EXHIBIT 4.2
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.,
as Issuer
and
IBJ XXXXXXXX BANK & TRUST COMPANY,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of February 6, 1997
to
INDENTURE
Dated as of February 6, 1997
between
CAF ACQUISITION CORPORATION, as Issuer
and
IBJ XXXXXXXX BANK & TRUST COMPANY, as Trustee
--------------------
$100,000,000
10% Senior Subordinated Notes due 2007
and
Series B 10% Senior Subordinated Notes due 2007
FIRST SUPPLEMENTAL INDENTURE, dated as of February 6, 1997,
between XXXXXXX & XXXXXX FLOORCOVERINGS, INC., a Delaware corporation (the
"Company"), and IBJ Xxxxxxxx Bank & Trust Company, a New York banking
corporation, as Trustee (the "Trustee").
WHEREAS, CAF Acquisition Corporation, a Virginia corporation
("CAF Acquisition"), has heretofore executed and delivered to the Trustee an
Indenture dated as of February 6, 1997 (the "Indenture") providing for the
issuance of $100,000,000 aggregate principal amount of CAF Acquisition's 10%
Senior Subordinated Notes due 2007 (the "Initial Notes") and CAF Acquisition's
Series B 10% Senior Subordinated Notes due 2007 (the "Exchange Notes", and
together with the Initial Notes, the "Notes"); and
WHEREAS, CAF Acquisition has merged with and into the Company
and, in connection herewith, the Company has assumed by operation of law, all
of CAF Acquisition's debts, liabilities, duties and obligations, including CAF
Acquisition's obligations in respect of the Notes and under the Indenture; and
WHEREAS, the Company desires by this First Supplemental
Indenture, pursuant to and as contemplated by Section 5.01 and 9.01 of the
Indenture, to expressly assume covenants, agreements and undertakings of CAE
Acquisition in the Indenture and under the Notes; and
WHEREAS, the execution and delivery of this First Supplemental
Indenture and the note(s) evidencing the Initial Notes and the Exchange Notes
substantially in the form attached hereto as Exhibit A and Exhibit B,
respectively (the "Securities"), has been authorized by a resolution of the
Board of Directors of the Company; and
WHEREAS, all conditions and requirements necessary to make each
of this First Supplemental Indenture and the Securities a valid, binding and
legal instrument in accordance with its terms have been performed and
fulfilled by the parties hereto and the execution and delivery thereof have
been in all respects duly authorized by the parties hereto.
NOW, THEREFORE, in consideration of the above premises, each
party agrees, for the benefit of the other and for the equal and ratable
benefit of the Holders of the Notes, as follows:
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ARTICLE ONE
ASSUMPTION OF OBLIGATIONS OF CAF ACQUISITION
SECTION 1.01. Assumption.
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The Company hereby expressly and unconditionally assumes each
and every covenant, agreement and undertaking of CAF Acquisition in the
Indenture as if the Company had been the original issuer of the Notes, and
also hereby expressly and unconditionally assumes each and every covenant,
agreement and undertaking in each Note outstanding on the date of this First
Supplemental Indenture.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 2.01. Terms Defined.
-------------
For all purposes of this First Supplemental Indenture, except as
otherwise defined or unless the context otherwise requires, terms used in
capitalized form in this First Supplemental Indenture and defined in the
Indenture have the meanings specified in the Indenture.
SECTION 2.02. Indenture.
---------
Except as amended hereby, the Indenture and the Notes are in all
respects ratified and confirmed and all the terms shall remain in full force
and effect.
SECTION 2.03. Governing Law.
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THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS .
SECTION 2.04. Successors.
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All agreements of the Company in this First Supplemental
Indenture and the Notes shall bind its successors. All
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agreements of the Trustee in this First Supplemental Indenture shall bind its
successors.
SECTION 2.05. Duplicate Originals.
-------------------
The parties may sign any number of copies of this First
Supplemental Indenture. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
SECTION 2.06. Trustee Disclaimer.
------------------
The Trustee accepts the amendment of the Indenture effected by
this First Supplemental Indenture and agrees to execute the trust created by
the Indenture as hereby amended, but only upon the terms and conditions set
forth in the Indenture, including the terms and provisions defining and
limiting the liabilities and responsibilities of the Trustee, which terms and
provisions shall in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the Indenture as
hereby amended, and without limiting the generality of the foregoing, the
Trustee shall not be responsible in any manner whatsoever for or with respect
to any of the recitals or statements contained herein, all of which recitals
or statements are made solely by the Company, or for or with respect to (i)
the validity of the terms of this First Supplemental Indenture or any of the
terms or provisions hereof, (ii) the proper authorization hereof by the
Company by corporate action or otherwise, (iii) the due execution hereof by
the Company or (iv) the consequences (direct or indirect and whether
deliberate or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
Issuer:
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Time: Vice President
Trustee:
IBJ XXXXXXXX BANK & TRUST COMPANY,
as Trustee
By: /s/ Xxxxxxx XxXxxxxxx
-----------------------------------
Name: Xxxxxxx XxXxxxxxx
Time: Vice President
-
EXHIBIT A
---------
CUSIP No.:
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
10% SENIOR SUBORDINATED NOTE DUE 2007
No. $
XXXXXXX & XXXXXX FLOORCOVERINGS, INC., a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum
of Dollars, on January 15, 2007.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Note
contained herein, which will for a11 purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
XXXXXXX & XXXXXX FLOORCOVERINGS,
INC.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Dated: February 6, 1997 Title:
Certificate of Authentication
This is one of the 10% Senior Subordinated Notes due 2007
referred to in the within-mentioned Indenture.
IBJ XXXXXXXX BANK & TRUST
COMPANY, as Trustee
Dated: February 6, 1997 By:
-----------------------------
Authorized Signatory
A-1
(REVERSE OF SECURITY)
% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. XXXXXXX & XXXXXX FLOORCOVERINGS, INC., a Delaware
--------
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at the rate per annum shown above. Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from February 6, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing July 15,
1997. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes plus 2% per annum and on overdue installments of interest
(without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Notes (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts ("U.S.
Legal Tender"). However, the Company may pay principal and interest by its
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, IBJ Xxxxxxxx Bank &
--------------------------
Trust Company, a New York banking corporation (the "Trustee"), will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of February 6, 1997 (as supplemented by the First Supplemental
Indenture thereto, dated as of February 6, 1997, the "Indenture"), between the
Company and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 10% Senior Subordinated Notes
due 2007 (the "Initial Notes"). The Notes are limited in aggregate principal
amount to $100,000,000. The Notes
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include the Initial Notes and the Exchange Notes, as defined below, issued in
exchange for the Initial Notes pursuant to the Indenture. The Initial Notes
and the Exchange Notes are treated as a single class of securities under the
Indenture. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code SS 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and said Act for a statement of them. The Notes
are general unsecured obligations of the Company.
5. Subordination. The Notes are subordinated in right of
-------------
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt of the
Company, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary or appropriate
to effectuate the subordination provided for in the Indenture and appoints the
Trustee his attorney-in-fact for such purposes.
6. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after January 15, 2002, upon not less than 30 nor more than 60 days' notice,
at the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
January 15 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
Year Percentage
---- ----------
2002................................................... 105.000%
2003................................................... 103.333%
2004................................................... 101.667%
2005 and thereafter.................................... 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any
------------------------------------------------
time, or from time to time, on or prior to January 15, 2000, the Company may,
at its option, use the net cash proceeds of one or more Public Equity-
Offerings (as
A-3
defined in the Indenture) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110% of the
principal amount thereof plus, in each case, accrued interest to the date of
redemption; provided that at least 65% of the principal amount of Notes
originally issued remains outstanding immediately after any such redemption.
In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than S1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued and
unpaid interest, if any, the Notes called for redemption will cease to bear
interest from and after such Redemption Date and the only right of the Holders
of such Notes will be to receive payment of the Redemption Price plus accrued
and unpaid interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement (as defined in the Indenture), the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's Series B 10% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), which have been registered
under the Securities Act, in like principal amount and having terms identical
in all material respects to the Initial Notes. The Holders of the Initial
Notes shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
A-4
10. Denominations; Transfer; Exchange. The Notes are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of S1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption.
11. Persons Deemed Owners. The registered Holder of
---------------------
a Note shall be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal
---------------
or interest remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company. After that, all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company
-----------------------------------------
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of
the Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain
-----------------------------
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the
Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or
comply with Article Five of the Indenture or make any other change that does
not adversely affect in any material respect the rights of any Holder of a
Note.
15. Restrictive Covenants. The Indenture imposes certain
---------------------
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur
A-5
additional Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, enter into transactions with Affiliates, create dividend
or other payment restrictions affecting Subsidiaries, merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with
----------
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and
payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the
-----------------------------
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No stockholder, director,
--------------------------
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation 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 a Note 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.
A-6
20. Authentication. This Note shall not be valid until the
--------------
Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.
21. Governing Law. The Laws of the State of New York shall
-------------
govern this Note and the Indenture, without regard to principles of conflict
of laws.
22. Abbreviations and Defined Terms. Customary abbreviations
-------------------------------
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by
-------------
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the
Holders of the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be
---------
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Xxxxxxx & Xxxxxx Floorcoverings,
Inc., 000 Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx 00000, Attn: President.
A-7
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint __________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Date: Signed:
---------------------------- --------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
---------------------------
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date of the declaration by the SEC of
the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) February 6, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with
the transfer and that this Note is being transferred:
A-8
[Check One]
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(1) _ to the Company or a subsidiary thereof; or
(2) _ pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) _ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished
to the Trustee a signed letter containing certain representations and
agreements (the form of which letter can be obtained from the Trustee);
or
(4) _ outside the United states to a "foreign person" in compliance with Rule
904 of Regulation S under the Securities Act; or
(5) _ pursusnt to the exemption from registration provided by Rule 144 under
the Securities Act; or
(6) _ pursuant to an effective registration statement under the Securities
Act; or
(7) _ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A-9
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Dated: Signed:
---------------------------- --------------------------------
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:
----------------------------------------
TO BE COMPLETED BY PURCHASER IF ( 2 ) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such informa tion regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
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NOTICE: To be executed by an executive officer
A-10
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4-16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture,
state the amount you elect to have purchased:
$
------------------------------
Dated:
--------------------------- ---------------------------------------
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of the
within Note in every particular without
alteration or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:
--------------------------------
A-ll
EXHIBIT B
---------
CUSIP No.:
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
SERIES B 10% SENIOR SUBORDINATED NOTE DUE 2007
No. $
XXXXXXX & XXXXXX FLOORCOVERINGS, INC , a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum
of Dollars, on January 15,
2007.
Interest Payment Dates: January 15
and July 15
Record Dates: January 1
and July 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Certificate of Authentication
This is one of the Series B 10% Senior Subordinated Notes due
2007 referred to in the within-mentioned Indenture.
IBJ XXXXXXXX BANK & TRUST COMPANY,
as Trustee
Dated: By:
--------------------------- -----------------------------
Authorized Signatory
B-1
(REVERSE OF SECURITY)
SERIES B 10% SENIOR SUBORDINATED
NOTE DUE 2007
1. Interest. XXXXXXX & XXXXXX FLOORCOVERINGS, INC., a Delaware
--------
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at the rate per annum shown above. Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from February 6, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing July 15,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes plus 2% per annum and on overdue installments of interest
(without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Notes (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts ("U.S.
Legal Tender"). However, the Company may pay principal and interest by its
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Reqistrar. Initially, IBJ Xxxxxxxx Bank &
--------------------------
Trust Company, a New York banking corporation (the "Trustee"), will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of February 6, 1997 (as supplemented by the First Supplemental
Indenture thereto, dated as of February 6, 1997, the "Indenture"), between the
Company and the Trustee. This Note is one of a duly authorized issue of
Exchange Notes of the Company designated as its Series B 10% Senior
Subordinated Notes due 2007 (the "Exchange Notes"). The Notes are limited in
aggregate principal amount to
B-2
$100,000,000. The Notes include the Initial Notes (the 10% Senior Subordinated
Notes due 2007) and the Exchange Notes, issued in exchange for the Initial
Notes pursuant to the Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
obligations of the Company.
5. Subordination. The Notes are subordinated in right of
-------------
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt of the
Company, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary or appropriate
to effectuate the subordination provided for in the Indenture and appoints the
Trustee his attorney-in-fact for such purposes.
6. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after January 15, 2002, upon not less than 30 nor more than 60 days notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
January 15 of the year set forth below, plus, in each case, accrued interest
to the date of redemption:
Year Percentage
2002.......................................... 105.000%
2003.......................................... 103.333%
2004.......................................... 101.667%
2005 and thereafter........................... 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any
------------------------------------------------
time, or from time to time, on or prior to January 15, 2000, the Company may,
at its option, use the net cash proceeds of one or more Public Equity
Offerings (as
B-3
defined in the Indenture) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110% of the
principal amount thereof plus, in each case, accrued interest to the date of
redemption; provided that at least 65% of the principal amount of Notes
originally issued remains outstanding immediately after any such redemption.
In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than S1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued and
unpaid interest, if any, the Notes called for redemption will cease to bear
interest from and after such Redemption Date and the only right of the Holders
of such Notes will be to receive payment of the Redemption Price plus accrued
and unpaid interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, smong
other things, to furnish appropriate endorsements and transfer documents and
to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption.
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10. Persons Deemed Owners. The registered Holder of a Note
---------------------
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company
-----------------------------------------
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
-----------------------------
exceptions, the or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in addition
to or in place of certificated Notes, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
---------------------
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
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15. Successors. When a successor assumes, in accordance with
----------
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
-----------------------------
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
--------------------------
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation 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 a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the
--------------
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
20. Governinq Law. The Laws of the State of New York shall
-------------
govern this Note and the Indenture, without regard to principles of conflict of
laws.
21. Abbreviations and Defined Terms. Customary abbreviations may
-------------------------------
be used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with
B-6
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by
-------------
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be
---------
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indehture, which has the text of this
Note in larger type. Requests may be made to: Xxxxxxx & Xxxxxx Floorcoverings,
Inc., 000 Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx 00000, Attn: President.
B-7
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint , agent to transfer
this Note on the books of the Company. The agent may substitute another to act
for him.
Dated: Signed:
-------------------------------- ------------------------------
(Sign exactly as name appears
on the other side of this Note)
Signature Guarantee:
--------------------------------------------
B-8
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you
elect to have purchased:
$
------------------------
Dated:
---------------------------- ------------------------------------
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever and be
guaranteed by the endorser s bank or
broker.
Signature Guarantee:
---------------------------------
B-9
Exhibit C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
------------------, ----
IBJ Xxxxxxxx Bank & Trust
Company
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Securities Processing
Window Level SC1
Re: Xxxxxxx & Xxxxxx Floorcoverings, Inc.
10% Senior Subordinated Notes due 2007
--------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 10% Senior
Subordinated Notes due 2007 (the "Notes") of Xxxxxxx & Xxxxxx Floorcoverings,
Inc. (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated January 29, 1997 relating to the Notes and such
other information as we deem necessary in order to make our investment decision.
we acknowledge that we have read and agreed to the matters stated on pages (i)-
(ii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum, including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes
C-1
prior to the date which is three years after the original issuance of the Notes,
we will do so only (i) to the Company or any of its subsidiaries, (ii) inside
the Vnited States in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), (iii) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture
relating to the Notes), a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Notes, (iv) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
4. We are not acquiring the Notes for or on behalf of, and will
not transfer the Notes to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
C-2
You 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 proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:
----------------------------------
Name:
Title:
C-3
Exhibit D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
-----------------------------------
IBJ Xxxxxxxx Bank & Trust Company
Xxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Securities Processing
Window Level SC1
Re: Xxxxxxx & Xxxxxx Floorcoverings, Inc.
(the "Company")
10% Senior Subordinated Notes due 2007
(the "Notes")
--------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $ _______________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
D-1
(4) the transaction is not part of 8 plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
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 certificate have
the meanings set forth in.Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------
Authorized Signature
D-2
