder of the Global Notes a new Global Note or Notes or, in the case of
Certificated Securities, mail to each Holder new Certificated Securities, as ap-
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plicable, equal in principal amount to any unpurchased portion of the Notes
surrendered, if any, provided that each new Certificated Security will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
notify the Trustee and the Holders of the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
Neither the Board of Directors of the Company nor the Trustee may
waive the provisions of this Section 4.14 relating to the Company's obligation
to make a Change of Control Offer or a Holder's right to redemption upon a
Change of Control.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.14, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 4.14 by virtue thereof.
SECTION 4.15. LIMITATION ON ASSET SALES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors), (ii) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash or Cash Equivalents and is received at the
time of such disposition; PROVIDED that the amount of (x) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet), of the Company or any Restricted Subsidiary (other than liabilities that
are by their terms subordinated to the Notes or, in the case of liabilities of a
Restricted Subsidiary, any Note Guarantee of such Subsidiary) that are assumed
by the transferee of any such assets and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received) within 180 days after receipt, shall
be deemed to be cash for purposes of this
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clause (ii); PROVIDED, FURTHER, HOWEVER, that this clause (ii) shall not apply
to any sale of Capital Stock of or other Investments in Unrestricted
Subsidiaries and (iii) upon the consummation of an Asset Sale, the Company shall
apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds
relating to such Asset Sale within 360 days of receipt thereof either (A) to
prepay (and, in the case of any Indebtedness under any revolving credit
facility, including the New Credit Facility, effect a permanent reduction in the
availability under such revolving credit facility) any Indebtedness, (B) to make
an investment in properties and assets that replace the properties and assets
that were the subject of such Asset Sale or in properties and assets that will
be used in the business of the Company and its Restricted Subsidiaries as
existing on the Issue Date or in businesses reasonably related thereto
("Replacement Assets"), or (C) a combination of prepayment and investment
permitted by the foregoing clauses (iii)(A) and (iii)(B). On the 361st day
after an Asset Sale or such earlier date, if any, as the Board of Directors of
the Company or of such Restricted Subsidiary determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A),
(iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net Proceeds
Offer Trigger Date"), such aggregate amount of such Net Cash Proceeds which have
not been applied on or before such Net Proceeds Offer Trigger Date as permitted
in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each
a "Net Proceeds Offer Amount") shall be applied by the Company or such
Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45
days following the applicable Net Proceeds Offer Trigger Date, from all Holders
on a PRO RATA basis, that amount of Notes issued under this Indenture equal to
the Net Proceeds Offer Amount at a price equal to 100% of the principal amount
of the Notes to be purchased, plus accrued and unpaid interest thereon, if any,
to the date of purchase; PROVIDED, HOWEVER, that if at any time any non-cash
consideration received by the Company or any Restricted Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted into
or sold or otherwise disposed of for cash (other than interest or dividends
received with respect to any such non-cash consideration), then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this Section 4.15.
The Company may defer the Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer Amount equal to or in excess of $10.0 million
resulting from one or more Asset Sales (at which time, the entire unutilized Net
Pro-
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ceeds Offer Amount, and not just the amount in excess of $10.0 million, shall be
applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor Person shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for purposes of this
Section 4.15, and shall comply with the provisions of this Section 4.15 with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.15.
Notwithstanding the two immediately preceding paragraphs, the Company
and its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Replacement Assets and (ii) such
Asset Sale is for fair market value; PROVIDED that any consideration not
constituting Replacement Assets received by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the two preceding paragraphs.
Each Net Proceeds Offer will be mailed to the record Holders as shown
on the register of Holders within 25 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a PRO RATA basis (based on amounts tendered). A
Net Proceeds Offer shall remain open for a period of 20 Business Days or such
longer period as may be required by law.
The notice, which shall govern the terms of the Net Proceeds Offer,
shall include such disclosures as are required by applicable law and shall
state:
(i) that the Net Proceeds Offer is being made pursuant to this
Section 4.15;
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(ii) the purchase price (including the amount of accrued interest, if
any) to be paid for Notes purchased pursuant to the Net Proceeds Offer and
the Net Proceeds Payment Date;
(iii) that any Note not tendered for payment will continue to accrue
interest in accordance with the terms thereof;
(iv) that, unless the Company defaults on making the payment, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Payment Date;
(v) that Holders accepting the Net Proceeds Offer to have their
Notes purchased pursuant to the Net Proceeds Offer will be required to
surrender their Notes to the Paying Agent at the address specified in the
notice prior to the close of business on the Net Proceeds Payment Date;
(vi) that Holders will be entitled to withdraw their acceptance if
the Paying Agent receives, not later than the close of business on the
second Business Day prior to the Net Proceeds Payment Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; PROVIDED that each Note purchased and each such new
Note issued shall be in an original principal amount in denominations of
$1,000 and integral multiples thereof;
(viii) any other procedures that a Holder must follow to accept a Net
Proceeds Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
On the Net Proceeds Payment Date, the Company shall (i) accept for
payment Notes or portions thereof tendered pursuant to the Net Proceeds Offer in
accordance with this Section 4.15, (ii) deposit timely with the Paying Agent
U.S. Legal Tender sufficient to pay the purchase price, plus accrued interest,
if any, of all Notes to be purchased in accordance with
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this Section 4.15 and (iii) deliver to the Trustee Notes so accepted together
with an Officers' Certificate stating the Notes or portions thereof tendered to
and accepted for payment by the Company.
For purposes of this Section 4.15, the Trustee shall act as the Paying
Agent. The Paying Agent shall promptly mail or deliver to the Holders of Notes
so accepted payment in an amount equal to the purchase price for such Notes, and
the Company shall execute and issue, and the Trustee shall promptly authenticate
and mail to such Holders, a new Note equal in principal amount to any
unpurchased portion of the Note surrendered; PROVIDED that each such new Note
shall be issued in an original principal amount in denominations of $1,000 and
integral multiples thereof. The Company will send to the Trustee and the
Holders of Notes on or as soon as practicable after the Net Proceeds Payment
Date a notice setting forth the results of the Net Proceeds Offer. Any Notes
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.15 by virtue thereof.
SECTION 4.16. LIMITATION ON PREFERRED STOCK OF
RESTRICTED SUBSIDIARIES.
The Company will not permit any of its Restricted Subsidiaries to
issue any Preferred Stock (other than to the Company or to a Wholly Owned
Restricted Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly Owned Restricted Subsidiary of the Company) to own any
Preferred Stock of any Restricted Subsidiary of the Company.
SECTION 4.17. LIMITATION ON LIENS.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company
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or any of its Restricted Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Notes, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens and (ii) in all
other cases, the Notes are equally and ratably secured, except in each case for
(A) Liens existing as of the Issue Date to the extent and in the manner such
Liens are in effect on the Issue Date; (B) Liens of the Company or a Restricted
Subsidiary of the Company on assets of any Restricted Subsidiary of the Company;
(C) Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Indenture;
PROVIDED, HOWEVER, that such Liens do not extend to or cover any property or
assets of the Company or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (D) Permitted Liens.
SECTION 4.18. LIMITATION OF GUARANTEES BY RESTRICTED SUBSIDIARIES.
The Company will not permit any of its domestic Restricted
Subsidiaries, directly or indirectly, by way of the pledge of any intercompany
note or otherwise, to guarantee any Indebtedness of the Company unless, in any
such case, (a) such Restricted Subsidiary executes and delivers a supplemental
indenture to this Indenture providing a Note Guarantee by such Restricted
Subsidiary and (b) if any such guarantee of such Restricted Subsidiary is
provided in respect of Indebtedness that is expressly subordinated to the Notes,
the guarantee or other instrument provided by such Restricted Subsidiary in
respect of such subordinated Indebtedness shall be subordinated to the Note
Guarantee pursuant to subordination provisions no less favorable to the Holders
of the Notes than those contained in this Indenture.
SECTION 4.19. CONDUCT OF BUSINESS.
The Company and its Restricted Subsidiaries will not engage in any
businesses which are not the same, similar or reasonably related or
complementary to the businesses in which the Company and its Restricted
Subsidiaries are engaged on the Issue Date (as determined in good faith by the
Board of Directors of the Company).
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS.
(a) The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or the
Person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Restricted Subsidiaries substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (y) shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Notes and the performance of every covenant of the Notes, this Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company or
such Surviving Entity, as the case may be, shall be able to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.12; (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (iv) the Company or the
Surviving Entity shall have delivered to the Trustee an Officers'
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Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to such
transaction have been satisfied.
(b) For purposes of this Section 5.01, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
(c) Notwithstanding clauses (ii), (iii) and (iv) of paragraph (a) of
this Section 5.01, (i) any Restricted Subsidiary may consolidate with, merge
into or transfer all or part of its properties and assets to the Company, and
(ii) EHI may merge with (A) Elgar at any time following the Issue Date, or
(B) an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction.
(d) Notwithstanding the foregoing, the merger of MergerCo with and
into EHI as contemplated by the Recapitalization Agreement on the Issue Date
shall be permitted.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with Section
5.01 in which the Company is not the Surviving Entity, the Surviving Entity
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture and the Notes with the same effect as if
such Surviving Entity had been named as such and thereafter the Company will be
discharged from all of its obligations and covenants under the Indenture and
Notes.
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ARTICLE SIX
REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" means any of the following events:
(a) the failure to pay interest on any Notes when the same becomes
due and payable and the default continues for a period of 30 days;
(b) the failure to pay the principal on any Notes when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer);
(c) a default in the observance or performance of any other covenant
or agreement contained in this Indenture which default continues for a
period of 60 days after written notice specifying the default (and
demanding that such default be remedied) is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% of
the outstanding principal amount of the Notes (except in the case of a
default with respect to Section 5.01, which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
(d) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company and such failure continues for a period of 20 days or more, or the
acceleration of the final stated maturity of any such Indebtedness (which
acceleration is not rescinded, annulled or otherwise cured within 20 days
of receipt by the Company or such Restricted Subsidiary of notice of any
such acceleration) if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $5.0 million or more at any time;
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(e) one or more judgments in an aggregate amount in excess of $5.0
million shall have been rendered against the Company or any of its
Significant Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable; or
(f) the Company or any of its Significant Subsidiaries pursuant to or
under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in
an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property; or
(iv) makes a general assignment for the benefit of its
creditors; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries for all or substantially all of their
properties taken as a whole, or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and in each case the order or decree remains unstayed and in effect for 60
days.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
paragraph (f) or (g) of Section 6.01 relating to the Company) shall occur and be
continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Notes may declare the principal of and accrued interest on all the
Notes to be due and payable by notice in writing to the
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Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice"), and the same shall
become immediately due and payable. If an Event of Default specified in
paragraph (f) or (g) of Section 6.01 relating to the Company occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and
unpaid interest and Additional Interest, if any, on all of the outstanding Notes
shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid and
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and any
other amounts due to the Trustee pursuant to the provisions of Section 7.07. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the principal of, premium, if any, or interest or Additional
Interest, if any, on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
(b) All rights of action and claims under this Indenture or the Notes
may be enforced by the Trustee even if it does not possess any of the Notes 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 to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Prior to the acceleration of the Notes, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may, on behalf of the Holders of all the Notes, waive any existing
Default or Event of Default and its consequences under this Indenture, except a
Default or Event of Default specified in paragraph (a) or (b) of Section 6.01 or
in respect of any provision hereof which cannot be modified or amended without
the consent of the Holder so affected pursuant to Section 9.02. When a Default
or Event of Default is so waived, it shall be deemed cured and shall cease to
exist and any Event of Default arising therefrom shall be deemed to have been
cured and waived for every purpose under this Indenture, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any consequent right. This Section 6.04 shall be in lieu of Section
316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of the Notes may not enforce this Indenture or the Notes
except as provided in this Article Six and under the TIA. The Holders of a
majority in aggregate principal amount of the then outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee, PROVIDED, HOWEVER, that the Trustee may refuse to follow any
direction (a) that conflicts with any rule of law or this Indenture, (b) that
the Trustee, in its sole discretion, determines may be unduly prejudicial to the
rights of another Holder, or (c) that may expose the Trustee to personal
liability for which adequate indemnity provided to the Trustee against such
liability is not reasonably assured to it; PROVIDED, FURTHER, HOWEVER, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction or this Indenture. This Section 6.05 shall be
in lieu of Section 316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of
the TIA is hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
SECTION 6.06. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any
proceeding with respect to this Indenture or the Notes or any remedy hereunder,
unless the Holders of at least 25% in
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aggregate principal amount of the outstanding Notes have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee under the Notes and this Indenture, the Trustee has failed to institute
such proceeding within 60 days after receipt of such notice, request and offer
of indemnity and the Trustee, within such 60-day period, has not received
directions inconsistent with such written request by Holders of a majority in
aggregate principal amount of the outstanding Notes.
The foregoing limitations shall not apply to a suit instituted by a
Holder of a Note for the enforcement of the payment of the principal of,
premium, if any, or interest or Additional Interest, if any, on, such Note on or
after the respective due dates expressed or provided for in such Note.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
SECTION 6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision in this Indenture, the right of
any Holder of a Note to receive payment of the principal of, premium, if any,
and interest or Additional Interest, if any, on such Note, on or after the
respective due dates expressed or provided for in such Note, or to bring suit
for the enforcement of any such payment on or after the respective due dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in paragraph (a) or (b) of Section
6.01 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 Notes for the whole amount of the principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum provided for by the
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any other
amounts due the Trustee pursuant to the provisions of Section 7.07.
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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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents, counsel, accountants and
experts) and the Holders allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six it
shall pay out such money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the cost
and expenses of collection;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest (including any Additional Interest);
Third: to Holders for the principal amounts (including any premium)
owing under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for the principal
(including any premium); and
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Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need undertake to perform only those duties as are
specifically set forth in this Indenture and no covenants or obligations
shall be implied in this Indenture that are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed
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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 that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any 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 for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01:
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(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate or
an Opinion of Counsel, which shall conform to Sections 11.04 and 11.05.
The Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect to any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney and to consult with the officers and
representatives of the Company, including the Company's accountants and
attorneys during reasonable business hours and subject to executing a
confidentiality undertaking in customary form with respect to confidential
and/or proprietary information of the Company and its Subsidiaries.
(f) The Trustee shall be under no obligation to exercise any of its
rights or powers vested in it by this
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Indenture at the request, order or direction of any of the Holders pursuant
to the provisions of this Indenture, unless such Holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee against the
costs, expenses and liabilities which may be incurred by it in compliance
with such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(h) Delivery of reports, information and documents to the Trustee
under Section 4.08 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 exclusively on
Officers' Certificates).
(i) The Trustee shall not be charged with knowledge of any Default or
Event of Default, of the identity of any Restricted Subsidiary or of the
existence of any Change of Control or Asset Sale unless either (i) a Trust
Officer shall have actual knowledge thereof, or (ii) the Trustee shall have
received written notice thereof from the Company or any Holder of the
Notes.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any of its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement of the Company in this
Indenture or the Notes other than the Trustee's certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to a Trust Officer, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Note, including an accelerated payment, a
Default in payment on the Change of Control Payment Date pursuant to a Change of
Control Offer or on the Net Proceeds Offer Payment Date pursuant to a Net
Proceeds Offer and a Default in compliance with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of
the proviso to Section 315(b) of the TIA and such proviso to Section 315(b) of
the TIA is hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after May 15 of each year beginning with 1998, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA Section
313(d).
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its services as has been agreed to in writing signed by the
Company and the Trustee. 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
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expenses incurred or made by it in connection with the performance of its duties
under this Indenture. Such expenses shall include the reasonable fees and
expenses of the Trustee's agents, counsel, accountants and experts.
The Company shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders, Affiliates and directors and
officers for, and hold them each harmless against, any and all loss, liability,
damage, claim or expense (including reasonable fees and expenses of counsel),
incurred by them except for such actions to the extent caused by any negligence,
bad faith or willful misconduct on their part, arising out of or in connection
with the acceptance or administration of this trust including the reasonable
costs and expenses of enforcing this Indenture against the Company (including
those costs and expenses pursuant to this Section 7.07) and defending themselves
against any claim or liability in connection with the exercise or performance of
any of their rights, powers or duties hereunder. The Trustee shall notify the
Company promptly in writing of any claim asserted against the Trustee for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall
not relieve the Company of its Obligations hereunder except to the extent such
failure shall have prejudiced the Company. At the Company's sole discretion,
the Company shall defend the claim and the Trustee shall cooperate and may
participate in the defense; PROVIDED, HOWEVER, that any settlement of a claim
shall be approved in writing by the Trustee if such settlement would result in
an admission of liability by the Trustee or if such settlement would not be
accompanied by a full release of the Trustee for all liability arising out of
the events giving rise to such claim. Alternatively, the Trustee may at its
option have separate counsel of its own choosing and the Company shall pay the
reasonable fees and expenses of such counsel, PROVIDED 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 such parties in connection with
such defense. The Company need not reimburse any expense or indemnify against
any loss, liability, damage, claim or expense incurred by an indemnified party
through such party's own willful misconduct, negligence or bad faith. The
Company need not pay any settlement made without its consent (which consent
shall not unreasonably be withheld).
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its
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capacity as Trustee, except assets or money held in trust to pay principal of or
premium, if any, or interest or Additional Interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in paragraph (f) or (g) of Section 6.01 occurs, such expenses
and the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the termination of this Indenture.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time upon not less than 10 Business
Days' notice by so notifying the Company in writing. The Holders of a majority
in principal amount of the outstanding Notes may remove the Trustee and appoint
a successor Trustee with the Company's consent, by so notifying the Company and
the Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, pow-
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ers and duties of the Trustee under this Indenture. The Company shall mail
notice of such successor Trustee's appointment to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; PROVIDED, HOWEVER, that
such corporation shall be otherwise qualified and eligible under this
Article Seven.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the
case of a Trustee that is a subsidiary of another bank or a corporation included
in a bank holding company system, the related bank or bank holding company)
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, and have a Corporate
Trust Office in the City of New York. In addition, if the Trustee is a
subsidiary of another bank or a corporation included in a bank holding company
system, the Trustee, independently of such bank or bank holding company, shall
meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded
from the operation
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of TIA Section 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in this Indenture) as to all outstanding
Notes when (a) either (i) all Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest and Additional Interest, if any, on the Notes to
the date of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be; (b) the Company has paid all other sums payable
under this Indenture by the Company; and (c) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that all
conditions precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with.
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The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Subsidiary Guarantors discharged with
respect to the outstanding Notes ("Legal Defeasance"), this Indenture and the
Note Guarantees. Such Legal Defeasance means that the Company and the
Subsidiary Guarantors shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes and the Note Guarantees and
cured all then existing Defaults and Events of Default, except for (a) the
rights of Holders to receive payments in respect of the principal of, premium,
if any, and interest and Additional Interest, if any, on the Notes when such
payments are due and of the defeasance trust referred to below, (b) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (c) the rights, powers, trust,
duties and immunities of the Trustee and the Company's obligations in connection
therewith and (d) the Legal Defeasance provisions of this Section 8.01. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and the Subsidiary Guarantors released with respect
to covenants contained in Sections 4.04, 4.08 and 4.10 through 4.19 and Article
Five ("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, those events described
under Section 6.01 (except those events described in paragraph (a), (b), (f) and
(g) of Section 6.01) will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders cash in U.S. Legal Tender, non-callable
U.S. Government Obligations, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the Notes on the stated date for payment thereof or on the
applicable Redemption Date, as the case may be;
(b) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Company has received
from, or
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there has been published by, the Internal Revenue Service a ruling or (ii)
since the date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit
and the grant of any Lien securing such borrowing) or insofar as Events of
Default under paragraph (f) or (g) of Section 6.01 from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or re-
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lating to the Legal Defeasance or the Covenant Defeasance, as the case may
be, have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, subject to customary assumptions and
conclusions, after the 91st day following the deposit, the trust funds will
not be part of any "estate" formed by the bankruptcy or reorganization of
the Company or subject to the "automatic stay" under the Bankruptcy Code
or, in the case of Covenant Defeasance, will be subject to a first priority
Lien in favor of the Trustee for the benefit of the Holders.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (b) above need not be delivered if all Notes not theretofore delivered to
the Trustee for cancellation (i) have become due and payable, (ii) will become
due and payable on the maturity date within one year, or (iii) are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by such Trustee in the name, and at the
expense, of the Company.
SECTION 8.02. APPLICATION OF TRUST MONEY.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.03. REPAYMENT TO THE COMPANY.
Subject to Sections 7.07 and 8.01, the Trustee and the Paying Agent
shall promptly pay to the Company upon request any U.S. Legal Tender or U.S.
Government Obligations held by them at any time that, in the opinion of a
nationally recognized firm of independent public accountants as certified to
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the Trustee, is excess funds and thereupon shall be relieved from all liability
with respect to such money. The Trustee and the Paying Agent shall pay to the
Company upon request any money held by them for the payment of principal or
interest that remains unclaimed for one year; PROVIDED, HOWEVER, that the
Company shall, if requested by the Trustee or Paying Agent, give to the Trustee
or Paying Agent, indemnification reasonably satisfactory to it against any and
all liability which may be incurred by it by reason of such paying; PROVIDED,
FURTHER, that the Trustee or such Paying Agent, before being required to make
any payment, may at the expense of the Company cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to
such money must look to the Company for payment as general creditors unless an
applicable law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.04. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01 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 and those of the Subsidiary Guarantors
under this Indenture, the Notes and the Note Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01; PROVIDED,
HOWEVER, that if the Company has made any payment of interest on or principal of
any Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or
Paying Agent.
SECTION 8.05. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Company has paid or caused to be paid all
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other sums payable hereunder by the Company and (iii) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified in Section 8.01, PROVIDED the legal counsel delivering such Opinion of
Counsel may rely as to matters of fact on one or more Officers' Certificates of
the Company.
ARTICLE NINE
MODIFICATION OF THE INDENTURE
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
Subject to the provisions of Section 9.02, the Company, the Subsidiary
Guarantors and the Trustee may amend, waive or supplement this Indenture without
notice to or consent of any Holder: (a) to evidence the succession of another
Person to the Company or any Subsidiary Guarantor and the assumption by any such
successor of the covenants of the Company or any Subsidiary Guarantor in this
Indenture and in the Notes; or (b) to add to the covenants of the Company or any
Subsidiary Guarantor for the benefit of the Holders, or to surrender any right
or power herein conferred upon the Company or any Subsidiary Guarantor; or (c)
to add additional Events of Defaults; or (d) to provide for uncertificated Notes
in addition to or in place of the certificated Notes; or (e) to evidence and
provide for the acceptance of appointment under this Indenture by a successor
Trustee; or (f) to secure the Notes or any Note Guarantee; or (g) to cure any
ambiguity, to correct or supplement any provision in this Indenture that may be
defective or inconsistent with any other provisions in this Indenture, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such actions pursuant to this clause (g) do not
adversely affect the interests of the Holders in any material respect; or (h) to
comply with any requirements of the Commission in order to effect and maintain
the qualification of this Indenture under the TIA; or (i) to release any
Subsidiary Guarantor from its Note Guarantee in accordance with the provisions
of this Indenture (including in connection with a sale of all of the Capital
Stock of such Subsidiary Guarantor) or (j) to enter into the Supplemental Inden-
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ture as provided herein or (k) to provide for the issuance of Initial Notes
subsequent to the Issue Date pursuant to Section 2.02. In formulating its
opinion on the matters in clause (g), the Trustee will be entitled to rely on
such evidence as it deems appropriate, including, without limitation, solely on
an Opinion of Counsel. Notwithstanding the foregoing, the Trustee, the
Subsidiary Guarantors and the Company may not make any change pursuant to this
Section 9.01 that adversely affects the rights of any Holder under this
Indenture without the consent of such Holder.
Upon the request of the Company and the Subsidiary Guarantors
accompanied by a Board Resolution authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.06, the Trustee shall join with the Company and the
Subsidiary Guarantors in the execution of any amended or supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations which may be therein contained, but the
Trustee may but shall not be obligated to enter into such amended or
supplemental indenture which affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS.
The Company, the Subsidiary Guarantors and the Trustee may amend or
supplement this Indenture or the Notes or any amended or supplemental indenture
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, the Notes).
Upon the request of the Company and the Subsidiary Guarantors
accompanied by a Board Resolution authorizing the execution of any such amended
or supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 9.06, the
Trustee shall join with the Company and the Subsidiary Guarantors in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its sole
discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
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It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 6.04 and 6.07, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder of the
Notes affected thereby, an amendment or waiver may not, directly or indirectly:
(i) reduce the amount of Notes whose Holders must consent to an amendment;
(ii) reduce the rate of or change the time for payment of and interest,
including defaulted interest, on any Notes; (iii) reduce the principal of or
change the fixed maturity of any Notes, or change the date on which any Notes
may be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor; (iv) make any Notes payable in money other than that
stated in the Notes; (v) make any change in provisions of this Indenture
protecting the right of each Holder to receive payment of principal of and
interest on such Note on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority in principal amount of
the Notes to waive Defaults or Events of Default; (vi) modify or change any
provision of this Indenture or the related definitions affecting the ranking of
the Notes or any Note Guarantee in a manner which adversely affects the Holders;
or (vii) release any Subsidiary Guarantor from any of its obligations under its
Note Guarantee other than in accordance with the terms of this Indenture.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; PROVIDED, HOWEVER, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
The Company may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a Record Date is fixed, then notwithstanding the
second sentence of 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 revoke any consent previously given, whether or
not such Persons continue to be Holders after such Record Date. No such consent
shall be valid or effective for more than 90 days after such Record Date unless
consents from Holders of the requisite percentage in principal amount of
outstanding Notes required hereunder for the effectiveness of such consents
shall have also been given and not revoked within such 90-day period.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determine, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; PROVIDED, HOWEVER, that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. In executing such amendment, supplement or waiver the Trustee shall
be entitled to receive indemnity reasonably satisfactory to it, and shall be
fully protected in relying upon an Opinion of Counsel and an Officers'
Certificate of the Company, meeting the requirements of Sections 11.04 and 11.05
and stating that no Event of Default shall occur as a result of such amendment,
supplement or waiver and that the execution of such amendment, supplement or
waiver is authorized or permitted by this Indenture, PROVIDED, HOWEVER, that the
legal counsel delivering such Opinion of Counsel may rely as to matters of fact
on one or more Officers' Certificates of the Company. Such Opinion of Counsel
shall not be an expense of the Trustee.
ARTICLE TEN
GUARANTEE OF NOTES
SECTION 10.01. UNCONDITIONAL GUARANTEE.
Subject to the provisions of this Article Ten, each Subsidiary
Guarantor hereby, jointly and severally, unconditionally and irrevocably
guarantees, on a senior unsecured basis (such guarantee to be referred to herein
as a "Note Guarantee") to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture, the Notes or the obligations
of the Company or any other Subsidiary Guarantor to the Holders or the Trustee
hereunder or thereunder, that: (a) the principal of, premium, if any, and
interest and any Additional Interest on the Notes shall be duly and punctually
paid in full when due, whether at maturity, upon redemption at the option of
Holders pursuant to the provisions of the Notes relating thereto, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Notes and all other
obligations of the Company or the Subsidiary Guarantors to the Holders or the
Trustee hereunder or thereunder (including amounts due the Trustee under
Section 7.07) and all other obligations shall be promptly paid in full or
performed, all in ac-
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cordance with the terms hereof and thereof (including any applicable grace
periods); and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, the same shall be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders under this Indenture or under the Notes, for whatever
reason, each Subsidiary Guarantor shall be obligated to pay, or to perform or
cause the performance of, the same immediately. An Event of Default under this
Indenture or the Notes shall constitute an event of default under this Note
Guarantee, and shall entitle the Holders of Notes or the Trustee to accelerate
the obligations of the Subsidiary Guarantors hereunder in the same manner and to
the same extent as the obligations of the Company.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Subsidiary
Guarantor, the recovery of any judgment against the Company, any action to
enforce the same, whether or not a Note Guarantee is affixed to any particular
Note, or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Subsidiary Guarantor. Each of the
Subsidiary Guarantors hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its Note
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes, this Indenture and this Note Guarantee.
This Note Guarantee is a guarantee of payment and not of collection. If any
Holder or the Trustee is required by any court or otherwise to return to the
Company or to any Subsidiary Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or such Subsidiary
Guarantor, any amount paid by the Company or such Subsidiary Guarantor to the
Trustee or such Holder, this Note Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary
Guarantor further agrees that, as between it, on the one hand, and the Holders
of Notes and the Trustee, on the other hand, (a) subject to this Article Ten,
the maturity of
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the obligations guaranteed hereby may be accelerated as provided in Article Six
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantors for the
purpose of this Note Guarantee.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Subsidiary Guarantor, as such, shall have any personal
liability under this Note Guarantee by reason of his, her or its status as such
stockholder, officer, director, employee or incorporator.
SECTION 10.02. LIMITATIONS ON GUARANTEES.
The obligations of any Subsidiary Guarantor under its Note Guarantee
are limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Note Guarantee or pursuant to its contribution obligations
under this Indenture, will result in the obligations of such Subsidiary
Guarantor under the Note Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under any laws of the United States, any state of the United
States or the District of Columbia.
SECTION 10.03. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To further evidence the Note Guarantee set forth in Section 10.01,
each Subsidiary Guarantor hereby agrees that a notation of such Note Guarantee,
substantially in the form of EXHIBIT E, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Note Guarantee shall be
executed on behalf of each Subsidiary Guarantor by either manual or facsimile
signature of two Officers of the Subsidiary Guarantor, each of whom shall have
been duly authorized to so execute by all requisite corporate action. The
validity and enforceability of any Note Guarantee shall not be affected by the
fact that it is not affixed to any particular Note. Each of the Subsidiary
Guarantors hereby agrees that its Note Guarantee set forth in Section 10.01
shall remain in full force and effect
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notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Note Guarantee no longer holds that office at the time the
Trustee authenticates the Note on which such Note Guarantee is endorsed or at
any time thereafter, such Subsidiary Guarantor's Note Guarantee of such Note
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Note Guarantee set forth
in this Indenture on behalf of each Subsidiary Guarantor.
SECTION 10.04. RELEASE OF SUBSIDIARY GUARANTORS.
(a) The Note Guarantee by a Restricted Subsidiary shall provide
by its terms that it shall be automatically and unconditionally released and
discharged, without any further action required on the part of the Trustee or
any Holder, upon: (i) the unconditional release of such Restricted Subsidiary
from its liability in respect of the Indebtedness in connection with which such
Note Guarantee was executed and delivered; (ii) any sale or other disposition
(by merger or otherwise) to any Person which is not a Restricted Subsidiary of
the Company of all of the Company's Capital Stock in, or all or substantially
all of the assets of, such Restricted Subsidiary; PROVIDED that such sale or
disposition of such Capital Stock or assets is otherwise in compliance with the
terms of this Indenture, (iii) the designation of such Subsidiary as an
Unrestricted Subsidiary in accordance with the provisions of this Indenture or
(iv) the sale or other disposition of shares of Capital Stock of such Subsidiary
to a Person other than the Company or a Restricted Subsidiary such that such
Subsidiary ceases to constitute a Subsidiary of the Company, provided such
disposition is otherwise in accordance with the provisions of this Indenture.
If such Subsidiary Guarantor is not so released, such Subsidiary Guarantor or
the entity surviving such Subsidiary Guarantor, as applicable, shall remain or
be liable under its Note Guarantee as provided in this Article Ten.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of any Subsidiary Guarantor upon receipt of a request by the Company
or such Subsidiary Guarantor accompanied by an Officers' Certificate and an
Opinion of Counsel certifying as to the compliance with this Section 10.04,
PROVIDED the legal counsel delivering such Opinion of
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Counsel may rely as to matters of fact on one or more Officers Certificates of
the Company.
The Trustee shall execute any documents reasonably requested by the
Company or any Subsidiary Guarantor in order to evidence the release of such
Subsidiary Guarantor from its obligations under its Note Guarantee endorsed on
the Notes and under this Article Ten.
Except as set forth in Articles Four and Five and this Section 10.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of any Subsidiary Guarantor with or into, or shall
prevent any sale or conveyance of the property of such Subsidiary Guarantor as
an entirety or substantially as an entirety to, the Company or another
Subsidiary Guarantor that is a Restricted Subsidiary of the Company.
SECTION 10.05. WAIVER OF SUBROGATION.
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under this Note Guarantee and this
Indenture, in any such instance including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, and any
right to participate in any claim or remedy of the Holders against the Company,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to any Subsidiary Guarantor in
violation of the preceding sentence and any amounts owing to the Trustee or the
Holders under the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Subsidiary Guarantor for the benefit of, and held in trust for the benefit
of, the Trustee or the Holders and shall forthwith be paid to the Trustee for
the benefit of itself or such Holders to be credited and applied to the
obligations in favor of the Trustee or the Holders, as the case may be, whether
ma-
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tured or unmatured, in accordance with the terms of this Indenture. Each
Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 10.05 is knowingly made in contemplation of
such benefits.
SECTION 10.06. IMMEDIATE PAYMENT.
Each Subsidiary Guarantor agrees to make immediate payment to the
Trustee on behalf of the Holders of all Obligations owing or payable to the
respective Holders upon receipt of a demand for payment therefor by the Trustee
to such Subsidiary Guarantor in writing.
SECTION 10.07. OBLIGATIONS CONTINUING.
The obligations of each Subsidiary Guarantor hereunder shall be
continuing and shall remain in full force and effect until all the obligations
have been paid and satisfied in full or released pursuant to Section 10.04.
Each Subsidiary Guarantor agrees with the Trustee that it will from time to time
deliver to the Trustee suitable acknowledgments of this continued liability
hereunder.
SECTION 10.08. OBLIGATIONS REINSTATED.
The obligations of each Subsidiary Guarantor hereunder shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of any Subsidiary
Guarantor hereunder (whether such payment shall have been made by or on behalf
of the Company or by or on behalf of a Subsidiary Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of the Company or any Subsidiary Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Company is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Company, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.
SECTION 10.09. OBLIGATIONS NOT AFFECTED.
The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring be-
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fore, upon or after any demand for payment hereunder (and whether or not known
or consented to by any Subsidiary Guarantor or any of the Holders) which, but
for this provision, might constitute a whole or partial defense to a claim
against any Subsidiary Guarantor hereunder or might operate to release or
otherwise exonerate any Subsidiary Guarantor from any of its obligations
hereunder or otherwise affect such obligations, whether occasioned by default of
any of the Holders or otherwise.
SECTION 10.10. WAIVER.
Without in any way limiting the provisions of Section 10.01 hereof,
each Subsidiary Guarantor hereby waives notice or proof of reliance by the
Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Company, protest or notice of
dishonor of any of the Obligations, or other notice or formalities to the
Company of any kind whatsoever.
SECTION 10.11. NO OBLIGATION TO TAKE ACTION AGAINST THE COMPANY.
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against the Company or any other Person or any
property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Subsidiary Guarantors of their
liabilities and obligations under their Note Guarantees or under this Indenture.
SECTION 10.12. DEALING WITH THE COMPANY AND OTHERS.
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Subsidiary
Guarantor hereunder and without the consent of or notice to any Subsidiary
Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any
other Person;
(b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral of the Company;
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(c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without
consideration) any and all collateral, mortgages or other security given by
the Company or any third party with respect to the obligations or matters
contemplated by this Indenture or the Notes;
(d) accept compromises or arrangements from the Company;
(e) apply all monies at any time received from the Company or from
any security upon such part of the Obligations as the Holders may see fit
or change any such application in whole or in part from time to time as the
Holders may see fit; and
(f) otherwise deal with, or waive or modify their right to deal with,
the Company and all other Persons and any security as the Holders or the
Trustee may see fit.
SECTION 10.13. DEFAULT AND ENFORCEMENT.
If any Subsidiary Guarantor fails to pay in accordance with
Section 10.06, the Trustee may proceed in its name as trustee hereunder in the
enforcement of the Note Guarantee of any such Subsidiary Guarantor and such
Subsidiary Guarantor's obligations thereunder and hereunder by any remedy
provided by law, whether by legal proceedings or otherwise, and to recover from
such Subsidiary Guarantor the obligations.
SECTION 10.14. AMENDMENT, ETC.
No amendment, modification or waiver of any provision of this
Indenture relating to any Subsidiary Guarantor or consent to any departure by
any Subsidiary Guarantor or any other Person from any such provision will in any
event be effective unless it is signed by such Subsidiary Guarantor and the
Trustee.
SECTION 10.15. ACKNOWLEDGMENT.
Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture and the Notes and consents to and approves of the same.
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SECTION 10.16. COSTS AND EXPENSES.
Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all reasonable costs, fees and expenses (including, without limitation, legal
fees) incurred by the Trustee, its agents, advisors and counsel or any of the
Holders in enforcing any of their rights under any Note Guarantee.
SECTION 10.17. NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the
Trustee or the Holders, any right, remedy, power or privilege hereunder or under
this Indenture or the Notes, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under this Indenture or the Notes preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges in the Note Guarantee and under this Indenture,
the Notes and any other document or instrument between a Subsidiary Guarantor
and/or the Company and the Trustee are cumulative and not exclusive of any
rights, remedies, powers and privilege provided by law.
SECTION 10.18. SURVIVAL OF OBLIGATIONS.
Without prejudice to the survival of any of the other obligations of
each Subsidiary Guarantor hereunder, the obligations of each Subsidiary
Guarantor under Section 10.01 shall be enforceable against such Subsidiary
Guarantor without regard to and without giving effect to any right of offset or
counterclaim available to or which may be asserted by the Company or any
Subsidiary Guarantor.
SECTION 10.19. NOTE GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.
The obligations of each Subsidiary Guarantor under its Note Guarantee
and this Indenture are in addition to and not in substitution for any other
obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes (including the Purchase Agreement and the Registration
Rights Agreement).
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SECTION 10.20. SEVERABILITY.
Any provision of this Article Ten which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction unless its removal
would substantially defeat the basic intent, spirit and purpose of this
Indenture and this Article Ten.
SECTION 10.21. SUCCESSORS AND ASSIGNS.
Each Note Guarantee shall be binding upon and inure to the benefit of
each Subsidiary Guarantor and the Trustee and the other Holders and their
respective successors and permitted assigns, except that no Subsidiary Guarantor
may assign any of its obligations hereunder or thereunder.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control; PROVIDED, HOWEVER, that this Section
11.01 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
SECTION 11.02. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
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if to the Company or the Subsidiary Guarantors:
Elgar Holdings, Inc.
9250 Brown Deer Road
San Diego, CA 92121
Facsimile No.: (619) 458-0257
Attention: Chief Financial Officer
with a copy to:
Gibson Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, CA 90071
Facsimile No.: (213) 229-7520
Attention: Kenneth M. Doran
if to the Trustee:
United States Trust Company
of New York
114 West 47th Street
25th Floor
New York, NY 10036
Facsimile No.: (212) 852-1625
Attention: Corporate Trust Department
The Company, the Subsidiary Guarantors and the Trustee by written
notice to the other may designate additional or different addresses for notices
to such Person. Any notice or communication to the Company, the Subsidiary
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered if hand delivered; when answered back, if telexed; when
receipt is acknowledged, if faxed; one (1) Business Day after mailing by
reputable overnight courier and five (5) calendar days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten (10) days prior to such mailing and
shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed
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in the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the signers,
all conditions precedent to be performed by the Company, if any, provided
for in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with (which counsel, as to factual matters, may rely on an
Officers' Certificate).
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 11.07. BUSINESS DAYS.
If a payment date is not a Business Day at a particular place of
payment, payment may be made at such place on the next succeeding day that is a
Business Day, and no interest shall accrue for the intervening period.
SECTION 11.08. GOVERNING LAW.
This Indenture, the Notes and the Note Guarantees 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 law of another jurisdiction would be required thereby.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. NO PERSONAL LIABILITY.
No director, officer, employee, stockholder or incorporator, as such,
of the Company or any Subsidiary Guarantor, as such, shall have any liability
for any obligations of the Company or any Subsidiary Guarantor under the Notes,
the Note
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Guarantees, this Indenture or the Registration Rights Agreement or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.
SECTION 11.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 11.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 11.14. INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
[Signature Page Follows]
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
JFL-EEC MERGER SUB CO.,
as Issuer
By: /s/ Donald Glickman
----------------------------------
Name: Donald Glickman
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ Cynthia Chaney
----------------------------------
Name: Cynthia Chaney
Title: Assistant Vice President
EXHIBIT A
CUSIP No.: [ ]
JFL-EEC MERGER SUB CO.
% SENIOR NOTE DUE 2008, SERIES A
No. [ ] $
JFL-EEC MERGER SUB CO., a Delaware corporation (the "Company"), for
value received promises to pay to or registered assigns the principal
sum of Dollars [(as such amount may be increased or decreased
from time to time by adjustments made on the records of the Trustee, as
custodian for the Depository)]* on February 1, 2008.
Interest Payment Dates: February 1 and August 1, commencing August 1,
1998
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
- -------------------
* Language to be included in Global Notes only.
A-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
JFL-EEC MERGER SUB CO.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
Dated:
A-2
Certificate of Authentication
This is one of the 9 7/8% Senior Notes, Series A due 2008 referred to
in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
----------------------------------
Authorized Signatory
A-3
(REVERSE OF SECURITY)
9 7/8% Senior Note due 2008, Series A
1. INTEREST. JFL-EEC MERGER SUB CO., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from February 3, 1998. The Company will pay interest semi-annually in arrears
on each Interest Payment Date, commencing August 1, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after such Record Date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Company shall pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by its check payable in such
U.S. Legal Tender or by wire transfer of immediately available funds. The
Company may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice to
the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture, dated
as of February 3, 1998 (the "Indenture"), between the Company and the Trustee.
This Note is one of a duly authorized issue of Initial Notes of the Company
designated as its 9 7/8% Senior Notes due 2008, Series A (the "Initial Notes").
The Notes are limited (except as otherwise provided in the Indenture) in
aggregate principal amount to
A-4
$150,000,000, which may be issued under the Indenture; PROVIDED the principal
amount of Initial Notes issued on the Issue Date is $90,000,000. The Notes
include the Initial Notes, the Private Exchange Notes and the Exchange Notes
issued in exchange for the Initial Notes pursuant to the Registration Rights
Agreement. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used
as defined in the Indenture unless otherwise defined herein. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
obligations of the Company.
Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time in accordance with its terms.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2003, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the years set forth below, plus, in each case, accrued and unpaid
interest thereon and Additional Interest, if any, to the date of redemption:
Year Percentage
---- ----------
2003 ...................................... 104.938%
2004 ...................................... 103.292%
2005 ...................................... 101.646%
2006 and thereafter ........................ 100.000%
OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time, or
from time to time, on or prior to February 1, 2001, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings to
redeem up to 35% of the sum of (i) the initial aggregate principal amount of
Notes issued in the Offering and (ii) the respective initial aggregate principal
amounts of Notes issued under the Indenture after the Issue Date, at a
redemption price equal to 109.875% of the principal amount thereof plus accrued
and unpaid interest thereon and Additional Interest, if any, to the date of
redemption; PROVIDED that at least 65% of the sum of (i) the initial
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aggregate principal amount of Notes issued in the Offering and (ii) the
respective initial aggregate principal amounts of Notes issued under the
Indenture after the Issue Date remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of
any Public Equity Offering, the Company shall make such redemption not more than
120 days after the consummation of any such Public Equity Offering.
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL. Upon the occurrence of a
Change of Control prior to February 1, 2003, the Notes will be redeemable, in
whole or in part, at the option of the Company, upon not less than 30 nor more
than 60 days prior notice to each holder of Notes to be redeemed, at a
redemption price equal to the sum of (i) the then outstanding principal amount
thereof plus (ii) accrued and unpaid interest thereon and Additional Interest,
if any, to the redemption date plus (iii) the Applicable Premium.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such redemption price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the redemption price plus accrued interest, if any.
7. OFFERS TO PURCHASE. Sections 4.14 and 4.15 of the Indenture
provide that, after certain Asset Sales and upon the occurrence of a Change of
Control, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
8. REGISTRATION RIGHTS. Pursuant to a Registration Rights Agreement
between the Company and the Initial Purchaser, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for Exchange Notes, which have been
registered under the Securities Act, in like principal amount and having terms
identical in all material respects as the Initial Notes. The Holders of the
Initial Notes shall be entitled to receive certain additional interest payments
in the event such
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exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall 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 one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any
time deposits with the Trustee U.S. Legal Tender sufficient to pay the principal
of and interest on the Notes to redemption or maturity and complies with the
other provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Notes (including
certain covenants, and including, under certain circumstances, the Company's
obligation to pay the principal of and interest on the Notes but without
affecting the rights of the Holders to receive such amounts from such deposits).
13. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, and any past Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, comply with any
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under
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the TIA or comply with Article Five of the Indenture or make any other change
that does not adversely affect the rights of any Holder of a Note.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, pay dividends or make certain other
Restricted Payments, consummate certain Asset Sales, enter into certain
transactions with Affiliates, incur liens, impose restrictions on the ability of
a Subsidiary to pay dividends or make certain payments to the Company and its
Subsidiaries, merge or consolidate with any other Person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
assets of the Company. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Company must annually report to the Trustee on compliance with such limitations.
15. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest when due,
for any reason or a Default in compliance with Article Five of the Indenture) if
it determines that withholding notice is in their interest.
17. TRUSTEE DEALINGS WITH THE COMPANY AND ITS SUBSIDIARIES. The
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
shareholder or incorporator, as such, of the
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Company or any Subsidiary Guarantor, as such, shall have any liability for any
obligation of the Company under the Notes, the Indenture or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. AUTHENTICATION. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Note.
21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: Elgar Holdings, Inc., 9250 Brown Deer Road, San Diego,
CA 92121, Facsimile No.: (619) 458-0257, Attention: Chief Financial Officer.
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ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ______________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------------- ----------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
-----------------------------------------------------------
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) February 3, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
[CHECK ONE]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
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(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter can
be obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) __ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
/ / The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; PROVIDED, HOWEVER, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
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If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
------------------------- ---------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
----------------------------------------------------------
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TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
--------------------- ----------------------------------------
NOTICE: To be executed by an executive
officer
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[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ]
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated:
---------------------- ---------------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon
the face of the within Note in every
particular without alteration or enlargement
or any change whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------
A-14
EXHIBIT B
CUSIP No.: [ ]
JFL-EEC MERGER SUB CO.
9 7/8% SENIOR NOTE DUE 2008, SERIES B
No. [ ] $
JFL-EEC MERGER SUB CO., a Delaware corporation (the "Company"), for
value received, promises to pay to or registered assigns the
principal sum of Dollars [(as such amount may be increased or
decreased from time to time by adjustments made on the records of the Trustee,
as custodian for the Depository)]* on February 1, 2008.
Interest Payment Dates: February 1 and August 1, commencing August 1,
1998
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
- ------------------------
* Language to be included in Global Notes only.
B-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
JFL-EEC MERGER SUB CO.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Dated:
B-2
Certificate of Authentication
This is one of the 9 7/8% Senior Notes, Series B due 2008, Series B
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
------------------------------
Authorized Signatory
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(REVERSE OF SECURITY)
9 7/8% Senior Note due 2008, Series B
1. INTEREST. JFL-EEC MERGER SUB CO., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from February 3, 1998. The Company will pay interest semi-annually in arrears
on each Interest Payment Date, commencing August 1, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender or by wire transfer of immediately available funds. The Company
may deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice to
the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture,
dated as of February 3, 1998 (the "Indenture"), between the Company and the
Trustee. This Note is one of a duly authorized issue of Exchange Notes of the
Company designated as its 9 7/8% Senior Notes due 2008, Series B (the "Exchange
Notes"). The Notes include the 9 7/8% Notes due 2008, Series A (the "Initial
Notes") and the Exchange Notes, issued in exchange for the Initial Notes
pursuant to a Registration Rights Agreement. The Notes are limited (except as
otherwise provided in the Indenture) in aggregate principal
B-4
amount to $150,000,000, which may be issued under the Indenture; PROVIDED the
principal amount of Initial Notes issued on the Issue Date was $90,000,000. The
Initial Notes and the Exchange Notes are treated as a single class of securities
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and said Act for a statement of them. The Notes
are general unsecured obligations of the Company.
Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time in accordance with its terms.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2003, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the years set forth below, plus, in each case, accrued and unpaid
interest thereon and Additional Interest, if any, to the date of redemption:
Year Percentage
---- ----------
2003. . . . . . . . . . . . . . . . . . . . . 104.938%
2004. . . . . . . . . . . . . . . . . . . . . 103.292%
2005. . . . . . . . . . . . . . . . . . . . . 101.646%
2006 and thereafter . . . . . . . . . . . . . 100.000%
OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time, or
from time to time, on or prior to February 1, 2001, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings to
redeem up to 35% of the sum of (i) the initial aggregate principal amount of
Notes issued in the Offering and (ii) the respective initial aggregate principal
amounts of Notes issued under the Indenture after the Issue Date, at a
redemption price equal to 109.875% of the principal amount thereof plus accrued
and unpaid interest thereon and Additional Interest, if any, to the date of
redemption; PROVIDED that at least 65% of the sum of (i) the initial aggregate
principal amount of Notes issued in the Offering and (ii) the respective initial
aggregate principal amounts of Notes issued under the Indenture after the Issue
Date remains
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outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 120 days after the consummation
of any such Public Equity Offering.
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL. Upon the occurrence of a
Change of Control prior to February 1, 2003, the Notes will be redeemable, in
whole or in part, at the option of the Company, upon not less than 30 nor more
than 60 days prior notice to each holder of Notes to be redeemed, at a
redemption price equal to the sum of (i) the then outstanding principal amount
thereof plus (ii) accrued and unpaid interest thereon and Additional Interest,
if any, to the redemption date plus (iii) the Applicable Premium.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such redemption price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the redemption price plus accrued interest, if any.
7. OFFERS TO PURCHASE. Sections 4.14 and 4.15 of the Indenture
provide that, after certain Asset Sales and upon the occurrence of a Change of
Control, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
8. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
B-6
9. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
10. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any
time deposits with the Trustee U.S. Legal Tender sufficient to pay the principal
of and interest on the Notes to redemption and complies with the other
provisions of the Indenture relating thereto, the Company will be discharged
from certain provisions of the Indenture and the Notes (including certain
covenants, and including, under certain circumstances, the Company's obligation
to pay the principal of and interest on the Notes but without affecting the
rights of the Holders to receive such amounts from such deposit).
12. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, and any past Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, comply with any
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA or comply with Article Five of the Indenture or
make any other change that does not adversely affect the rights of any Holder of
a Note.
13. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, pay dividends or make certain other
Restricted Payments, consummate certain Asset Sales, enter into certain
transactions with Affiliates, incur liens, impose restrictions on the ability of
a Subsidiary to pay dividends or make certain payments to the Company and its
Subsidiaries, merge or consolidate with any other Person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
assets of the Company. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to
B-7
Section 4.06 of the Indenture, the Company must annually report to the
Trustee on compliance with such limitations.
14. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
15. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest when due,
for any reason or a Default in compliance with Article Five of the Indenture) if
it determines that withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH THE COMPANY AND ITS SUBSIDIARIES. The
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
shareholder or incorporator, as such, of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligation of the Company
under the Notes, the Indenture or the Registration Rights Agreement or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
18. AUTHENTICATION. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
19. GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and per-
B-8
formed within the State of New York, without regard to principles of conflict of
laws. Each of the parties hereto agrees to submit to the jurisdiction of the
courts of the State of New York in any action or proceeding arising out of or
relating to this Note.
20. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: Elgar Holdings, Inc., 9250 Brown Deer Road, San Diego,
CA 92121, Facsimile No.: (619) 458-0257, Attention: Chief Financial Officer.
B-9
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint _______________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
----------------------- --------------------------------
(Sign exactly as name appears on the
other side of this Note)
Signature Guarantee:
-----------------------------------
B-10
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ]
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated:
--------------- ------------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
--------------------------------
B-11
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
[ ], [ ]
United States Trust Company
of New York
114 West 47th Street
25th Floor
New York, NY 10036
Ladies and Gentlemen:
In connection with our proposed purchase of 9 7/8% Senior Notes due
2008 (the "Notes") of JFL-EEC Merger Sub Co., a Delaware corporation (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated January 30, 1998, relating to the Notes and such other
information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated in the
section entitled "Transfer Restrictions" of such Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (the "Indenture") as described in the Offering
Memorandum and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act"), and all applicable State securities laws.
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of,
U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(i) to the Company or any subsidiary thereof, (ii) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as de-
C-1
fined in Rule 144A promulgated under the Securities Act), (iii) inside the
United States to an institutional "accredited investor" (as defined below)
that, prior to such transfer, furnishes (or has furnished on its behalf by
a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Notes (the form of which letter can be
obtained from the Trustee), (iv) outside the United States in accordance
with Rule 904 of Regulation S promulgated under the Securities Act to
non-U.S. persons, (v) pursuant to the exemption from registration provided
by Rule 144 under the Securities Act (if available), or (vi) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein.
4. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
C-2
You, the Company, the Trustee and others are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-----------------------------------
Name:
Title:
C-3
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
[ ], [ ]
United States Trust Company
of New York
114 West 47th Street
25th Floor
New York, New York 10036
Re: JFL-ECC Merger SubCo.
(the "Company") 9 7/8%
Senior Notes due 2008 (the "Notes")
------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------
Authorized Signature
D-2
EXHIBIT E
FORM OF NOTE GUARANTEE
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest and Additional Interest, if any, on this Note in the amounts and at the
times when due and interest on the overdue principal, premium, if any, and
interest and Additional Interest, if any, of this Note, if lawful, and the
payment or performance of all other obligations of the Company under the
Indenture (as defined below) or the Notes, to the Holder of this Note and the
Trustee, all in accordance with and subject to the terms and limitations of this
Note, Article Ten of the Indenture and this Note Guarantee. This Note Guarantee
will become effective in accordance with Article Ten of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any Note
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture dated as of February 3, 1998, between
JFL-EEC Merger Sub Co., a Delaware corporation, as Company (the "Company") and
United States Trust Company of New York, as Trustee (the "Trustee"), as amended
or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Note Guarantee and the Indenture are expressly set
forth in Article Ten of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Note Guarantee and all of the other
provisions of the Indenture to which this Note Guarantee relates.
THIS NOTE GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. Each Subsidiary Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Note Guarantee.
This Note Guarantee is subject to release upon the terms set forth in
the Indenture.
E-1
IN WITNESS WHEREOF, the Subsidiary Guarantor has caused its Note
Guarantee to be duly executed.
Date:______________
[Subsidiary Guarantor],
as Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
E-2
EXHIBIT F
FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF
BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY
TO EUROCLEAR OR CEDEL
OWNER SECURITIES CERTIFICATION
JFL-EEC Merger Sub Co.
9 7/8% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of February 3,
1998 (the "INDENTURE"), by and between JFL-EEC Merger Sub Co., as Issuer and
United States Trust Company of New York, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
This is to certify that, as of the date hereof, $ of the
above-captioned Notes (the "NOTES") are beneficially owned by non-U.S.
person(s). As used in this paragraph, the term "U.S. person" has the meaning
given to it by Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the Notes held
by you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
F-1
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and the Initial Purchaser.
Dated: __________, ____
By:
-----------------------------------
As, or as agent for, the beneficial
owner(s) of the Notes to which this
certificate relates.
F-2
EXHIBIT G
FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL BANK, SOCIETE ANONYME
DEPOSITORY SECURITIES CERTIFICATION
JFL-EEC Merger Sub co.
9 7/8% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of February 3,
1998 (the "Indenture"), by and between JFL-EEC Merger Sub Co., as Issuer and
United States Trust Company of New York, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
This is to certify that, with respect to U.S.$
principal amount of the above-captioned Notes (the "Notes"), except as set forth
below, we have received in writing, by tested telex or by electronic
transmission, from member organizations appearing in our records as persons
being entitled to a portion of the principal amount of the Note (our "Member
Organizations"), certifications with respect to such portion, substantially to
the effect set forth in the Indenture.*
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Temporary Regulation S Global Note excepted in such
certifications and (ii) that as of the date hereof we have not received any
notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the
part submitted herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) are no longer true and cannot be relied upon as of
the date hereof.
- ----------------
* Unless Morgan Guaranty Trust Company of New York, London Branch is
otherwise informed by the Agent, the long form certificate set out in the
Operating Procedures will be
Footnote continued on next page.
G-1
We understand that this certification is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and the Initial Purchasers.
Dated: ___________, ____
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as operator of the
Euroclear System]
or
[CEDEL BANK, SOCIETE ANONYME]
By:
---------------------------------
- --------------------
Footnote continued from previous page.
deemed to meet the requirements of this sentence.
G-2