EXHIBIT 4.1
EXECUTION COPY
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J. CREW INTERMEDIATE LLC
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16.0% SENIOR DISCOUNT CONTINGENT PRINCIPAL NOTES DUE 2008
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INDENTURE
DATED AS OF MAY 6, 2003
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U.S. BANK NATIONAL ASSOCIATION
TRUSTEE
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions............................................................ 1
Section 1.02. Other Definitions...................................................... 20
Section 1.03. Incorporation by Reference of Trust Indenture Act...................... 21
Section 1.04. Rules of Construction.................................................. 21
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating........................................................ 22
Section 2.02. Execution and Authentication........................................... 23
Section 2.03. Registrar and Paying Agent............................................. 24
Section 2.04. Paying Agent to Hold Money in Trust.................................... 24
Section 2.05. Holder Lists........................................................... 24
Section 2.06. Global Note Provisions................................................. 25
Section 2.07. Legends................................................................ 26
Section 2.08. Transfer and Exchange.................................................. 26
Section 2.09. Replacement Notes...................................................... 32
Section 2.10. Outstanding Notes...................................................... 32
Section 2.11. Treasury Notes......................................................... 33
Section 2.12. Temporary Notes........................................................ 33
Section 2.13. Cancellation........................................................... 33
Section 2.14. Defaulted Interest..................................................... 34
Section 2.15. Record Date............................................................ 34
Section 2.16. Computation Of Interest................................................ 34
Section 2.17. CUSIP Number........................................................... 34
Section 2.18. Additional Notes....................................................... 34
Section 2.19. Additional Interest Under the Registration Rights Agreements........... 35
Section 2.20. Contingent Principal................................................... 35
Section 2.21. Calculation of Original Issue Discount and Interest for U.S. Federal
Income Tax Purposes.................................................... 36
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee..................................................... 36
Section 3.02. Selection of Notes to be Redeemed or Purchased......................... 36
Section 3.03. Notice of Redemption................................................... 37
Section 3.04. Effect of Notice of Redemption......................................... 38
Section 3.05. Deposit of Redemption or Purchase Price................................ 38
Section 3.06. Notes Redeemed in Part................................................. 38
Section 3.07. Optional Redemption.................................................... 38
Section 3.08. Mandatory Redemption................................................... 39
Section 3.09. Repurchase Offers...................................................... 39
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes....................................................... 41
Section 4.02. Maintenance of Office or Agency........................................ 41
Section 4.03. Commission Reports..................................................... 42
Section 4.04. Compliance Certificate................................................. 43
Section 4.05. Taxes.................................................................. 43
Section 4.06. Stay, Extension and Usury Laws......................................... 44
Section 4.07. Restricted Payments.................................................... 44
Section 4.08. Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries........................................................... 46
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock............. 47
Section 4.10. Asset Sales............................................................ 50
Section 4.11. Transactions with Affiliates........................................... 51
Section 4.12. Liens.................................................................. 52
Section 4.13. Offer to Purchase Upon Change of Control............................... 52
Section 4.14. Corporate Existence.................................................... 53
Section 4.15. Business Activities.................................................... 54
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation of Sale of Assets................................ 54
Section 5.02. Successor Corporation Substituted...................................... 55
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default...................................................... 55
Section 6.02. Acceleration........................................................... 57
Section 6.03. Other Remedies......................................................... 58
Section 6.04. Waiver of Past Defaults................................................ 57
Section 6.05. Control by Majority.................................................... 58
Section 6.06. Limitation on Suits.................................................... 58
Section 6.07. Rights of Holders of Notes to Receive Payment.......................... 59
Section 6.08. Collection Suit by Trustee............................................. 59
Section 6.09. Trustee May File Proofs of Claim....................................... 59
Section 6.10. Priorities............................................................. 60
Section 6.11. Undertaking for Costs.................................................. 60
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee...................................................... 61
Section 7.02. Rights of Trustee...................................................... 62
Section 7.03. Individual Rights of Trustee........................................... 62
Section 7.04. Trustee's Disclaimer................................................... 62
Section 7.05. Notice of Defaults..................................................... 63
Section 7.06. Reports by Trustee to Holders of the Notes............................. 63
Section 7.07. Compensation and Indemnity............................................. 64
Section 7.08. Replacement of Trustee................................................. 64
Section 7.09. Successor Trustee by Merger, Etc....................................... 65
Section 7.10. Eligibility; Disqualification.......................................... 65
Section 7.11. Preferential Collection of Claims Against the Company.................. 65
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance............... 65
Section 8.02. Legal Defeasance and Discharge......................................... 66
Section 8.03. Covenant Defeasance.................................................... 66
Section 8.04. Conditions to Legal or Covenant Defeasance............................. 67
Section 8.05. Deposited Money and U.S................................................ 68
Section 8.06. Repayment to the Company............................................... 69
Section 8.07. Reinstatement.......................................................... 69
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of the Notes................................ 69
Section 9.02. With Consent of Holders of Notes....................................... 70
Section 9.03. Compliance With Trust Indenture Act.................................... 72
Section 9.04. Revocation and Effect of Consents...................................... 72
Section 9.05. Notation on or Exchange of Notes....................................... 72
Section 9.06. Trustee to Sign Amendments, Etc........................................ 72
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls........................................... 72
Section 10.02. Notices................................................................ 73
Section 10.03. Communication by Holders of Notes With Other Holders of Notes.......... 74
Section 10.04. Certificate and Opinion as to Conditions Precedent..................... 74
Section 10.05. Statements Required in Certificate or Opinion.......................... 74
Section 10.06. Rules by Trustee and Agents............................................ 75
Section 10.07. No Personal Liability of Directors, Officers, Employees, Organizers
and Members............................................................ 75
Section 10.08. Governing Law.......................................................... 75
Section 10.09. No Adverse Interpretation of Other Agreements.......................... 75
Section 10.10. Successors............................................................. 75
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TABLE OF CONTENTS
(continued)
PAGE
Section 10.11. Severability........................................................... 75
Section 10.12. Counterpart Originals.................................................. 75
Section 10.13. Table of Contents, Headings, Etc....................................... 76
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EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B-1 FORM OF NON-U.S. BENEFICIAL OWNERSHIP CERTIFICATION BY EUROCLEAR
OR CLEARSTREAM, LUXEMBOURG
EXHIBIT B-2 FORM OF NON-U.S. BENEFICIAL OWNERSHIP CERTIFICATION BY MEMBER
ORGANIZATION
EXHIBIT C FORM OF CERTIFICATE FOR TRANSFER TO QIB
EXHIBIT D FORM OF CERTIFICATE FOR TRANSFER TO INSTITUTIONAL ACCREDITED
INVESTOR
EXHIBIT E FORM OF CERTIFICATE FOR TRANSFER PURSUANT TO REGULATION S
EXHIBIT F FORM OF CERTIFICATE FOR TRANSFER PURSUANT TO RULE 144
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)................................... 7.10
(a)(2)................................... 7.10
(a)(3)................................... N.A.
(a)(4)................................... N.A.
(a)(5)................................... 7.10
(b)...................................... 7.03; 7.10
(c)...................................... N.A.
311 (a)...................................... 7.11
(b)...................................... 7.11
(c)...................................... N.A.
312 (a)...................................... 2.05
(b)...................................... 10.03
(c)...................................... 10.03
313 (a)...................................... 7.06
(b)(1)................................... 7.06
(b)(2)................................... 7.06; 7.07
(c)...................................... 7.06; 10.02
(d)...................................... 7.06
314 (a)...................................... 4.03; 10.05
(b)...................................... N.A.
(c)(1)................................... 10.04
(c)(2)................................... 10.04
(c)(3)................................... N.A.
(d)...................................... N.A.
(e)...................................... 10.05
(f)...................................... N.A.
315 (a)...................................... 7.01
(b)...................................... 7.05, 10.02
(c)...................................... 7.01
(d)...................................... 7.01
(e)...................................... 6.11
316 (a)(last sentence)....................... 2.11
(a)(1)(A)................................ 6.05
(a)(1)(B)................................ 6.04
(a)(2)................................... 2.15
(b)...................................... 6.07
(c)...................................... N.A.
317 (a)(1)................................... 6.08
(a)(2)................................... 6.09
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*This Cross-Reference Table is not part of the Indenture.
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(b)...................................... 2.04
318 (a)...................................... 10.01
(b)...................................... N.A.
(c)...................................... 10.01
N.A. means not applicable.
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Indenture, dated as of May 6, 2003, between J. Crew Intermediate LLC, a
Delaware limited liability company (the "Company"), and U.S. Bank National
Association, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the holders of the Company's
16.0% Senior Discount Contingent Principal Notes due 2008 (the "Senior Discount
Contingent Principal Notes") and the exchange 16.0% Senior Discount Contingent
Principal Notes due 2008 (the "Exchange Senior Discount Contingent Principal
Notes" and, together with the Senior Discount Contingent Principal Notes, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.
"Accreted Value" means, as of any date of determination prior to
November 15, 2005, with respect to any Note, the sum of (i) the initial offering
price (which will be calculated by discounting the aggregate principal amount at
maturity (not including any Contingent Principal and accreted interest thereon)
of such Note at a rate of 16.0% per annum, compounded semi-annually on each May
15 and November 15 from November 15, 2005 to the Issue Date) of such Note; (ii)
the portion of excess of the aggregate principal amount at maturity (not
including any Contingent Principal and accreted interest thereon) of such Note
over the initial offering price of such Note which will have been accreted
thereon through such date, such amount to be so accreted on a daily basis at a
rate of 16.0% per annum of the initial offering price of such Note, compounded
semi-annually on each May 15 and November 15 from the Issue Date through the
date of determination, computed on the basis of a 360-day year of twelve 30-day
months; (iii) the applicable initial offering price (which will be calculated by
discounting the aggregate principal amount at maturity of each Contingent
Principal, if any, at a rate of 16.0% per annum, compounded semi-annually on
each May 15 and November 15 from November 15, 2005, to the applicable date of
original issuance) of each such Contingent Principal, if any; and (iv) the
portion of excess of the aggregate principal amount at maturity of each
Contingent Principal, if any, over the applicable initial offering price of such
Contingent Principal which will have been accreted thereon through such date,
such amount to be so accreted on a daily basis at a rate of 16.0% per annum of
the applicable initial offering price of such Contingent Principal, compounded
semi-annually on each May 15 and November 15 from the applicable date of
original issuance of such Contingent Principal through the date of
determination, computed on the basis of a 360-day year of twelve 30-day months.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person or assumed in connection with the acquisition of any asset used or useful
in a Permitted Business acquired by such specified Person; provided that such
Indebtedness was not incurred in connection with, or in contemplation of, such
other Person
merging with or into or becoming a Subsidiary of such specified Person, or such
acquisition, as the case may be.
"Additional Interest" means all additional interest then owing pursuant
to Section 5 of the Registration Rights Agreement or any other Registration
Rights Agreement.
"Additional Note Board Resolutions" means resolutions duly adopted by
the Board of Directors of the Company and delivered to the Trustee in an
Officers' Certificate providing for the issuance of Additional Notes.
"Additional Notes" means the Company's 16.0% Senior Discount Contingent
Principal Notes originally issued after the Issue Date pursuant to Section 2.18,
including any replacement Notes and any Exchange Senior Discount Contingent
Principal Notes as specified in the relevant Additional Note Board Resolutions.
The aggregate principal amount of the Additional Notes that may be issued after
the Issue Date pursuant to Section 2.18 is limited to the amount necessary to
repurchase $21,667,000 in aggregate principal amount of the Existing Debentures
which were not exchanged for Senior Discount Contingent Principal Notes as of
the Issue Date.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Beneficial ownership
of 10% or more of the voting securities of a Person shall be deemed to be
control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of beneficial interests in a Global Note, the rules and procedures of the
Depositary that apply to such transfer and exchange.
"Asset Sale" means (i) the sale, lease (other than an operating lease),
conveyance or other disposition of any assets or rights (including, without
limitation, by way of a sale and leaseback) other than in the ordinary course of
business consistent with past practices (provided that the sale, lease (other
than an operating lease), conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of this Indenture described
in Sections 4.13 and 5.01 and not by the provisions of Section 4.10 hereof, and
(ii) the sale by the Company and the issue or sale by any of the Restricted
Subsidiaries of the Company of Equity Interests of any of the Company's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions that have a fair market value
(as determined in good faith by the Board of Directors) in excess of $1.0
million or for net cash proceeds in excess of $1.0 million.
Notwithstanding the foregoing: (i) a transfer of assets by the Company
to a Wholly Owned Restricted Subsidiary of the Company (other than a Receivables
Subsidiary) or by a Wholly Owned Restricted Subsidiary of the Company (other
than a Receivables Subsidiary) to
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the Company or to a Wholly Owned Restricted Subsidiary of the Company (other
than a Receivables Subsidiary), (ii) an issuance of Equity Interests by a
Restricted Subsidiary of the Company to the Company or to a Wholly Owned
Restricted Subsidiary of the Company (other than a Receivables Subsidiary),
(iii) a Restricted Payment that is permitted by Section 4.07 hereof, (iv) the
sale and leaseback of any assets within 90 days of the acquisition of such
assets, (v) foreclosures on assets, (vi) the clearance of inventory and (vii)
the sale, conveyance or other disposition of accounts receivables and related
assets customarily transferred in an asset securitization transaction involving
accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary,
in connection with a Qualified Receivables Transaction, in each case, will not
be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participation, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) securities issued or unconditionally and
fully guaranteed or insured by the full faith and credit of the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (ii) obligations issued or
fully guaranteed 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 Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (iii) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case, with any lender party to the
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Congress Credit Facility or with any domestic commercial bank having capital and
surplus in excess of $250.0 million, (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clauses (i) and (iii), above entered into with any financial institution meeting
the qualifications specified in clause (iii) above, (v) commercial paper having
one of the two of the highest ratings obtainable from either Moody's or S&P and
in each case maturing within one year after the date of acquisition and (vi)
investments in funds investing exclusively in investments of the types described
in clauses (i) through (v) above.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), other than the Principals and their Related Parties, (ii) the adoption of
a plan relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that (A) any "person" (as defined above),
other than the Principal and their Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of 40% or more of the Voting Stock of the Company
(measured by voting power rather than number of shares) and (B) the Principals
and their Related Parties beneficially own, directly or indirectly, in the
aggregate a lesser percentage of the Voting Stock of the Company than such other
"person", (iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors or (v) the Company
consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where (A) the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person and (B) the "beneficial owners" (as defined above) of the Voting Stock of
the Company immediately prior to such transaction own, directly or indirectly
through one or more subsidiaries, not less than a majority of the total Voting
Stock of the surviving or transferee corporation immediately after such
transaction.
"Clearstream, Luxembourg" means Clearstream Banking, societe anonyme, or
the successor to its securities clearance and settlement operations.
"Commission" means the Securities and Exchange Commission.
"Company" means J. Crew Intermediate LLC, a Delaware limited liability
company, and its permitted successors.
"Congress Credit Facility" means a certain Loan and Security Agreement,
dated as of December 23, 2002 by and among J. Crew Corp., J. Crew Inc., Grace
Holmes, Inc. and H.F.D. No. 55, Inc., as borrowers, Congress Financial
Corporation, as administrative and collateral agent, and certain other parties
named therein, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, extended, modified, renewed, refunded, replaced or refinanced from time
to time.
4
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income of such Person and its Restricted Subsidiaries), plus
(ii) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes was included in computing such Consolidated Net Income, plus (iii)
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash charge that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, plus (v) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
any of its Restricted Subsidiaries or secured by a Lien on assets of such Person
or any of its Restricted Subsidiaries, in each case, to the extent that such
interest expense is deducted in computing such Consolidated Net Income, minus
(vi) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent (and in the same proportion)
that the Net Income of such Restricted Subsidiary was included in calculating
the Consolidated Net Income of such Person.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP,
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, and (iii) the cumulative effect of a change in accounting principles
shall be excluded.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were either members of such Board at the time of such
5
nomination or election or are successor Continuing Directors appointed by such
Continuing Directors (or their successors).
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Congress Credit Facility and the
TPG-MD Investment Notes Payable) or commercial paper facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
Indebtedness under Credit Facilities outstanding on the Issue Date shall be
deemed to have been incurred on such date in reliance on the exceptions provided
by clause (i) of the definition of Permitted Debt.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes issued in fully-registered certificated
form (other than a Global Note), which shall be substantially in the form of
Exhibit A, with appropriate legends as specified in Section 2.07 and Exhibit A.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to this Indenture, and, thereafter,
"Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date on which the Notes mature; provided,
however, that a class of Capital Stock shall not be Disqualified Stock hereunder
solely as the result of any maturity or redemption that is conditioned upon, and
subject to, compliance with Section 4.07 hereof; and provided, further, that
Capital Stock issued to any plan for the benefit of employees of the Company or
its subsidiaries or by any such plan to such employees shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Company in order to satisfy applicable statutory or regulatory obligations.
"Distribution Compliance Period" means, in respect of any Regulation S
Global Note, the 40 consecutive days beginning on and including the later of (i)
the day on which any Notes represented thereby are offered to persons other than
distributors (as defined in Regulation S under the Securities Act) pursuant to
Regulation S and (ii) the issue date for such Notes.
6
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Euroclear Bank, S.A/N.V., as operator of the Euroclear
system, or its successor in such capacity.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer by the Company to Holders to exchange
Senior Discount Contingent Principal Notes for Exchange Senior Discount
Contingent Principal Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Issue Date Registration Rights Agreement and any other Registration Rights
Agreement.
"Exchange Senior Discount Contingent Principal Notes" means debt
securities of the Company substantially identical in all material respects to
the Senior Discount Contingent Principal Notes (except that the transfer
restrictions and the Additional Interest with respect to the Senior Discount
Contingent Principal Notes will be modified or eliminated, as appropriate), to
be issued pursuant to this Indenture pursuant to the Exchange Offer for a like
principal amount of Senior Discount Contingent Principal Notes originally issued
pursuant to an exemption from registration under the Securities Act, and any
replacement Notes issued therefore in accordance with this Indenture.
"Existing Debentures" means the 13 1/8% Senior Discount Debentures due
2008 issued by Holdings.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Congress Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations; provided,
however, that in no event shall any amortization of deferred financing costs
incurred in connection with the recapitalization be included in Fixed Charges),
and (ii) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is
called upon), and (iv) the product of (A) (without duplication) (1) all
dividends paid or accrued in respect of Disqualified Stock which are not
included in the interest expense of such Person for tax purposes for such period
and (2) all cash dividend payments on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other than dividend payments on
Equity
7
Interests payable solely in Equity Interests (other than Disqualified Stock) of
the Company, times (B) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
repayment or redemption of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow and Fixed
Charges for such reference period shall be calculated without giving effect to
clause (ii) of the proviso set forth in the definition of Consolidated Net
Income and shall reflect any pro forma expense and cost reductions attributable
to such acquisitions (to the extent such expense and cost reduction would be
permitted by the Commission to be reflected in pro forma financial statements
included in a registration statement filed with the Commission), and (ii) the
Consolidated Cash Flow and Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded and Consolidated
Cash Flow shall reflect any pro forma expense or cost reductions relating to
such discontinuance or disposition (to the extent such expense or cost
reductions would be permitted by the Commission to be reflected in pro forma
financial statements included in a registration statement filed with the
Commission), and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the referent Person or any of its Subsidiaries following the
Calculation Date.
"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 have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date; provided, however, that all
reports and other financial information provided by the Company to the Holders,
the Trustee and/or the Commission shall be prepared in accordance with GAAP, as
in effect on the date of such report or other financial information.
8
"Global Notes" means the Rule 144A Global Notes, the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes and any Notes
exchanged for any of the foregoing in the Exchange Offer.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"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.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or the value of foreign currencies.
"Holdings" means J. Crew Group, Inc., a New York corporation.
"Holder" means a Person in whose name a Note is registered.
"IAI" means an institutional "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, other than a QIB.
"IAI Note" means a Definitive Note that is a Restricted Note held by an
IAI.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
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 interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other
9
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to the creditors
of the Company, as such, or to the assets of the Company or (ii) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary and involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"Issue Date" means the date on which Notes are first issued and
authenticated under this Indenture.
"Issue Date Notes" means the Notes originally issued on the Issue Date
having an aggregate principal amount at maturity of $193,346,138, and any
replacement Notes and Exchange Senior Discount Contingent Principal Notes issued
therefor in accordance with this Indenture.
"Issue Date Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Company and the Trustee, on
behalf of the Holders of Notes.
"J. Crew Corp." means J. Crew Operating Corp., a Delaware corporation.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal Corporate
Trust Office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment shall be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any option or other agreement to sell or give a security
interest therein).
10
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (A) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (B) the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any payments
that are required to be made under the Tax Sharing Agreement), amounts required
to be applied to the repayment of Indebtedness (other than Indebtedness under
the Credit Facilities) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (A) provide(s) credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), or (B) are/is directly or indirectly liable (as a
guarantor or otherwise), and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries, including the stock of such
Unrestricted Subsidiary.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.
"Note Custodian" means the Trustee when serving as custodian for the
Depositary with respect to the Notes in global form, or any successor entity
thereto.
"Notes" means any of the Company's 16.0% Senior Discount Contingent
Principal Notes issued and authenticated pursuant to this Indenture, including
the Exchange Senior Discount Contingent Principal Notes and any Additional
Notes.
"Obligations" means, with respect to any Indebtedness, any principal,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offer to exchange Existing Debentures of Holdings
for the Senior Discount Contingent Principal Notes of the Company as
contemplated by the Offering Circular.
"Offering Circular" means the Confidential Offering Circular and Consent
Solicitation Statement dated April 4, 2003 with respect to the Offering.
11
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Clearstream,
Luxembourg, a Person who has an account with DTC, Euroclear or Clearstream,
Luxembourg, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream, Luxembourg).
"Permitted Business" means the design, manufacture, importing,
exporting, distribution, marketing, licensing and wholesale and retail sale of
apparel, housewares, home furnishings and related items, and businesses
reasonably related thereto.
"Permitted Investments" means (i) any Investment in the Company or in a
Restricted Subsidiary of the Company (other than a Receivables Subsidiary); (ii)
any Investment in Cash and Cash Equivalents; (iii) any Investment by the Company
or any Restricted Subsidiary in a Person, if as a result of such Investment (A)
such Person becomes a Restricted Subsidiary of the Company (other than a
Receivables Subsidiary) or (B) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company (other than a Receivables Subsidiary); (iv) any Restricted Investment
made as a result of the receipt of non-cash consideration from an Asset Sale
that was made pursuant to and in compliance with Section 4.10 hereof or any
transaction not constituting an Asset Sale by reason of the $1.0 million
threshold contained in the definition thereof; (v) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Company; (vi) Hedging Obligations entered into in the ordinary
course of the Company's or its Restricted Subsidiaries' businesses and otherwise
in compliance with this Indenture; (vii) 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 $5.0 million at any
one time outstanding; (viii) additional Investments not to exceed $25.0 million
at any one time outstanding; (ix) Investments in securities of trade creditors
or customers received in settlement of obligations or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers; and (x) Investments by the Company or a Restricted
Subsidiary in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person, in each case, in connection with a Qualified
Receivables Transaction, provided, that any Investment in any such Person is in
the form of a Purchase Money Note, any equity interest or interests in accounts
receivable and related assets
12
generated by the Company or a Restricted Subsidiary and transferred to any
Person in connection with a Qualified Receivables Transaction or any such Person
owning such accounts receivable.
"Permitted Liens" means (i) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (ii) Liens
on assets of Restricted Subsidiaries securing Indebtedness of Restricted
Subsidiaries permitted to be incurred under this Indenture; (iii) Liens securing
the Notes; (iv) Liens securing the Company's obligations under the Congress
Credit Facility; (v) Liens of the Company or a Wholly Owned Restricted
Subsidiary on assets of any Restricted Subsidiary of the Company; (vi) Liens
securing Permitted 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 hereof; provided,
however, that such Liens (A) are not materially less favorable to the Holders
and are not materially more favorable to the lienholders with respect to such
Liens than the Liens in respect of the Indebtedness being refinanced and (B) 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; (vii) 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; (viii) statutory Liens
of landlords and Liens of carriers, warehousemen, mechanics, supplies,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent for a period of more than 60 days
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; (ix) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security or similar obligations, including any Lien securing letters
of credit issued in the ordinary course of business consistent with past
practice 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); (x) judgment Liens
not giving rise to an Event of Default so long as such Lien is adequately bonded
and any appropriate legal proceedings which may have been duly initiated for the
review of such judgement shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired; (xi)
easements, rights-of-way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering in any material respect
with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (xii) any interest or title of a lessor under any
lease, whether or not characterized as capital or operating; provided that such
Liens do not extend to any property or assets which is not leased property
subject to such lease; (xiii) Liens securing Capital Lease Obligations and
purchase money Indebtedness incurred in accordance with Section 4.09 hereof;
provided, however, that (A) the Indebtedness shall not exceed the cost of such
property or assets being acquired or constructed and shall not be secured by any
property or assets of the Company or any Restricted Subsidiary of the Company
other than the property or assets of the Company or any Restricted Subsidiary of
the Company other than the property and assets being acquired or constructed and
(B) the Lien securing such Indebtedness shall be created within 90 days of such
acquisition or construction; (xiv) 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
13
such inventory or other goods; (xv) Liens securing reimbursement obligations
with respect to letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof; (xvi)
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; (xvii) Liens
securing Hedging Obligations which Hedging Obligations relate to Indebtedness
that is otherwise permitted under this Indenture; (xviii) Liens securing
Acquired Debt incurred in accordance with Section 4.09 hereof; provided that (A)
such Liens secured such Acquired Debt at the time of and prior to the incurrence
of such Acquired Debt 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 Debt 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 any of its Restricted Subsidiaries other than the property or assets
that secured the Acquired Debt prior to the time such Indebtedness became
Acquired Debt of the Company or a Restricted Subsidiary of the Company and are
not more favorable to the lienholders than those securing the Acquired Debt
prior to the incurrence of such Acquired Debt by the Company or a Restricted
Subsidiary of the Company; (xix) leases or subleases granted to others not
interfering in any material respect with the business of the Company or its
Restricted Subsidiaries; (xx) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any Restricted
Subsidiary in the ordinary course of business; and (xxi) Liens or assets of a
Receivables Subsidiary arising in connection with a Qualified Receivables
Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, prepay, retire, renew, replace, defease
or refund Indebtedness of the Company or any of its Subsidiaries (other than
such Indebtedness described in clauses (i), (vi), (vii), (viii), (ix), (x),
(xi), (xiii) and (xiv) of Section 4.09 hereof); provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, prepaid, retired, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith including premiums paid, if
any, to the holders thereof); (ii) such Permitted Refinancing Indebtedness has a
final maturity date at or later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
prepaid, retired, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, prepaid, retired, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
14
"Principals" means TPG Partners II, L.P., a Delaware limited
partnership.
"Purchase Money Note" means a promissory note evidencing a line of
credit, or evidencing other Indebtedness owed to the Company or any Restricted
Subsidiary in connection with a Qualified Receivables Transaction, which note
shall be repaid from cash available to the maker of such note, other than
amounts required to be established as reserves pursuant to agreement, amounts
paid to investors in respect of interest, principal and other amounts owing to
such investors and amounts paid in connection with the purchase of newly
generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) cash, (ii) Cash Equivalents, (iii) long-term assets that are
used or useful in a Permitted Business and (iv) the Capital Stock of any Person
engaged primarily in a Permitted Business if, in connection with the receipt by
the Company or any Restricted Subsidiary of the Company of such Capital Stock,
(A) such Person becomes a Wholly Owned Restricted Subsidiary or (B) such Person
is merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or any
Wholly Owned Restricted Subsidiary of the Company.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a
transfer by the Company or any Restricted Subsidiary) and (ii) any other Person
(in the case of a transfer by a Receivables Subsidiary), or may grant a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company or any Restricted Subsidiary and any asset related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
which are customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization transactions
involving accounts receivable.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security, or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
15
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary
which engages in no activities other than in connection with the financing of
accounts receivables and which is designated by the Board of Directors of the
Company (as provided below) as a Receivables Subsidiary (i) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which (A) is
guaranteed by the Company or any other Restricted Subsidiary (excluding
guarantees of obligations (other than the principal of, and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings), (B) is recourse
to or obligates the Company or any other Restricted Subsidiary in any way other
than pursuant to Standard Securitization Undertakings or (C) subjects any
property or asset of the Company or any other Restricted Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings, (ii) with which neither the
Company nor any other Restricted Subsidiary has any material contract,
agreement, arrangement or understanding (except in connection with a Purchase
Money Note or Qualified Receivables Transaction) other than on terms no less
favorable to the Company or such other Restricted Subsidiary than those that
might be obtained at the time from persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable, and (iii) to which neither the
Company nor any other Restricted Subsidiary has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of the Company shall be evidenced by the Company by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers' Certificate
certifying, to the best of such officer's knowledge and belief after consulting
with counsel, that such designation complied with the foregoing conditions.
"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests therein); provided that in each of the
foregoing, the Company or its Subsidiaries receive at least 80% of the aggregate
principal amount of any Receivables financed in such transaction.
"Registration Rights Agreement" means the registration rights agreement
between the Company and the Trustee or one or more investment banks acting as
initial purchasers in connection with any issuance of Notes under the Indenture,
including the Issue Date Registration Rights Agreement.
"Registration Statement" means an effective Exchange Offer Registration
Statement or Shelf Registration Statement.
"Regulation S" means Regulation S promulgated under the Securities Act
or any successor regulation.
"Related Party" with respect to any Principal means (i) any controlling
stockholder or a majority of (or more) owned Subsidiary of such Principal or, in
the case of an individual, any spouse or immediate family member of such
Principal, or (ii) any trust, corporation, partnership
16
or other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority (or more) controlling interest of which consist
of such Principal and/or such other Persons referred to in the immediately
preceding clause (i).
"Resale Restriction Termination Date" means for any Restricted Note (or
beneficial interest therein) other than a Regulation S Temporary Global Note
(which shall have no Resale Restriction Termination Date), two years (or such
other period specified in Rule 144(k)) from the Issue Date or, if any Additional
Notes that are Restricted Notes have been issued before the Resale Restriction
Termination Date for any Restricted Notes, from the latest such original issue
date of such Additional Notes.
"Responsible Officer" when used with respect to the Trustee, means any
officer in the Corporate Trust Services Division of the Trustee (or any
successor group of the Trustee) or any other officer of the trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"Restricted Broker Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Restricted Global Notes" means the Rule 144A Global Notes and the
Regulation S Global Notes, all of which shall bear the Private Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Note" means any Issue Date Note (or beneficial interest
therein) or any Additional Note (or beneficial interest therein) not originally
issued and sold pursuant to an effective registration statement under the
Securities Act other than, in each case, the Regulation S Permanent Global Note,
or any Exchange Senior Discount Contingent Principal Note until such time as:
(i) such Issue Date Note (or beneficial interest therein) or
Additional Note (or beneficial interest therein) has been exchanged for
a corresponding Exchange Senior Discount Contingent Principal Note
pursuant to an Exchange Offer Registration Statement or transferred
pursuant to a Shelf Registration Statement;
(ii) the Resale Restriction Termination Date therefor has
passed; or
(iii) the Private Placement Legend (as defined in Section
2.07(b)) therefor has otherwise been removed pursuant to Section 2.08
or, in the case of a beneficial interest in a Global Note, such
beneficial interest has been exchanged for an interest in a Global Note
not bearing a Private Placement Legend.
17
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act or any
successor rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Subordinated Notes" means J. Crew Corp.'s 10 3/8% Senior
Subordinated Notes due 2007.
"Shelf Registration Statement" has the meaning set forth in the Issue
Date Registration Rights Agreement and any other Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the Issue
Date.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary which are reasonably customary in an accounts receivable
transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total Voting
Stock thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (A) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (B) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Tax Sharing Agreement" means the tax sharing agreement in effect as of
the Issue Date among the Company, Holdings and any one or more of subsidiaries
of the Company, as amended from time to time, so long as the amount of the
Company's (or any of its Restricted Subsidiaries') payments for which the
Company and its Restricted Subsidiaries are responsible, or the time when such
payments are required to be made thereunder or any other of the Company's
rights, duties, and obligations thereunder are no less favorable to the Company
than as provided in such agreement as in effect on the Issue Date, as determined
in good faith by (i) a majority of the independent members of the Board of
Directors of the Company if there are more than two independent members of the
Board of Directors of the Company, or (ii) if there are not more than two
independent members of the Board of Directors of the Company, then a majority of
the members of the Board of Directors of the Company and the independent members
of the Board of Directors of the Company, if applicable.
18
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date hereof.
"TPG-MD Investment Notes Payable" means that certain Credit Agreement,
dated as of February 4, 2003, among Holdings, J. Crew Corp., and certain
subsidiaries thereof, and TPG-MD Investment, LLC.
"Transfer Restricted Securities" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"Trustee" means U.S. Bank National Association until a successor
replaces it in accordance with the applicable provisions of this Indenture, and
thereafter means the successor.
"Unrestricted Global Notes" means one or more Global Notes that do not
and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (i) is not party
to any agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (ii) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (A) to subscribe for additional Equity Interests or (B) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (iii) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
filing with a Trustee a certified copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness and
issuance of preferred stock by a Restricted Subsidiary of the Company of any
outstanding Indebtedness or outstanding issue of preferred stock of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness and preferred stock is permitted to be incurred under Section 4.09
hereof, and (ii) no Default or Event of Default would exist following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by
19
multiplying (A) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (B) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (ii) the then outstanding principal amount of such
Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Restricted Subsidiary of
such person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Restricted Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
Section 1.02. Other Definitions.
Term Defined in
Section
"Affiliate Transaction"................................................. 4.11
"Agent Members"......................................................... 2.06
"Asset Sale Offer"...................................................... 4.10
"Asset Sale Offer Triggering Agent"..................................... 4.10
"Authenticating Agent".................................................. 2.02
"Change of Control Offer"............................................... 4.13
"Change of Control Payment"............................................. 4.13
"Change of Control Payment Date"........................................ 4.13
"Company Order"......................................................... 2.02
"Contingent Principal".................................................. 2.20
"Covenant Defeasance"................................................... 8.03
"Custodian"............................................................. 6.01
"DTC"................................................................... 2.03
"Event of Default"...................................................... 6.01
"Excess Proceeds"....................................................... 4.10
"incur"................................................................. 4.09
"Legal Defeasance"...................................................... 8.02
"Non-U.S. Beneficial Ownership Certification"........................... 2.01
"Offer Amount".......................................................... 3.09
"Offer Period".......................................................... 3.09
"Pari Passu Indebtedness"............................................... 4.10
"Paying Agent".......................................................... 2.03
"Payment Default"....................................................... 6.01
"Permitted Debt"........................................................ 4.09
"Private Placement Legend".............................................. 2.07
"Purchase Date"......................................................... 3.09
"Registrar"............................................................. 2.03
"Regulation S Global Note".............................................. 2.01
"Regulation S Temporary Global Note".................................... 2.01
"Regulation S Permanent Global Note".................................... 2.01
"Repurchase Offer"...................................................... 3.09
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"Restricted Payments"................................................... 4.07
"Rule 144A Global Note"................................................. 2.01
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it herein;
(ii) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement
or successor sections or rules adopted by the Commission
from time to time;
(vii) references to the payment of principal of the Notes
shall include applicable premium, if any; and
21
(viii) references to payments on the Notes shall include
Additional Interest payable under a Registration Rights
Agreement, if any.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) The Issue Date Notes are being originally offered and sold by
the Company pursuant to the Offering Circular. The Notes will be issued in
fully-registered certificated form without coupons. The Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
hereto. The Notes initially shall be issued in minimum denominations of $1 and
integral multiples thereof.
(b) The terms and provisions of the Notes, the form of which is in
Exhibit A, shall constitute, and are hereby expressly made, a part of this
Indenture, and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture expressly agree to such terms and
provisions and to be bound thereby. Except as otherwise expressly permitted in
this Indenture, all Notes shall be identical in all respects. Notwithstanding
any differences among them, all Notes issued under this Indenture shall vote and
consent together on all matters as one class.
(c) The Notes may have notations, legends or endorsements as
specified in Section 2.07 or as otherwise required by law, stock exchange rule
or DTC rule or usage. The Company and the Trustee shall approve the form of the
Notes and any notation, legend or endorsement on them. Each Note shall be dated
the date of its authentication.
(d) Notes originally offered and sold to QIBs in reliance on Rule
144A will be issued in the form of one or more permanent Global Notes (each, a
"Rule 144A Global Note").
(e) Notes originally offered and sold outside the United States of
America in reliance on Regulation S will be issued in the form of one or more
temporary Global Notes (each, a "Regulation S Temporary Global Note"). An
interest in a Regulation S Temporary Global Note will be exchangeable for an
interest in a permanent Global Note (a "Regulation S Permanent Global Note", and
together with the Regulation S Temporary Global Note, a "Regulation S Global
Note") on or after the expiration of the Distribution Compliance Period upon the
receipt by the Registrar of a certificate in the form of Exhibit B-1 (a
"Non-U.S. Beneficial Ownership Certification") to the effect that Euroclear or
Clearstream, Luxembourg, as applicable, has received a certificate in the form
of Exhibit B-2, from the holder of a beneficial interest in such Regulation S
Temporary Global Note (or its agent) in the principal amount to be exchanged.
Upon receipt by the Registrar of a Non-U.S. Beneficial Ownership Certification,
(i) with respect to the first such Non-U.S. Beneficial Ownership Certification,
the Company will execute, and upon Company Order the Trustee will authenticate
and deliver to the Note Custodian, one or more Regulation S Permanent Global
Notes and (ii) with respect to the first and each subsequent Non-U.S. Beneficial
Ownership Certification, the Registrar and the Note Custodian shall exchange the
interest in the Regulation S Temporary Global Note covered by such Non-U.S.
Beneficial Ownership Certification for an interest of equal principal amount in
the Regulation S
22
Permanent Global Note. Upon any exchange of an interest in a Regulation S
Temporary Global Note for a comparable interest in the Regulation S Permanent
Global Note, the Registrar shall decrease the Regulation S Temporary Global Note
and increase the Regulation S Permanent Global Note, in each case in an amount
equal to the principal amount of Notes covered by the applicable Non-U.S.
Beneficial Ownership Certification.
(f) Each Issue Date Note originally offered and sold to an IAI and
each Additional Note originally offered and sold to an IAI not pursuant to an
effective registration statement under the Securities Act and not in reliance on
Regulation S will be issued in the form of a IAI Note. Upon such issuance, the
Registrar shall register such IAI Note in the name of the beneficial owner or
owners of such note (or the nominee of such beneficial owner or owners) and
deliver the certificates for such IAI Notes to the respective beneficial owner
or owners. IAI Notes shall be in minimum denominations of $250,000 and integral
multiples of $1, except as provided in Section 4.10, 4.13 or 3.06.
Section 2.02. Execution and Authentication.
One Officer of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Notes and may be in facsimile form. If an Officer of the Company whose signature
is on a Note no longer holds that office at the time the Note is authenticated,
the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A hereto.
At any time and from time to time after the execution and delivery of
this Indenture, the Trustee shall authenticate and make available for delivery
Notes upon a written order of the Company signed by an Officer of the Company
(the "Company Order"). A Company Order shall specify the amount of the Notes to
be authenticated and the date on which the original issue of Notes is to be
authenticated. The aggregate principal amount of the Additional Notes that may
be authenticated and delivered under this Indenture after the Issue Date
pursuant to Section 2.18 is limited to the amount necessary to repurchase
$21,667,000 in aggregate principal amount of the Existing Debentures which were
not exchanged for Senior Discount Contingent Principal Notes as of the Issue
Date.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") acceptable to the Company to authenticate Notes. Unless limited by the
terms of such appointment, any such Authenticating Agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by the Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii) an
office or agency where Notes
23
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more additional paying agents. The term "Paying Agent" includes
any additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes. The Company initially
appoints the Trustee to act as the Registrar and Paying Agent and to act as Note
Custodian with respect to the Global Notes. The Company initially appoints the
Trustee to act as the Registrar and Paying Agent with respect to the Definitive
Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Additional Interest, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
the occurrence of events specified in Section 6.01(vii) or (viii) hereof, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
(7) Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Global Note Provisions.
(a) Each Global Note initially shall: (i) be registered in the name
of DTC or the nominee of DTC, (ii) be delivered to the Note Custodian, and (iii)
bear the appropriate legend, as set forth in Section 2.07 and Exhibit A. Any
Global Note may be represented by more than one certificate. The aggregate
principal amount of each Global Note may from time to time be increased or
decreased by adjustments made on the records of the Note Custodian, as provided
in this Indenture.
24
(b) Members of, or participants in, DTC ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by DTC or by the Note Custodian under such Global Note, and DTC may be
treated by the Company, the Trustee, the Paying Agent and the Registrar and any
of their agents as the absolute owner of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, the Paying Agent or the Registrar or any of their agents
from giving effect to any written certification, proxy or other authorization
furnished by DTC or impair, as between DTC and its Agent Members, the operation
of customary practices of DTC governing the exercise of the rights of an owner
of a beneficial interest in any Global Note. The registered 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 that a Holder is entitled to take under this Indenture or the Notes.
(c) Except as provided below, owners of beneficial interests in
Global Notes will not be entitled to receive Definitive Notes. Definitive Notes
shall be issued to all owners of beneficial interests in a Global Note in
exchange for such interests if:
(i) DTC notifies the Company that it is unwilling or unable
to continue as depositary for such Global Note or DTC
ceases to be a clearing agency registered under the
Exchange Act, at a time when DTC is required to be so
registered in order to act as depositary, and in each
case a successor depositary is not appointed by the
Company within 90 days of such notice,
(ii) the Company executes and delivers to the Trustee and
Registrar an Officers' Certificate stating that such
Global Note shall be so exchangeable, or
(iii) an Event of Default has occurred and is continuing and
the Registrar has received a request from DTC.
In connection with the exchange of an entire Global Note for Definitive Notes
pursuant to this subsection (c), such Global Note shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute, and
upon Company Order the Trustee shall authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Global Note, an equal aggregate principal amount of Definitive Notes of
authorized denominations.
(d) In connection with the exchange of a portion of a Definitive
Note for a beneficial interest in a Global Note, the Trustee shall cancel such
Definitive Note, and the Company shall execute, and the Trustee shall
authenticate and deliver to the exchanging Holder, a new Definitive Note
representing the principal amount not so exchanged unless such principal amount
is to be exchanged for a beneficial interest in a Global Note pursuant to
Section 2.08(e).
Section 2.07. Legends.
(a) Each Global Note shall bear the legend specified therefor in
Exhibit A on the face thereof.
25
(b) Each Restricted Note shall bear the private placement legend
specified therefor in Exhibit A on the face thereof (together with, if
applicable, the legend specified in Section 2.07(d), the "Private Placement
Legend").
(c) Each Regulation S Temporary Global Note shall bear the legend
specified therefor in Exhibit A on the face thereof.
(d) Each IAI Note that is a Restricted Note shall bear the
additional legend specified therefor in Exhibit A on the face thereof.
Section 2.08. Transfer and Exchange.
(a) The following provisions shall apply with respect to any
proposed transfer of an interest in a Rule 144A Global Note that is a Restricted
Note:
(i) If the owner of a beneficial interest in a Rule 144A
Global Note wishes to transfer such interest (or a
portion thereof) to an IAI, (x) upon receipt by the Note
Custodian and Registrar of:
(A) instructions from the Holder of the Rule 144A
Global Note directing the Note Custodian and
Registrar to issue one or more IAI Notes in the
amounts specified to the transferee IAI and,
debit or cause to be debited an equivalent
amount of beneficial interest in the Rule 144A
Global Note, and
(B) a certificate in the form of Exhibit D from the
IAI transferee,
and (y) subject to the rules and procedures of DTC, the Note Custodian
and Registrar shall:
(A) authenticate and deliver to the IAI transferee
IAI Note(s) in an equivalent amount to the
beneficial interest in the Rule 144A Global Note
being transferred in accordance with the
foregoing, and
(B) decrease the Rule 144A Global Note by such
amount in accordance with the foregoing.
(ii) If (1) the owner of a beneficial interest in a Rule 144A
Global Note wishes to transfer such interest (or portion
thereof) to a Non-U.S. Person pursuant to Regulation S
and (2) such Non-U.S. Person wishes to hold its interest
in the Notes through a beneficial interest in the
Regulation S Global Note, (x) upon receipt by the Note
Custodian and Registrar of:
(A) instructions from the Holder of the Rule 144A
Global Note directing the Note Custodian and
Registrar to credit or cause to be credited a
beneficial interest in the Regulation S Global
Note equal
26
to the principal amount of the beneficial
interest in the Rule 144A Global Note to be
transferred, and
(B) a certificate in the form of Exhibit E from the
transferor,
and (y) subject to the rules and procedures of DTC, the Note Custodian
and Registrar shall increase the Regulation S Global Note and decrease
the Rule 144A Global Note by such amount in accordance with the
foregoing.
(b) The following provisions shall apply with respect to any
proposed transfer of an interest in a Regulation S Temporary Global Note:
(i) If the owner of a beneficial interest in a Regulation S
Temporary Global Note wishes to transfer such interest
(or a portion thereof) to an IAI, (x) upon receipt by
the Note Custodian and Registrar of:
(A) instructions from the Holder of the Regulation S
Temporary Global Note directing the Note
Custodian and Registrar to issue one or more IAI
Notes in specified amounts in the name of the
transferee IAI, and debit or cause to be debited
an equivalent amount of beneficial interest in
the Regulation S Temporary Global Note, and
(B) a certificate in the form of Exhibit D from the
IAI transferee,
and (y) subject to the rules and procedures of DTC, the Note Custodian
and Registrar shall:
(1) authenticate and deliver to the IAI
transferee IAI Note(s) in an equivalent
amount to the beneficial interest in the
Regulation S Temporary Global Note being
transferred in accordance with the
foregoing, and
(2) decrease the Regulation S Temporary
Global Note for such amount in
accordance with the foregoing.
(ii) If the owner of an interest in a Regulation S Temporary
Global Note wishes to transfer such interest (or any
portion thereof) to a QIB pursuant to Rule 144A, (x)
upon receipt by the Note Custodian and Registrar of:
(A) instructions from the Holder of the Regulation S
Temporary Global Note directing the Note
Custodian and Registrar to credit or cause to be
credited a beneficial interest in the Rule 144A
Global Note equal to the principal amount of the
beneficial interest in the Regulation S
Temporary Global Note to be transferred, and
(B) a certificate in the form of Exhibit C duly
executed by the transferor, and
27
(y) in accordance with the rules and procedures of DTC, the Note
Custodian and Registrar shall increase the Rule 144A Global Note and
decrease the Regulation S Temporary Global Note by such amount in
accordance with the foregoing.
(iii) No interest in a Regulation S Temporary Global Note will
be transferred to a holder of an interest in the
Regulation S Permanent Global Note except pursuant to
Section 2.01(e).
(c) The following provisions shall apply with respect to any
proposed transfer of an IAI Note (or portion thereof) that is a Restricted Note:
(i) If the Holder of an IAI Note wishes to transfer such IAI
Note (or a portion thereof) to a QIB pursuant to Rule
144A, (x) upon receipt by the Note Custodian and
Registrar of:
(A) such IAI Note, duly endorsed as provided herein,
(B) instructions from such Holder directing the Note
Custodian and Registrar to credit or cause to be
credited a beneficial interest in the Rule 144A
Global Note equal to the principal amount (or
portion thereof) of such IAI Note to be
transferred, and, if the entire principal amount
of such IAI Note is not being transferred to
issue one or more IAI Notes to the transferor
IAI in an amount equal to the principal amount
not transferred, and
(C) a certificate in the form of Exhibit C duly
executed by the transferor, and
(y) subject to the rules and procedures of DTC, the Note Custodian and
Registrar shall:
(1) cancel the IAI Note delivered to it,
(2) increase the Rule 144A Global Note in
accordance with the foregoing, and
(3) if applicable, issue to the IAI
transferor one or more IAI Note(s) in
accordance with the foregoing;
(ii) If the Holder of an IAI Note wishes to transfer such IAI
Note (or any portion thereof) to an IAI, the Registrar
shall authenticate and deliver IAI Note(s) to the
appropriate IAI(s) upon receipt by Registrar of:
(A) such IAI Note, duly endorsed as provided herein,
(B) instructions from such Holder directing the
Registrar to issue one or more IAI Notes in the
amounts specified to the transferee IAI and, if
the entire principal amount of such IAI Note is
not being
28
transferred, the transferor IAI in an amount
equal to the principal amount not transferred,
and
(C) a certificate in the form of Exhibit D duly
executed by the transferee.
(iii) If (1) the Holder of an IAI Note wishes to transfer such
IAI Note (or a portion thereof) to a Non-U.S. Person
pursuant to Regulation S and (2) such Non-U.S. Person
wishes to hold its interest in the Notes through a
beneficial interest in the Regulation S Global Note, (x)
upon receipt by the Note Custodian and Registrar of:
(A) such IAI Note, duly endorsed as provided herein,
(B) instructions from the Holder of such IAI Note
directing the Registrar to credit or cause to be
credited a beneficial interest in the Regulation
S Global Note equal to the principal amount of
the IAI Note (or portion thereof) to be
transferred, and, if the entire principal amount
of such IAI Note is not being transferred to
issue one or more IAI Notes to the transferor
IAI in an amount equal to the principal amount
not transferred, and
(C) a certificate in the form of Exhibit E from the
transferor,
and (y) subject to the rules and procedures of DTC, the Note Custodian
and Registrar shall:
(1) cancel the IAI Note delivered to it,
(2) increase the Regulation S Global Note
for such amount in accordance with the
foregoing, and
(3) if applicable, issue to the IAI
transferor one or more IAI Note(s) in
accordance with the foregoing.
(d) Other Transfers. Any transfer of Restricted Notes not described
above (other than a transfer of a beneficial interest in a Global Note that does
not involve an exchange of such interest for a Definitive Note or a beneficial
interest in another Global Note, which must be effected in accordance with
applicable law and the rules and procedures of DTC, but is not subject to any
procedure required by this Indenture) shall be made only upon receipt by the
Registrar of such opinions of counsel, certificates and/or other information
reasonably required by and satisfactory to it in order to ensure compliance with
the Securities Act or in accordance with Section 2.8(e).
(e) Use and Removal of Private Placement Legends. Upon the transfer,
exchange or replacement of Notes (or beneficial interests in a Global Note) not
bearing (or not required to bear upon such transfer, exchange or replacement) a
Private Placement Legend, the Note Custodian and Registrar shall exchange such
Notes (or beneficial interests) for beneficial
29
interests in a Global Note (or Definitive Notes if they have been issued
pursuant to Section 2.06(c)) that does not bear a Private Placement Legend. Upon
the transfer, exchange or replacement of Notes (or beneficial interests in a
Global Note) bearing a Private Placement Legend, the Note Custodian and
Registrar shall deliver only Notes (or beneficial interests in a Global Note)
that bear a Private Placement Legend unless:
(i) such Notes (or beneficial interests) are exchanged in
the Exchange Offer;
(ii) such Notes (or beneficial interests) are transferred
pursuant to a Shelf Registration Statement;
(iii) such Notes (or beneficial interests) are transferred
pursuant to Rule 144 upon delivery to the Registrar of a
certificate of the transferor in the form of Exhibit F
and an Opinion of Counsel reasonably satisfactory to the
Registrar;
(iv) such Notes (or beneficial interests) are transferred,
replaced or exchanged after the Resale Restriction
Termination Date therefor; or
(v) in connection with such transfer, exchange or
replacement the Registrar shall have received an Opinion
of Counsel and other evidence reasonably satisfactory to
it to the effect that neither such Private Placement
Legend nor the related restrictions on transfer are
required in order to maintain compliance with the
provisions of the Securities Act.
The Private Placement Legend on any Note shall be removed at the request of the
Holder on or after the Resale Restriction Termination Date therefor. The Holder
of a Global Note may exchange an interest therein for an equivalent interest in
a Global Note not bearing a Private Placement Legend (other than a Regulation S
Global Note) upon transfer of such interest pursuant to any clauses Section
2.08(e)(i) through (v). The Company shall deliver to the Trustee an Officers'
Certificate promptly upon effectiveness, withdrawal or suspension of any
Registration Statement.
(f) Consolidation of Global Notes and Exchange of Definitive Notes
for Beneficial Interests in Global Notes.
(i) If a Global Note not bearing a Private Placement Legend
(other than a Regulation S Global Note) is outstanding
at the time of a Exchange Offer, any interests in a
Global Note exchanged in such Exchange Offer shall be
exchanged for interests in such outstanding Global Note.
(ii) Upon the transfer or exchange (including pursuant to a
Exchange Offer) of any Definitive Note for which a
Private Placement Legend would not be required pursuant
to Section 2.08(e) following such transfer or exchange,
such Definitive Note shall be exchanged for an interest
in a Global Note (other than a Regulation S Global Note)
not bearing a Private Placement Legend and, if no such
Global Note is Outstanding at such time, the
30
Company shall execute and upon Company Order the Trustee
shall authenticate a Global Note not bearing a Private
Placement Legend.
(iii) Nothing in this Indenture shall provide for the
consolidation of any Notes with any other Notes to the
extent that they constitute, as determined pursuant to
an Opinion of Counsel, different classes of securities
for U.S. federal income tax purposes.
(g) Retention of Documents. The Registrar shall retain copies of all
letters, notices and other written communications received pursuant to this
Article 2. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
(h) Execution, Authentication of Notes, etc.
(i) Subject to the other provisions of this Section 2.08,
when Notes are presented to the Registrar with a request
to register the transfer of such Notes or to exchange
such Notes for an equal principal amount of Notes of
other authorized denominations, the Registrar shall
register the transfer or make the exchange as requested
if its requirements for such transaction are met;
provided that any 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 Registrar, duly
executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of
transfers and exchanges and subject to the other terms
and conditions of this Article 2, the Company will
execute and upon Company Order the Trustee will
authenticate Definitive Notes and Global Notes at the
Registrar's request. In accordance with any Registration
Rights Agreement, the Company will execute and upon
Company Order, the Trustee will authenticate Exchange
Senior Discount Contingent Principal Notes in exchange
for Issue Date Notes.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental
charges payable upon exchange or transfer pursuant to
the Exchange Offer, or Section 3.07, Section 4.10,
Section 4.13 or Section 9.05).
(iii) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration
of transfer or exchange.
31
(iv) The Registrar shall not be required: (A) to issue, to
register the transfer of or to exchange Notes during a
period beginning at the opening of fifteen (15) Business
Days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the
close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part,
or (C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any
Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and
neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
Section 2.09. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.10. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.10 as not outstanding. Except as set forth in Section 2.11 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note. If a Note is replaced pursuant to Section 2.09 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
32
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.11. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes shown on the Trustee's register as being owned shall be so disregarded.
Notwithstanding the foregoing, Notes that are to be acquired by the Company or
an Affiliate of the Company pursuant to an exchange offer, tender offer or other
agreement shall not be deemed to be owned by such entity until legal title to
such Notes passes to such entity.
Section 2.12. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes. Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.13. Cancellation.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.09 hereof, the Company may not
issue new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to it.
Section 2.14. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least five (5) Business Days prior to the payment
date, in each case at the rate provided in the Notes and in Section 4.01 hereof.
The Company shall fix
33
or cause to be fixed each such special record date and payment date, and shall
promptly thereafter, notify the Trustee of any such date. At least fifteen (15)
days before the special record date, the Company (or the Trustee, in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.15. Record Date.
The record date for purposes of determining the identity of Holders of
the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA Section 316 (c).
Section 2.16. Computation Of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Section 2.17. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made 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 number.
Section 2.18. Additional Notes.
The Company may, from time to time, subject to compliance with any other
applicable provisions of this Indenture, without the consent of the Holders,
create and issue pursuant to this Indenture Additional Notes having terms and
conditions set forth in Exhibit A identical to those of the other outstanding
Notes, except that Additional Notes
(i) may have a different issue date from other outstanding Notes;
(ii) may have a different amount of interest payable on the first
Interest Payment Date after issuance than is payable on other outstanding Notes;
and
(iii) may be entitled to Additional Interest as provided in Section
2.19 not applicable to other outstanding Notes and may not be entitled to such
Additional Interest applicable to other outstanding Notes;
provided, that no adjustment pursuant to this Section 2.18 shall cause such
Additional Notes to constitute, as determined pursuant to an Opinion of Counsel,
a different class of securities than the Issue Date Notes for U.S. federal
income tax purposes except for Additional Notes that have a separate CUSIP
number from other outstanding Notes pending performance by the Company of its
obligations under the Registration Rights Agreement applicable thereto.
34
Section 2.19. Additional Interest Under the Registration Rights Agreements.
Under certain circumstances, the Company may be obligated to pay
Additional Interest to Holders, all as and to the extent set forth in the Issue
Date Registration Rights Agreement or any Registration Rights Agreement
applicable to Additional Notes. The terms thereof are hereby incorporated herein
by reference.
The Company shall advise the Trustee promptly and, if requested by
Trustee, confirm such advice in writing, of the registration status as set forth
in the applicable Registration Rights Agreement. The Trustee may rely on such
notices without further inquiry. Unless the Trustee receives a notice from the
Company to the effect that a registration statement has been filed or is
effective, as applicable, or an exchange offer has been consummated within the
deadlines set forth in the applicable Registration Rights Agreement, the Trustee
may assume that the deadline has been missed, in which case the Trustee will
impose Additional Interest in accordance with the applicable Registration Rights
Agreement. Such Additional Interest is deemed to be interest for purposes of
this Indenture.
Section 2.20. Contingent Principal.
(a) Contingent Principal. In the event that Holdings' consolidated
EBITDA (as defined in the Congress Credit Facility) exceeds $50.0 million for
the immediately preceding fiscal year, on each May 15 (including May 15, 2008),
commencing on May 15, 2004, the aggregate Accreted Value or the aggregate
principal amount at maturity, as applicable, of the Notes will be increased in
an amount equal to 10% of the excess, if any, of Holdings' consolidated EBITDA
for the immediately preceding fiscal year over $50.0 million (such amount, the
"Contingent Principal"). The Contingent Principal, if any, will be allocated pro
rata among the then outstanding Notes. Any Contingent Principal will accrete or
accrue, as applicable, at a rate of 16.0% per annum (computed on a semi-annual
bond equivalent basis) calculated from the date of issuance of such Contingent
Principal.
(b) Payment of Contingent Principal. If payable, the Contingent
Principal shall be paid on the Stated Maturity of the Notes.
(c) Notice. In the event that Contingent Principal accrues on the
Notes, the Company shall give notice thereof by delivering an Officers'
Certificate to the Trustee no later than April 30 of the applicable year. Such
Officers' Certificate shall inform the Trustee of the amount of Contingent
Principal per Note and in the aggregate for all outstanding Notes. Following the
receipt of such notice, the Trustee shall promptly provide such information to
the registered Holders of Notes and DTC for dissemination to its Participants.
Section 2.21. Calculation of Original Issue Discount and Interest for U.S.
Federal Income Tax Purposes.
The Company agrees, and each Holder and any beneficial holder of a Note
by its purchase thereof shall be deemed to agree, to treat (in the absence of an
administrative determination or judicial ruling to the contrary), for United
States federal income tax purposes, the Notes as debt instruments that are
subject to Section 1.1275-4(c) of the Treasury Regulations. For United States
federal income tax purposes, the Company shall accrue interest with respect to
35
the noncontingent component of the outstanding Notes as original issue discount
and shall report interest with respect to the contingent component of the
outstanding Notes according to the "method for debt instruments not subject to
the noncontingent bond method," set forth in section 1.1275-4(c) of the Treasury
Regulations.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date (unless a
shorter period is acceptable to the Trustee) an Officers' Certificate setting
forth (i) the Section of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
If the Company is required to make an offer to purchase Notes pursuant
to Section 4.10 or 4.13 hereof, it shall furnish to the Trustee, at least 45
days before the scheduled purchase date, an Officers' Certificate setting forth
(i) the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase price, (v) the purchase date and (vi) and further
setting forth a statement to the effect that (A) the Company or one its
Subsidiaries has affected an Asset Sale and there are Excess Proceeds
aggregating more than $10.0 million or (B) a Change of Control has occurred, as
applicable.
Section 3.02. Selection of Notes to be Redeemed or Purchased.
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not 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. Notices of redemption shall be mailed by first class
mail, postage prepaid, 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. Notices of redemption may not be conditional. 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
principal amount equal to the unredeemed portion thereof (if any) will be issued
in the name of the Holder thereof upon cancellation of the original Note (or
appropriate adjustments to the amount and beneficial interests in a Global Note
will be made, as appropriate). Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest and
Additional Interest cease to accrue on Notes or portions of them called for
redemption unless the Company defaults in making the redemption payment.
36
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed by first class mail a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price for the Notes and accrued interest,
and Additional Interest, if any;
(iii) if any Note is being redeemed in part, the portion of
the principal amount of such Notes to be redeemed and
that, after the redemption date, upon surrender of such
Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon surrender of
the original Note;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(vi) that, unless the Company defaults in making such
redemption payment, interest and Additional Interest, if
any, on Notes called for redemption ceases to accrue on
and after the redemption date;
(vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for
redemption are being redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such
notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall have delivered to the Trustee, at least 45 days
prior to the redemption date (or such shorter period as shall be acceptable to
the Trustee), an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in the notice as provided
in the preceding paragraph. The notice mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not the Holder
receives such notice. In any case, failure to give such notice by mail 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.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption
37
price plus accrued and unpaid interest and Additional Interest, if any, to such
date. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption or Purchase Price.
On or before 10:00 a.m. (New York City time) on each redemption date or
the date on which Notes must be accepted for purchase pursuant to Section 4.10
or 4.13, the Company shall deposit with the Trustee or with the Paying Agent
money sufficient to pay the redemption price of and accrued and unpaid interest
and Additional Interest, if any, on all Notes to be redeemed or purchased on
that date. The Trustee or the Paying Agent shall promptly return to the Company
upon its written request any money deposited with the Trustee or the Paying
Agent by the Company in excess of the amounts necessary to pay the redemption
price of (including any applicable premium), accrued interest and Additional
Interest, if any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or
Change of Control Offer are paid or if the Company has deposited with the
Trustee or Paying Agent money sufficient to pay the redemption or purchase price
of, unpaid and accrued interest and Additional Interest, if any, on all Notes to
be redeemed or purchased, on and after the redemption or purchase date interest
and Additional Interest, if any, shall cease to accrue on the Notes or the
portions of Notes called for redemption or tendered and not withdrawn in an
Asset Sale Offer or Change of Control Offer (regardless of whether certificates
for such securities are actually surrendered). If a Note is redeemed or
purchased on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Additional
Interest, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal and Additional Interest, if any, from the
redemption or purchase date until such principal and Additional Interest, if
any, is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case, at the rate provided in the Notes and in Section 4.01
hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
The Company may redeem the Notes, in whole at any time or in part from
time to time, at the following redemption prices, expressed as percentages of
the Accreted Value or the principal amount at maturity thereof, as applicable,
of the Notes if redeemed during the 12-month period commencing on May 15 of the
years set forth below:
38
YEAR PERCENTAGE
---- ----------
2003.................................................... 110.0%
2004.................................................... 107.5%
2005.................................................... 105.0%
2006.................................................... 102.5%
2007 and thereafter..................................... 100.0%
Section 3.08 Mandatory Redemption.
Except as set forth under Sections 3.09, 4.10 and 4.13 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.09. Repurchase Offers.
In the event that the Company shall be required to commence an offer to
all Holders to repurchase Notes (a "Repurchase Offer") pursuant to Section 4.10
hereof, an "Asset Sale," or pursuant to Section 4.13 hereof, a "Change of
Control Offer," the Company shall follow the procedures specified below.
A Repurchase Offer shall commence no earlier than 30 days and no later
than 60 days after a Change of Control (unless the Company is not required to
make such offer pursuant to Section 4.13(c) hereof) or an Asset Sale Offer
Triggering Event (as defined below), as the case may be, and remain open for a
period of twenty (20) Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
"Offer Period"). No later than five (5) Business Days after the termination of
the Offer Period (the "Purchase Date"), the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section 4.10 hereof, in the
case of an Asset Sale Offer, or 4.13 hereof, in the case of a Change of Control
Offer (the "Offer Amount") or, if less than the Offer Amount has been tendered,
all Notes tendered in response to the Repurchase Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Additional Interest, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Additional Interest, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to such Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall describe the transaction
or transactions that constitute the Change of Control or Asset Sale Offer
Triggering Event as the case may be and shall state:
(i) that the Repurchase Offer is being made pursuant to this
Section 3.09 and Section 4.10 or 4.13 hereof, as the
case may be, and the length of time the Repurchase Offer
shall remain open;
39
(ii) the Offer Amount, the purchase price and the Purchase
Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the
Repurchase Offer shall cease to accrue interest and
Additional Interest, if any, after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant
to a Repurchase Offer shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note, duly completed, or
transfer by book-entry transfer, to the Company, the
Depositary, or the Paying Agent at the address specified
in the notice not later than the close of business on
the last day of the Offer Period;
(vi) that Holders shall be entitled to withdraw their
election if the Company, the Depositary or the Paying
Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note
purchased;
(vii) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a pro
rata basis; and
(viii) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest and Additional Interest, if any, thereon, to be held for payment
in accordance with the terms of this Section 3.09. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or cause the Paying Agent or
depository, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three (3)
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, plus any accrued and unpaid interest and
Additional Interest, if any, thereon to the Purchase Date and the Company shall
promptly issue a new Note,
40
and the Trustee, shall authenticate and mail or deliver such new Note, to such
Holder, equal in principal amount to any unpurchased portion of such Holder's
Notes surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce in a newspaper of general circulation or in a press release provided to
a nationally recognized financial wire service the results of the Repurchase
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01, 3.02, 3.05 and 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal (including
Contingent Principal, if any, and accreted interest thereon) of, premium, if
any, and interest (including accrued interest on Contingent Principal, if any)
on the Notes on the dates and in the manner provided in the Notes. The Company
shall pay all Additional Interest, if any, in the same manner on the dates and
in the amounts set forth in the Registration Rights Agreement. Principal,
premium and Additional Interest, if any, and interest, shall be considered paid
for all purposes hereunder on the date the Paying Agent if other than the
Company or a Subsidiary thereof holds, as of 10:00 a.m. (New York City time)
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all such principal, premium and Additional Interest, if
any, and interest, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from
41
time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the office of U.S. Bank National
Association in the Borough of Manhattan, City of New York, as one such office or
agency of the Company in accordance with Section 2.03 hereof.
Section 4.03. Commission Reports.
Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operation of the Company and
its consolidated Subsidiaries and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods set forth in the Commission's rules and regulations. In addition,
whether or not required by the rules and regulations of the Commission at any
time after the effective date of the Exchange Offer Registration Statement, the
Company shall file a copy of all such information and reports with the
Commission for public availability within the time period set forth in the rules
and regulations of the Commission (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. In addition, at all times that the
Commission does not accept the filings provided for in the preceding sentence,
the Company has agreed that, for so long as any Notes remain outstanding, it
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act. The financial information to be
distributed to Holders of Notes shall be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar, within 90 days after the end of the Company's fiscal years and
within 45 days after the end of each of the first three quarters of each such
fiscal year.
The Company shall provide the Trustee with a sufficient number of copies
of all reports and other documents and information and, if requested by the
Company and at the Company's expense, the Trustee will deliver such reports to
the Holders under this Section 4.03.
Section 4.04. Compliance Certificate.
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
42
obligations under this Indenture (including, with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.07 hereof were computed, which calculations may be based on the
Company's latest available financial statements), and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that, to the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium or
Additional Interest, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, in connection with the
year-end financial statements delivered pursuant to Section 4.03 hereof, the
Company shall use its best efforts to deliver a written statement of the
Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article
Four or Section 5.01 hereof or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation. In the event that such
written statement of the Company's independent public accountants cannot be
obtained, the Company shall deliver an Officers' Certificate certifying that it
has used its best efforts to obtain such statements and was unable to do so.
The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency all material taxes, assessments and governmental levies,
except such as are contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and
43
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly take any of the following actions (each,
a "Restricted Payment"): (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, payment in
connection with any merger or consolidation involving the Company), other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or dividends or distributions payable to the Company or
any Wholly Owned Subsidiary of the Company; (ii) purchase, redeem, retire or
otherwise acquire for value any Equity Interests of the Company or any Equity
Interest of any Restricted Subsidiary held by persons other than the Company or
another Restricted Subsidiary; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment, unless, at
the time of and immediately after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof; and
(C) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted by
clauses (ii), (iii), (iv), (vii), (ix), (x) and (xi) of the next succeeding
paragraph), is less than the sum (without duplication) of (1) 50% of the
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing after the
Issue Date to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a loss, less
100% of such loss), plus (2) 100% of the aggregate Qualified Proceeds received
by the Company from contributions to the Company's capital or the issue or sale
subsequent to the Issue Date of Equity Interests of the Company (other than
Disqualified Stock) or of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (3) to the extent that
any Restricted Investment that was made after the Issue Date is sold for
Qualified Proceeds or otherwise liquidated or repaid (including, without
limitation, by way of a dividend or other distribution, a repayment of a loan or
advance or other transfer of assets) for in whole or in part,
44
the lesser of (x) the Qualified Proceeds with respect to such Restricted
Investment, (less the cost of disposition, if any) and (y) the initial amount of
such Restricted Investment, plus (4) upon the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the lesser of (x) the fair market value
of such Subsidiary or (y) the aggregate amount of all Investments made in such
Subsidiary subsequent to the Issue Date by the Company and its Restricted
Subsidiaries, plus (v) $15.0 million.
The provisions of the foregoing paragraph will not prohibit (i) the
payment of any dividend within 60 days after the date of declaration thereof, if
the dividend would have been permitted on the date of declaration pursuant to
the foregoing paragraph; (ii) the redemption, repurchase, retirement, defeasance
or other acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of, other
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (C)(2) of the preceding paragraph; (iii) the defeasance,
redemption, repurchase, retirement or other acquisition of subordinated
Indebtedness in exchange for, or with the net cash proceeds from, an incurrence
of Permitted Refinancing Indebtedness; (iv) the payment of any dividend (or the
making of a similar distribution or redemption) by a Restricted Subsidiary of
the Company to the holders of the Company's common Equity Interests on a pro
rata basis; (v) so long as no Default or Event of Default shall have occurred
and is continuing, the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company, or any Equity Interests of the
Restricted Subsidiary of the Company, held by any member of the Company's (or
any of its Restricted Subsidiaries') management, employees or consultants
pursuant to any management, employee or consultant equity subscription agreement
or stock option agreement in effect as of the Issue Date; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed the sum of (A) $10.0 million and (B) the
aggregate cash proceeds received by the Company from any reissuance of Equity
Interests by the Company to members of management of the Company and its
Restricted Subsidiaries (provided that the cash proceeds referred to in this
clause (B) shall be excluded from clause (C)(2), of the preceding paragraph);
(vi) so long as no Default or Event of Default has occurred and is continuing,
the declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Company issued after the date hereof in accordance
with Section 4.09; (vii) so long as no Default or Event of Default will have
occurred and be continuing, payments required to be made under the Tax Sharing
Agreement; (viii) so long as no Default or Event of Default will have occurred
and be continuing, payments of cash dividends or the making of loans or advances
by the Company to Holdings not to exceed $0.5 million in any fiscal year for
costs and expenses incurred by Holdings in its capacity as a holding company or
for services rendered by Holdings on behalf of the Company; (ix) so long as no
Default or Event of Default will have occurred and be continuing, payments of
cash dividends to Holdings in order to enable Holdings to make payments of
interest required to be made in respect of the Existing Debentures in accordance
with the terms thereof in effect on the Issue Date; (x) deferment of interest
payable in respect of Existing Debentures the Company acquired in the Offering;
and (xi) distribution of Existing Debentures the Company acquired in the
Offering as dividends to Holdings for cancellation; provided that the Company is
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of
45
Section 4.09 hereof and the Existing Debentures distributed as dividends to
Holdings are immediately canceled.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greater of (i) the net book value of such Investments at the time
of such designation and (ii) the fair market value of such Investments at the
time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of (i) all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment
and (ii) Qualified Proceeds (other than cash) shall be the fair market value on
the date of receipt thereof by the Company of such Qualified Proceeds. The fair
market value of any non-cash Restricted Payment and Qualified Proceeds shall be
determined by the Board of Directors whose resolution with respect thereto shall
be delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
Section 4.08. Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (A) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (B) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (A) the Congress Credit Facility
and the indenture with respect to the Senior Subordinated Notes, as in effect as
of the Issue Date, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the Congress Credit Facility or the indenture with respect to the
Senior Subordinated Notes, as the case may be, as in effect on the Issue Date,
(B) the Indenture and the
46
Notes, (C) applicable law or any applicable rule, regulation or order, (D) any
agreement or instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such agreement or instrument
was created or entered into in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (E) by reason of customary
non-assignment provisions in leases, licenses, encumbrances, contracts or
similar assets entered into or acquired in the ordinary course of business and
consistent with past practices, (F) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (G) any
Purchase Money Note, or other Indebtedness or contractual requirements incurred
with respect to a Qualified Receivables Transaction relating to a Receivables
Subsidiary, (H) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced and (I) contracts for the sale of
assets containing customary restrictions with respect to a Subsidiary pursuant
to an agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock and will not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company or any of its Restricted Subsidiaries
may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 1.75 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The Company shall not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; provided, however, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) Indebtedness of the Company and its Restricted
Subsidiaries under the Credit Facilities; provided that
the aggregate principal amount of all
47
Indebtedness (with letters of credit being deemed to
have a principal amount equal to the maximum potential
liability of the Company and its Restricted Subsidiaries
thereunder) outstanding under all Credit Facilities
after giving effect to such incurrence, including all
Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (i),
does not exceed an amount equal to $224.0 million less
the aggregate principal of all principal payments
thereunder constituting permanent reductions of such
Indebtedness pursuant to and in accordance with Section
4.10.
(ii) the incurrence by the Company of Indebtedness
represented by the Notes (including Contingent
Principal, if any) and the Additional Notes, if any;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase money
obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost
of construction or improvements of property used in the
business of the Company or such Restricted Subsidiary,
in an aggregate principal amount not to exceed $25.0
million at any time outstanding;
(iv) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to
refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is permitted by this
Indenture to exist or be incurred;
(vi) the incurrence of intercompany Indebtedness (A) between
or among the Company and any Wholly Owned Restricted
Subsidiaries of the Company or (B) by a Restricted
Subsidiary that is not a Wholly Owned Restricted
Subsidiary to the Company or a Wholly Owned Subsidiary;
provided, however, that (1) if the Company is the
obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and
(2) (x) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being
held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company and (y) any
sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned
Restricted Subsidiary of the Company shall be deemed, in
each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the
case may be;
(vii) the incurrence by the Company or any of the Restricted
Subsidiaries of Hedging Obligations that are incurred
for the purpose of fixing or hedging
48
(A) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this
Indenture to be outstanding or (B) the value of foreign
currencies purchased or received by the Company in the
ordinary course of business;
(viii) Indebtedness incurred in respect of workers'
compensation claims, self-insurance obligations,
performance, surety and similar bonds and completion
guarantees provided by the Company or a Restricted
Subsidiary in the ordinary course of business;
(ix) Indebtedness arising from guarantees of Indebtedness of
the Company or any Subsidiary or the agreements of the
Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets
or Capital Stock of a Restricted Subsidiary, or other
guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or
Capital Stock of a Restricted Subsidiary for the purpose
of financing such acquisition, provided that the maximum
aggregate liability in respect of all such Indebtedness
shall at no time exceed the gross proceeds actually
received by the Company and its Restricted Subsidiaries
in connection with such disposition;
(x) Indebtedness of a Receivables Subsidiary that is not
recourse to the Company or any other Restricted
Subsidiary of the Company (other than Standard
Securitization Undertakings) incurred in connection with
a Qualified Receivables Transaction;
(xi) the guarantee by any Restricted Subsidiary of the
Company of Indebtedness of any Restricted Subsidiary of
the Company that was permitted to be incurred by another
provision of this covenant;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in an aggregate principal
amount at any time outstanding not to exceed $20.0
million;
(xiii) 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 five business
days of incurrence; and
(xiv) the incurrence by the Company or any Restricted
Subsidiary of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at
any time outstanding, including all indebtedness
incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xiv), not
to exceed $30.0 million.
49
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiv) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item 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, the accretion of Accreted
Value and the payment of interest in the form of additional Indebtedness will
not be deemed to be an incurrence of Indebtedness for purposes of this covenant.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of (A) cash
or Cash Equivalents or (B) Qualified Proceeds; provided that the aggregate fair
market value of Qualified Proceeds (other than cash or Cash Equivalents), which
may be received in consideration for Asset Sales shall not exceed $7.5 million
since the Issue Date; provided, further, 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 contingent
liabilities and liabilities that are by their terms subordinated to the Notes)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (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 extent of
the cash received) within 180 days following the closing of such Asset Sale,
shall be deemed to be cash for purposes of this provision.
Within 395 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or its Restricted Subsidiaries may apply such Net Proceeds, at
its option, (i) to repay Indebtedness of a Restricted Subsidiary, or (ii) to the
investment in, or the making of a capital expenditure or the acquisition of
other property or assets in each case used or useable in a Permitted Business,
or Capital Stock of any Person primarily engaged in a Permitted Business if, as
a result of the acquisition by the Company or any Restricted Subsidiary thereof,
such Person becomes a Restricted Subsidiary, or (iii) as combination of the uses
described in clauses (i) and (ii) of this paragraph. Pending the final
application of any such Net Proceeds, the Company or its Restricted Subsidiaries
may temporarily reduce Indebtedness of a Restricted Subsidiary of the Company or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million (an "Asset Sale Offer Triggering Event"), the Company will be required
to make an offer to all Holders of Notes and, to the extent required by the
terms of any Indebtedness ranking pari passu with the Notes ("Pari Passu
Indebtedness") to all holders of such Pari Passu Indebtedness (an "Asset Sale
Offer"), to
50
purchase the maximum principal amount of Notes and any such Pari Passu
Indebtedness that may be purchased out of the Excess Proceeds, at a purchase
price equal to 100% of the Accreted Value thereof as of the date of repurchase
if the date of purchase is prior to November 15, 2005 or the principal amount at
maturity thereof, plus accrued and unpaid interest thereon through the date of
purchase if the date of repurchase is on or after November 15, 2005, in each
case, in accordance with the procedures set forth in Section 3.09 hereof or such
Pari Passu Indebtedness, as applicable. To the extent that the aggregate
Accreted Value or principal amount at maturity, as applicable, of Notes and any
such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company or its Restricted Subsidiaries may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
Accreted Value or principal amount at maturity, as applicable of Notes and any
such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to or Investment in, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (B) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided that each of the following will not be deemed an Affiliate
Transaction: (1) transactions with suppliers or other purchasers or sales of
goods or services, in each case in the ordinary course of business (including,
without limitation, pursuant to joint venture agreements) and otherwise in
accordance with the terms of this Indenture which are fair to the Company, in
the good faith determination of the Board of Directors of the Company or the
senior management of the Company and are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party, (2) any
employment agreements, stock option or other compensation agreements or plans
(and the payment of amounts or the issuance of securities thereunder) and other
reasonable fees, compensation, benefits and indemnities paid or entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business of the Company or such Restricted Subsidiary to or with the officers,
directors or employees of the Company or its Restricted Subsidiaries, (3)
transactions between or among the Company and/or its Restricted Subsidiaries,
(4) sales or other transfers or dispositions of accounts receivable and other
related assets
51
customarily transferred in an asset securitization transaction involving
accounts receivable to a Receivables Subsidiary in a Qualified Receivables
Transaction, and acquisitions of Permitted Investments in connection with a
Qualified Receivables Transaction and (5) Restricted Payments (other than
Restricted Investments) that are permitted by Section 4.07 hereof.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom for purposes of security, except Permitted
Liens, 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, (with the same relative priority as such subordinate or junior
Indebtedness shall have with respect to the Notes) and (ii) in all other cases,
the Notes are secured by such Lien on an equal and ratable basis.
Section 4.13. Offer to Purchase Upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase 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 Accreted Value thereof as of
the date of repurchase if the Change of Control Payment Date is prior to
November 15, 2005 or 101% of the principal amount at maturity thereof, plus
accrued and unpaid interest thereon through the date of purchase if the Change
of Control Payment Date is on or after November 15, 2005 (the "Change of Control
Payment"). Within 65 days following the date on which a Change of Control
occurs, the Company shall mail, by first class mail, a notice to each Holder,
with a copy to the Trustee, describing the transaction or transactions that
constitute the Change of Control and offering to repurchase the Notes on the
date specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed, other than as may be
required by law (the "Change of Control Payment Date"), pursuant to the
procedures required by Section 3.09 hereof and described in such notice. 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 the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions hereof relating to
such Change of Control Offer, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described hereof by virtue thereof.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (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 Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control
52
Payment for such Notes, and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in minimum denominations of $1 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date in accordance with Section 3.09 hereof.
The Change of Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization, leveraged buy out or similar transaction which is not a Change
of Control.
Prior to complying with the provisions of the preceding paragraphs, but
in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Indebtedness of its Subsidiaries or obtain the
requisite consents, if any, under the Congress Credit Facility and the Senior
Subordinated Notes to permit the repurchase of the Notes required by this
section. The Company will not be required to purchase any Debentures until it
has complied with the preceding sentence, but the Company's failure to make a
Change of Control Offer when required or to purchase tendered Notes when
tendered would constitute an Event of Default under this Indenture.
The Company shall not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
herein applicable to a Change of Control Offer made by the Company and purchases
all Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.14. Corporate Existence.
Subject to Section 4.13 and Article 5 hereof, as the case may be, the
Company shall do or 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 Subsidiaries in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided that the Company
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
Section 4.15. Business Activities.
The Company shall not, and shall not permit any Restricted Subsidiary to
engage in any business other than Permitted Businesses.
53
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation of Sale of Assets.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving entity) Holdings. The Company shall not consolidate
or merge with or into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless (i) either the Company is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation or
limited liability company organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the Person formed by
or surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of
the Company (other than a Receivables Subsidiary), the Company or the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made at the time of such transaction and after
giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof.
For purposes of this Section 5.01, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company. Clause (iv) of
the foregoing paragraph will not prohibit (A) a merger between the Company and a
Wholly Owned Subsidiary of the Company created for the purpose of holding the
Capital Stock of the Company, (B) a merger between the Company and a Wholly
Owned Restricted Subsidiary of the Company or (C) a merger between the Company
and an Affiliate incorporated solely for the purpose of reincorporating the
Company in another State of the United States so long as, in the case of each of
clause (A), (B) and (C), the amount of Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with
54
which the Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the "Company" shall refer instead to the successor corporation and not to the
Company), and shall exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, that, (i) solely for the purposes of computing
Consolidated Net Income for purposes of clause (B) of the first paragraph of
Section 4.07 hereof, the Consolidated Net Income of any person other than the
Company and its Subsidiaries shall be included only for periods subsequent to
the effective time of such merger, consolidation, combination or transfer of
assets; and (ii) in the case of any sale, assignment, transfer, lease,
conveyance, or other disposition of less than all of the assets of the
predecessor Company, the predecessor Company shall not be released or discharged
from the obligation to pay the principal of or interest and Additional
Interest, if any, on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes an "Event of Default":
(i) default for 30 days in the payment when due of interest
on, or Additional Interest with respect to, the Notes;
(ii) default in payment when due of principal of or premium,
if any, on the Notes;
(iii) failure by the Company or any of its Restricted
Subsidiaries for 30 days after notice by the Trustee or
by the Holders of at least 25% in principal amount of
the Notes then outstanding to comply with the provisions
described under Sections 4.07, 4.09, 4.10 or 4.13;
(iv) failure by the Company or any of its Restricted
Subsidiaries for 60 days after notice from the Trustee
or by the Holders of at least 25% in principal amount of
the Notes then outstanding to comply with any of its
other agreement in this Indenture or the Notes;
(v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created
after the date hereof, which default (a) is caused by a
failure to pay principal of such Indebtedness after
giving effect to any grace period provided in such
Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such
Indebtedness prior to its stated maturity and, in each
case, the principal amount of any
55
such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so
accelerated, aggregates $20.0 million or more;
(vi) failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $20.0 million
(net of any amounts with respect to which a reputable
and credit worthy insurance company has acknowledged
liability in writing), which judgments are not paid,
discharged or stayed for a period of 60 days;
(vii) the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole would
constitute a Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of
its creditors, or
(E) generally is not paying its debts as they become
due;
(viii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an
involuntary case;
(B) appoints a Custodian of the Company or any of
its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all
or substantially all of the property of the
Company or any of its Significant Subsidiaries
or any group of Subsidiaries that, taken as a
whole, would constitute a Significant
Subsidiary; or
(C) orders the liquidation of the Company or any of
its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; and the
order or decree remains unstayed and in effect
for 60 consecutive days;
(ix) default by Holdings in payment when due of the principal
of the Existing Debentures; or
56
(x) default by Holdings for 30 days in the payment when due
of interest on the Existing Debentures.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately in an amount equal to
the Accreted Value of the Notes outstanding on the date of acceleration, if such
acceleration occurs prior to November 15, 2005 or all principal of and accrued
and unpaid interest on the Notes outstanding on the date of acceleration, if
such acceleration occurs on or after November 15, 2005. Notwithstanding the
foregoing, if an Event of Default specified in clause (vii) or (viii) of Section
6.01 hereof occurs, then, without any declaration or other act on the part of
the Trustee or any Holder of the Notes, the unpaid principal of and premium, if
any and accrued and unpaid interest on all the Notes will become immediately due
and payable in an amount equal to the Accreted Value of the Notes outstanding on
the date of acceleration, if such acceleration occurs prior to November 15, 2005
or all principal of and accrued and unpaid interest on the Notes outstanding on
the date of acceleration, if such acceleration occurs on or after November 15,
2005. Holders of the Notes may not enforce this Indenture or the Notes except as
provided in this Indenture. In the event of a declaration of acceleration of the
Notes because an Event of Default has occurred and is continuing as a result of
the acceleration of any Indebtedness described in clause (v) of Section 6.01
hereof, the declaration of acceleration of the Notes shall be automatically
annulled if the holders of any Indebtedness described in clause (v) of Section
6.01 hereof have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (A) the
annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a court of competent jurisdiction and (B) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have been cured or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any,
interest and Additional Interest, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with this Indenture, and the Company is required, upon
becoming aware of any
57
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes (other than as a result
of an acceleration), which shall require the consent of all of the Holders of
the Notes then outstanding.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust power
conferred on it. However, (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability, and (ii) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. In case an Event of Default shall occur (which shall not be cured),
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Notwithstanding any
provision to the contrary in this Indenture, the Trustee is under no obligation
to exercise any of its rights or powers under this Indenture at the request of
any Holder of Notes, unless such Holder shall offer to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(i) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default or the Trustee receives
such notice from the Company;
(ii) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the
Trustee to pursue the remedy;
(iii) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if
requested, the provision of indemnity; and
58
(v) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not
give the Trustee a direction inconsistent with the
request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, interest, and
Additional Interest, if any, on such Note, on or after the respective due dates
expressed in such Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Additional Interest, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
securities or property payable or deliverable upon the conversion or exchange of
the Notes or on any such claims and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes
59
or the rights of any Holder, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, interest, and Additional Interest, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, interest, and Additional
Interest, if any, respectively;
Third: without duplication, to the Holders for any other Obligations
owing to the Holders under this Indenture and the Notes; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing of which a
Responsible Officer of the Trustee has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture or the TIA and
the Trustee need perform only those duties that are
specifically set forth in this Indenture or the TIA and
no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely on the truth of the statements
and correctness of the opinions contained in, and shall be protected from 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.
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(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. Prior to taking, suffering or
admitting any action, the Trustee may consult with counsel of the Trustee's own
choosing and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
of Notes and may otherwise deal with the Company or any Affiliate of the Company
with the same rights it would have if it were not Trustee. However, in the event
that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or
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Event of Default in payment on any Note pursuant to Section 6.01(i) or (ii)
hereof, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports as required
by TIA Section 313(c). A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the Commission
and each stock exchange on which the Company has informed the Trustee in writing
the Notes are listed in accordance with TIA Section 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange and
of any delisting thereof.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. To the
extent permitted by law, the Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture. To secure the Company's payment
obligations in this Section 7.07, the Trustee shall have a Lien prior to the
Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal, interest and Additional Interest, if any, on
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particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture and the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01 (vii) or (viii) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee
under any Bankruptcy Law;
(iii) a Custodian or public officer takes charge of the
Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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 principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and the duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its
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succession to the Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, Etc.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee or any Agent, as applicable.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities. The Trustee and its direct parent shall at all times have a
combined capital surplus of at least $50.0 million as set forth in its most
recent annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against the Company.
The Trustee is subject to 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 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or Section 8.03 hereof be applied to all Notes then
outstanding upon compliance with the conditions set forth below in this Article
8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their respective obligations with respect to all Notes then
outstanding on the date the conditions set forth below are satisfied ("Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
Notes
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outstanding, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 and the other Sections of this Indenture referred to in
(i) and (ii) below, and to have satisfied all its other obligations under such
Notes and this Indenture (and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal amount at maturity or Accreted Value (as
applicable), premium, if any, and interest and Additional Interest on such Notes
when such payments are due from the trust referred to in Section 8.04(a); (ii)
the Company's obligations with respect to such Notes under Sections 2.03, 2.04,
2.05, 2.08, 2.09, 2.12, 4.02 and 4.03 hereof; (iii) the rights, powers, trusts,
duties and immunities of the Trustee and the Company's obligations in connection
therewith; and (iv) the provisions of this Section 8.02.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Article 5 and in Sections 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company or any
of its Subsidiaries may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iii) through (v) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or Section 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Notes,
cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as
shall be sufficient, in the opinion of a nationally
recognized firm of independent
66
public accountants, to pay the principal amount at
maturity of or Accreted Value (as applicable) of,
premium, if any, and interest and Additional Interest,
if any, on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may
be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption
date;
(ii) 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 (A) the Company has received from, or
there has been published by, the Internal Revenue
Service a ruling or (B) since the date hereof, 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, subject to
customary assumptions and exclusions, the Holders of the
outstanding Notes shall not recognize income, gain or
loss for federal income tax purposes as a result of such
Legal Defeasance and shall be subject to federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal
Defeasance had not occurred;
(iii) 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, subject to customary assumptions and
exclusions, the Holders of the outstanding Notes shall
not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and
shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had
not occurred;
(iv) 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 financing
of amounts to be applied to such deposit) or insofar as
Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the
91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a
default under any material agreement or instrument
(other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that, subject to
customary assumptions and exclusions (which assumptions
and exclusions shall not relate to the operation of
Section 547 of the United States Bankruptcy Code or any
analogous New York State law provision), after the 91st
day following the deposit, the trust funds
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shall not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(vii) 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 of Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and U.S. Government Securities to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the then outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Additional Interest, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time at the Company's written
request and be relieved of all liability with respect to any money or
non-callable Government Securities held by it as provided in Section 8.04 hereof
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under clause (i) of Section 8.04
hereof), are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
interest or Additional Interest, if any, on any Note and remaining unclaimed for
one year after such principal, and premium, if any, or interest, if any, or
Additional Interest, if any, have become due and payable
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shall be paid to the Company on its written request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining shall be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
hereof or Section 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Company
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 hereof or Section 8.03 hereof, as
the case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 hereof or Section 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, interest or Additional Interest, if
any, on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of the Notes.
Notwithstanding Section 9.02 of this Indenture, without the consent of
any Holder of Notes, the Company and the Trustee may amend or supplement this
Indenture or the Notes:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(iii) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a
merger, or consolidation pursuant to Article 5 hereof;
(iv) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights hereunder of
any Holder of the Notes;
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(v) to comply with requirements of the Commission in order
to effect or maintain the qualification of this
Indenture under the TIA;
(vi) to provide for the issuance of the Exchange Senior
Discount Contingent Principal Notes, which will have
terms substantially identical to the other outstanding
Notes except for the requirement of a Private Placement
Legend and related transfer restrictions under the
Securities Act and this Indenture and as to the
applicability of Additional Interest payable as provided
in Section 2.19, and which will be treated, together
with any other outstanding Notes, as a single issue of
securities; or
(vii) to provide for the issuance of Additional Notes as
permitted by Section 2.18, which will have terms
substantially identical to the other outstanding Notes
except as specified in Section 2.18, and which will be
treated, together with any other outstanding Notes, as a
single issue of securities.
Upon the written request of the Company accompanied by a resolution of
its Board of Directors of the Company authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, this Indenture and the
Notes issued hereunder may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or a tender offer or exchange offer for Notes), and any existing default or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, the
Notes).
Upon the request of the Company accompanied by a resolution of its Board
of Directors 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 an Officers' Certificate and an Opinion of Counsel, the Trustee
shall join with the Company in the execution of such amended or supplemental
indenture unless such amended or supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may, 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 each Note affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may amend or waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment, or waiver may not (with respect to any Note held by a non-consenting
Holder):
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of
any Notes or alter the provisions with respect to the
redemption of the Notes (other than provisions relating
to Sections 3.09, 4.10 and 4.13 hereof) or amend or
modify the calculation of the Accreted Value so as to
reduce the amount of Accreted Value of the Notes;
(iii) reduce the rate of or change the time for payment of
interest on any Note;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate
principal amount at maturity of the Notes and a waiver
of the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that stated in
the Notes;
(vi) make any change in Section 6.04 or 6.07 hereof;
(vii) waive a redemption or repurchase payment with respect to
any Note (other than a payment required by Section 4.10
or 4.13 hereof); or
(viii) make any change in the amendment and waiver provisions
of this Article 9.
Section 9.03. Compliance With Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental indenture that complies with the TIA as
then in effect.
71
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note.
However, any such Holder or subsequent Holder of a Note may revoke the
consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. When an
amendment, supplement or waiver becomes effective in accordance with its terms,
it thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until its Board of Directors
approves it. In signing or refusing to sign any amended or supplemental
indenture the Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon an Officers' Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 10.02. Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
72
If to the Company:
J. Crew Intermediate LLC
c/o J. Crew Group, Inc.
770 Broadway
New York, New York 10003
Telecopier No.: (212) 209-2666
Attention: Chief Financial Officer
With a copy to:
Cleary Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Telecopier No.: (212) 225-3999
Attention: Paul J. Shim
If to the Trustee:
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Telecopier No.: (860) 241-6881
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail or by overnight air courier promising next Business Day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA Section 313(c), to the
extent required by the TIA. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
73
Section 10.03. Communication by Holders of Notes With Other Holders of Notes.
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 anyone else shall have the protection of
TIA Section 312(c).
Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture (other than the initial issuance of the Notes),
the Company shall furnish to the Trustee upon request:
(i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 10.05
hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have
been satisfied; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05 hereof) stating
that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(i) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(ii) 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;
(iii) a statement that, in the opinion of such Person, he or
she has made such examination or investigation as is
necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been
satisfied; and
(iv) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
74
Section 10.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.07. No Personal Liability of Directors, Officers, Employees,
Organizers and Members.
No director, officer, employee, organizer or members of the Company, as
such, shall have any liability for any obligations of the Company under the
Notes, this Indenture 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 issuance of the Notes.
Section 10.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
Section 10.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 10.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
their respective successors and assigns. All agreements of the Trustee in this
Indenture shall bind its successors and assigns.
Section 10.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 10.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
75
[Signatures on following page]
76
SIGNATURES
Dated as of May 6, 2003 J. CREW INTERMEDIATE LLC
By: /s/ Scott M. Rosen
-------------------------
Name: Scott M. Rosen
Title: Executive Vice-President and
Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By: /s/ Philip G. Kane, Jr.
-------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
77
EXHIBIT A
FORM OF NOTE
[Include the following legend for Global Notes only:
"THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREINAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF."]
[Include the following legend on all Notes that are Restricted Notes:]
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES, FOR THE
BENEFIT OF THE COMPANY, THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
A-1
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b),
(c), (d) OR (e) BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
[Include the following legend on all IAI Notes:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH
OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE
TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS
PROVIDED FOR IN THE INDENTURE."]
[Include the following legend on all Regulation S Temporary Global Notes:
"THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). NEITHER
THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR
DELIVERED, EXCEPT AS PERMITTED ABOVE.
NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF PRINCIPAL HEREOF OR INTEREST HEREON UNLESS THE REQUIRED
CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE."]
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT,
WHICH SHOULD BE TAKEN INTO ACCOUNT UNDER THE METHOD SET FORTH IN SECTION
1.1275-4(c) OF THE TREASURY REGULATIONS FOR PRIVATELY PLACED CONTINGENT PAYMENT
DEBT INSTRUMENTS; FOR EACH $1,000 PRINCIPAL AMOUNT OF
A-2
THIS SECURITY, THE ISSUE PRICE IS $677.97, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT
IS $322.03, THE ISSUE DATE IS MAY 6, 2003 AND THE YIELD TO MATURITY IS 16.0% PER
ANNUM. ANY CONTINGENT PAYMENTS ON THIS SECURITY SHOULD BE TAKEN INTO ACCOUNT
UNDER THE "METHOD FOR DEBT INSTRUMENTS NOT SUBJECT TO THE NONCONTINGENT BOND
METHOD" SET FORTH IN SECTION 1.1275-4(c) OF THE TREASURY REGULATIONS.
A-3
FORM OF FACE OF NOTE
16.0% Senior Discount Contingent Principal Notes due 2008
No. ___ Principal Amount $___________
[If the Note is a Global Note include the following two lines:
as revised by the Schedule of Increases and
Decreases in Global Note attached hereto]
[CUSIP][ISIN] NO. ____________]
J. CREW INTERMEDIATE LLC, a Delaware limited liability company, promises to pay
to _________________ or registered assigns, the principal amount of __________
Dollars ($__________) [If the Note is a Global Note, add the following: as
revised by the Schedule of Increases and Decreases in Global Note attached
hereto] (the "Original Principal Amount"), or, if Contingent Principal has
accrued as specified on the reverse side of this Note, then J. CREW INTERMEDIATE
LLC promises to pay to ____________ or registered assigns, the sum of the
Original Principal Amount and the aggregate amount of the accrued Contingent
Principal, on May 15, 2008.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Additional provisions of this Note are set forth on the other side of
this Note, which provisions shall for all purposes have the same effect as if
fully set forth at this place.
J. CREW INTERMEDIATE LLC
By:
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 16.0% Senior Discount Contingent Principal Notes due 2008
referred to in the within-mentioned Indenture:
Dated: _____________ U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:
-------------------------------
Name:
Title:
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FORM OF BACK OF NOTE
16.0% Senior Discount Contingent Principal Notes due 2008
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST.
J. Crew Intermediate LLC, a Delaware limited liability company, or its
successor (the "Company"), promises to pay interest on the principal amount of
this Note at the rate of 16.0% per annum and shall pay the Additional Interest,
if any, payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Additional Interest, if
any, in United States dollars (except as otherwise provided herein)
semi-annually in arrears on May 15 and November 15, commencing on November 15,
2005, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes shall accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from November 15, 2005; provided that if there is no existing Default or
Event of Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date (but after November 15, 2005), interest shall accrue from
such next succeeding Interest Payment Date, except in the case of the original
issuance of Notes, in which case interest shall accrue from November 15, 2005.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Interest (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
2. CONTINGENT PRINCIPAL.
In the event that Holdings' consolidated EBITDA (as defined in the
Congress Credit Facility) exceeds $50.0 million for the immediately preceding
fiscal year, on each May 15 (including May 15, 2008), commencing on May 15,
2004, the aggregate Accreted Value or the aggregate principal amount at
maturity, as applicable, of the Notes will be increased in an amount equal to
10% of the excess, if any of Holdings' consolidated EBITDA for the immediately
preceding fiscal year over $50.0 million (such amount is hereinafter referred to
as "Contingent Principal"). The Contingent Principal, if any, will be allocated
pro rata among the then outstanding Notes. Any Contingent Principal will accrete
or accrue, as applicable, at a rate of 16.0% per annum (computed on a
semi-annual bond equivalent basis) calculated from the date of issuance of such
Contingent Principal. If payable, the Contingent Principal shall be paid on May
15, 2008.
In the event that Contingent Principal accrues on the Notes, the Company
shall give notice thereof by delivering an Officers' Certificate to the Trustee
no later than April 30 of the applicable year. Such Officers' Certificate shall
inform the Trustee of the amount of Contingent
A-5
Principal per Note and in the aggregate for all outstanding Notes. Following the
receipt of such notice, the Trustee shall promptly provide such information to
the registered Holders of Notes and DTC for dissemination to its Participants.
3. METHOD OF PAYMENT.
The Company will pay interest (including accrued interest on Contingent
Principal, if any) on the Notes (except defaulted interest) and Additional
Interest, if any, on the applicable Interest Payment Date to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.14 of the Indenture with respect to defaulted interest. The Notes
shall be payable as to principal (including Contingent Principal, if any, and
accreted interest thereon), premium and Additional Interest, if any, and
interest (including accrued interest on Contingent Principal, if any) at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest (including accrued interest on Contingent Principal, if any) and
Additional Interest, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds shall be required with respect to
principal (including Contingent Principal, if any, and accreted interest
thereon) of, premium and Additional Interest, if any, and interest (including
accrued interest on Contingent Principal, if any) on, all Global Notes. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
4. PAYING AGENT AND REGISTRAR.
Initially, U.S. Bank National Association, the Trustee under the
Indenture, shall act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Subsidiaries may act in any such capacity.
5. INDENTURE.
The Company issued the Notes under an Indenture dated as of May 6, 2003
("Indenture") between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. The
Notes are general unsecured Obligations of the Company having an aggregate
principal amount at maturity of $193,346,138 (plus Contingent Principal, if any,
and accreted interest thereon), plus amounts sufficient to pay premium or
Additional Interest, if any, and interest on outstanding Notes as set forth in
Paragraph 3 hereof. Subject to the conditions set forth in the Indenture and
without the consent of the Holders, the Company may issue Additional Notes. All
Notes will be treated as a single class of securities under the Indenture.
6. OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole at any time or in part from
time to time, at the following redemption prices, expressed as percentages of
the Accreted Value or the principal
A-6
amount at maturity thereof, as applicable, of the Notes if redeemed during the
12-month period commencing on May 15 of the years set forth below:
YEAR PERCENTAGE
---- ----------
2003................................................ 110.0%
2004................................................ 107.5%
2005................................................ 105.0%
2006................................................ 102.5%
2007 and thereafter................................. 100.0%
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
8. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Company to repurchase 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 Accreted Value thereof
as of the date of repurchase if the Change of Control Payment Date is prior to
November 15, 2005 or 101% of the principal amount at maturity thereof, plus
accrued and unpaid interest thereon through the date of purchase if the Change
of Control Payment Date is on or after November 15, 2005. Within 65 days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
setting forth the procedures governing the Change of Control Offer required by
the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will be required to make an offer to all Holders of Notes
and, to the extent required by the terms of any Pari Passu Indebtedness to all
holders of such Pari Passu Indebtedness (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and any such Pari Passu Indebtedness that may
be purchased out of the Excess Proceeds, at a purchase price equal to 100% of
the Accreted Value thereof as of the date of repurchase if the date of purchase
is prior to November 15, 2005 or the principal amount at maturity thereof, plus
accrued and unpaid interest thereon through the date of purchase if the date of
repurchase is on or after November 15, 2005, in each case in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness. To the
extent that the aggregate Accreted Value or principal amount at maturity, as
applicable, of Notes and any such Pari Passu Indebtedness tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
Accreted Value or principal amount at maturity, as applicable, of Notes and any
Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis.
Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
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(c) Holders of the Notes that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form titled "Option of Holder to Elect Purchase"
appearing below.
9. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. On and after the redemption date, the Accreted Value
will cease to increase and 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 the Indenture.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons. The transfer of the
Notes may be registered and the Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS.
The registered Holder of a Note may be treated as its owner for all
purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to the following paragraphs and to the provisions of the
Indenture, the Indenture and the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of or, tender offer or exchange offer for Notes), and any
existing Default or Event of Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of any Holder of Notes, the Company and the Trustee
may amend or supplement the Indenture or the Notes to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with requirements of the Commission in
order to effect or maintain the
A-8
qualification of the Indenture under the Trust Indenture Act or to provide for
the issuance of Exchange Senior Discount Contingent Principal Notes or
Additional Notes.
13. DEFAULTS AND REMEDIES.
Events of Default include:
(i) default for 30 days in the payment when due of interest on, or
Additional Interest with respect to, the Notes; (ii) default in payment when due
of principal of or premium, if any, on the Notes; (iii) failure by the Company
or any Restricted Subsidiary for 30 days after notice from the Trustee or at
least 25% in principal amount of the Notes to comply with the provisions
described in Sections 4.07, 4.09, 4.10 and 4.13 of the Indenture; (iv) failure
by the Company or any Subsidiary for 60 days after notice from the Trustee or
the Holders of at least 25% in principal amount of the Notes then outstanding to
comply with its other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (A) (1) is caused by a failure to pay principal of such
Indebtedness after giving effect to any grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (2) results in
the acceleration of such Indebtedness prior to its stated maturity and, (B) in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$20.0 million or more; (vi) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $20.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries (viii) default by Holdings in payment when due of the principal of
the Existing Debentures; and (ix) default by Holdings for 30 days in the payment
when due of interest on the Existing Debentures. If any Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately in an amount equal to the Accreted Value of the Notes
outstanding on the date of acceleration, if such acceleration occurs prior to
November 15, 2005 or all principal of and accrued and unpaid interest on the
Notes outstanding on the date of acceleration, if such acceleration occurs on or
after November 15, 2005. Notwithstanding the foregoing, if an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiary occurs, then, without any
declaration or other act on the part of the Trustee or any Holder of the Notes,
the unpaid principal of and premium, if any and accrued and unpaid interest on
all the Notes will become immediately due and payable in an amount equal to the
Accreted Value of the Notes outstanding on the date of acceleration, if such
acceleration occurs prior to November 15, 2005 or all principal of and accrued
and unpaid interest on the Notes outstanding on the date of acceleration, if
such acceleration occurs on or after November 15, 2005. Holders of the Notes may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of
A-9
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. In the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (v) above, the declaration of acceleration of the Notes shall be
automatically annulled if the holders of any Indebtedness described in clause
(v) above have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (x) the
annulment of the acceleration of Notes would not conflict with any judgment or
decree of a court of competent jurisdiction and (y) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have been cured or waived.
14. TRUSTEE DEALINGS WITH COMPANY.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
15. NO RECOURSE AGAINST OTHERS.
No director, officer, employee, organizer or member, of the Company, as
such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder 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.
16. AUTHENTICATION.
This Note shall not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.
17. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of the Notes under the
Indenture, Holders of Transfer Restricted Securities (as defined in the
Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of the date hereof, among the Company,
and the Trustee, on behalf of the Holders of Notes (the "Registration Rights
Agreement").
A-10
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
J. Crew Intermediate LLC
c/o J. Crew Group, Inc.
770 Broadway
New York, New York 10003
Telecopy: (212) 209-2666
Attention: Chief Financial Officer
A-11
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to ___________________ (Insert
assignee's soc. sec. or tax I.D. no.) ___________________
____________________________________________________
____________________________________________________
____________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________ to transfer
this Note on the books of the Company. The agent may substitute another to act
for him.
_________________________________________________________________
Date:_______________________
Your Signature:________________________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:__________________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
Exchange Act Rule 17Ad-15.
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.13 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.13
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.13 of the Indenture, state the
amount you elect to have purchased:
$_______________
Date:________________ Your Signature:_________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:__________________
Signature Guarantee:_________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
Exchange Act Rule 17Ad-15.
A-13
[To be attached to Global Notes only:
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized signatory
Date of Principal Amount of Principal Amount of following such of Trustee or Note
Exchange this Global Note this Global Note decrease or increase Custodian
________ _____________________ _____________________ ____________________ ____________________ ]
A-14
EXHIBIT B-1
FORM OF NON-U.S. BENEFICIAL OWNERSHIP CERTIFICATION BY EUROCLEAR OR
CLEARSTREAM, LUXEMBOURG
[Date]
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
This is to certify with respect to $__________ principal amount
of the Notes that, 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 such principal amount
(our "Member Organizations") certifications with respect to such portion,
substantially to the effect set forth in the Indenture for the Notes.
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 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 the
date hereof.
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 or the Company to produce this certification to any interested party in such
proceedings.
Dated:_____________________, 20 ___
Yours faithfully,
[Euroclear or Clearstream, Luxembourg]
By
--------------------------------------
B-1-1
EXHIBIT B-2
FORM OF NON-U.S. BENEFICIAL OWNERSHIP CERTIFICATION BY MEMBER ORGANIZATION
[Date]
[Euroclear or Clearstream, Luxembourg as applicable]
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
This is to certify that as of the date hereof, and except as set
forth below, the Notes held by you for our account are beneficially owned by (a)
non-U.S. person(s) or (b) U.S. person(s) who purchased the Notes in transactions
which did not require registration under the Securities Act of 1933, as amended
(the "Act"). As used in this paragraph the term "U.S. person" has the meaning
given to it by Regulation S under the Act.
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.
This certification excepts and does not relate to $________ of
such interest in the above Notes in respect of which we are not able to certify
and as to which we understand exchange and delivery of definitive Notes (or, if
relevant, exercise of any rights or collection of any interest) cannot be made
until we do so certify.
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, the Company or the Trustee or Registrar for the Notes to produce this
certification to any interested party in such proceedings.
Date:______________, 20 ___. (Not earlier than 15 days prior to the end of the
Distribution Compliance Period).
By:
----------------------------------
[Agent Member]
As, or as agent for, the Beneficial Owner(s) of the Notes to which this
certificate relates.]
B-2-1
EXHIBIT C
FORM OF CERTIFICATE FOR TRANSFER TO QIB
[Date]
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of May 6,
2003, (as amended and supplemented from time to time, the "Indenture"), among
the Company and U.S. Bank National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
This Certificate relates to $___________ aggregate principal
amount of Notes [in the case of a transfer of an interest in a Regulation S
Global Note: which represents an interest in a Regulation S Global Note
beneficially owned by] [in the case of a transfer of an IAI Note: which are held
in the name of] the undersigned (the "Transferor") to effect the transfer of
such Notes in exchange for an equivalent beneficial interest in the Rule 144A
Global Note.
In connection with such request, and with respect to such Notes,
the Transferor does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), to a transferee that the Transferor reasonably believes is purchasing
the Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion, and the transferee, as well as any such
account, is a "qualified institutional buyer" within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
C-1
You and 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.
Very truly yours,
[Name of Transferor]
By:
----------------------------
-------------------------------
Authorized Signature
C-2
EXHIBIT D
FORM OF CERTIFICATE FOR TRANSFER TO INSTITUTIONAL ACCREDITED INVESTOR
[Date]
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of May 6,
2003, (as amended and supplemented from time to time, the "Indenture"), among
the Company and U.S. Bank National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
This certificate is delivered to request a transfer of $_______
principal amount of the Notes (the "Transferred Notes") to the undersigned (the
"Transferee").
Upon transfer, the Transferred Notes should be registered in the
name of the new owner as follows:
Name: ___________________________________ [If applicable, add:
as nominee for the transferee]
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
(1) We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and
are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.
(2) We acknowledge that (a) neither the Company, nor any person
acting on behalf of the Company has made any representation to
us with respect to the Company or the offer or sale of the
Notes; and (b) any information we desire concerning the Company
and the Notes or any other matter relevant to our decision to
acquire the Notes is or has been made available to us.
(3) We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of
an investment in the Notes, and
D-1
we are (or any account for which we are purchasing under
paragraph (4) below is) an institutional "accredited investor"
(within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) able to bear the
economic risk of investment in the Notes.
(4) We are acquiring the Notes for our own account (or for accounts
as to which we exercise sole investment discretion and have
authority to make, and do make, the statements contained in
this letter) and not with a view to any distribution of the
Notes, subject, nevertheless, to the understanding that the
disposition of our property will at all times be and remain
within our control.
(5) We understand that (a) the Notes will be in registered form
only and that any certificates delivered to us in respect of
the Notes will bear a legend substantially to the following
effect:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES, FOR THE BENEFIT OF THE COMPANY, THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7)
OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) OR (e) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c),
(d)
D-2
OR (e) BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
and (b) the Company has agreed to reissue such certificates
without the foregoing legend only in the event of a disposition
of the Notes in accordance with paragraph 6 below (provided, in
the case of a disposition of the Notes in accordance with
paragraph (6)(f) below, that the legal opinion referred to in
such paragraph so permits), or at our request at such time as we
would be permitted to dispose of them in accordance with 6(a)
below.
(6) We agree, on our own behalf and on behalf of each account for
which we acquire any Notes, that if at some future time, we
decide to resell, pledge or otherwise transfer the Notes, we
will not do so unless such Notes are offered, resold, pledged or
otherwise transferred in accordance with any applicable
securities law of any state of the United States and:
(a) the Notes are sold in compliance with Rule 144(k) under
the Securities Act; or
(b) the Notes are sold in compliance with Rule 144A under
the Securities Act; or
(c) the Notes are sold in compliance with Rule 904 of
Regulation S under the Securities Act; or
(d) the Notes are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Notes are sold to the Company; or
(f) the Notes are disposed of in any other transaction that
does not require registration under the Securities Act,
and we theretofore have furnished to the Company or its
designee an opinion of counsel experienced in securities
law matters to such effect or such other documentation
as the Company or its designee may reasonably request.
You and 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.
D-3
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
You and 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.
Very truly yours,
[Name of Transferee]
By:
----------------------------------
-------------------------------------
Authorized Signature]
D-4
EXHIBIT E
FORM OF CERTIFICATE FOR TRANSFER PURSUANT TO REGULATION S
[Date]
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of May 6,
2003, (as amended and supplemented from time to time, the "Indenture"), among
the Company and U.S. Bank National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
In connection with our proposed sale of $________ aggregate
principal amount of the Notes [in the case of a transfer of an interest in a
144A Global Note: , which represent an interest in a 144A Global Note
beneficially owned by] [in the case of a transfer of an IAI Note: held in the
name of] the undersigned ("Transferor"), we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(a) the offer of the Notes was not made to a person in the
United States;
(b) either (i) at the time the buy order 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 (ii) 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;
(c) 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;
(d) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(e) we are the beneficial owner of the principal amount of
Notes being transferred.
In addition, if the sale is made during a Distribution
Compliance Period and the provisions of Rule 904(b)(1) or Rule 904(b)(2) of
Regulation S are applicable thereto, we
E-1
confirm that such sale has been made in accordance with the applicable
provisions of Rule 904(b)(1) or Rule 904(b)(2), as the case may be.
You and 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 letter have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------
----------------------------------
Authorized Signature]
E-2
EXHIBIT F
FORM OF CERTIFICATION FOR TRANSFER PURSUANT TO RULE 144
[Date]
U.S. Bank National Association
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Re: 16.0% Senior Discount Contingent Principal Notes due
2008 of J. Crew Intermediate LLC
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of May 6,
2003, (as amended and supplemented from time to time, the "Indenture"), among
the Company and U.S. Bank National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
In connection with our proposed sale of $________ aggregate
principal amount of the Notes [in the case of a transfer of an interest in a
144A Global Note: , which represent an interest in a 144A Global Note
beneficially owned by] [in the case of a transfer of an IAI Note: held in the
name of] the undersigned ("Transferor"), we confirm that such sale has been
effected pursuant to and in accordance with Rule 144 under the Securities Act.
You and 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.
Very truly yours,
[Name of Transferor]
By:
----------------------------
-------------------------------
Authorized Signature
F-1