EXECUTION COPY
RITE AID CORPORATION
11 1/4% Senior Notes due 2008
-------------------------------
INDENTURE
Dated as of June 27, 2001
-------------------------------
BNY Midwest Trust Company,
Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Other Definitions.............................................35
SECTION 1.03. Incorporation by Reference
of Trust Indenture Act........................................36
SECTION 1.04. Rules of Construction.........................................36
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in
Series.......................................................................37
SECTION 2.02. Form and Dating...............................................38
SECTION 2.03. Execution and Authentication..................................39
SECTION 2.04. Registrar and Paying Agent....................................40
SECTION 2.05. Paying Agent To Hold Money
in Trust......................................................40
SECTION 2.06. Securityholder Lists..........................................41
SECTION 2.07. Replacement Securities........................................41
SECTION 2.08. Outstanding Securities........................................41
SECTION 2.09. Temporary Securities..........................................42
SECTION 2.10. Cancellation..................................................42
SECTION 2.11. Defaulted Interest............................................42
SECTION 2.12. CUSIP Numbers.................................................42
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee............................................43
SECTION 3.02. Selection of Securities To Be
Redeemed......................................................43
SECTION 3.03. Notice of Redemption..........................................43
SECTION 3.04. Effect of Notice of Redemption................................44
SECTION 3.05. Deposit of Redemption Price...................................44
SECTION 3.06. Securities Redeemed in Part...................................45
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ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities.........................................45
SECTION 4.02. SEC Reports...................................................45
SECTION 4.03. Limitation on Debt............................................46
SECTION 4.04. Limitation on Restricted Payments.............................50
SECTION 4.05. Limitation on Liens...........................................54
SECTION 4.06. Limitation on Asset Sales.....................................54
SECTION 4.07. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries..................................................58
SECTION 4.08. Limitation on Transactions with
Affiliates....................................................60
SECTION 4.09. Limitation on Guarantees by
Restricted Subsidiaries.......................................62
SECTION 4.10. Limitation on Sale and Leaseback
Transactions..................................................63
SECTION 4.11. Designation of Restricted and
Unrestricted Subsidiaries.....................................64
SECTION 4.12. Change of Control.............................................65
SECTION 4.13. Further Instruments and Acts..................................67
ARTICLE V
Successor Company
SECTION 5.01. (a) When Company May Merge or
Transfer Assets...............................................67
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default.............................................69
SECTION 6.02. Acceleration..................................................71
SECTION 6.03. Other Remedies................................................72
SECTION 6.04. Waiver of Past Defaults.......................................72
SECTION 6.05. Control by Majority...........................................72
SECTION 6.06. Limitation on Suits...........................................73
SECTION 6.07. Rights of Holders to Receive
Payment.......................................................73
SECTION 6.08. Collection Suit by Trustee....................................73
SECTION 6.09. Trustee May File Proofs of Claim..............................73
SECTION 6.10. Priorities....................................................74
SECTION 6.11. Undertaking for Costs.........................................74
SECTION 6.12. Waiver of Stay or Extension
Laws..........................................................75
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee.............................................75
SECTION 7.02. Rights of Trustee.............................................76
SECTION 7.03. Individual Rights of Trustee..................................77
SECTION 7.04. Trustee's Disclaimer..........................................77
SECTION 7.05. Notice of Defaults............................................78
SECTION 7.06. Reports by Trustee to Holders.................................78
SECTION 7.07. Compensation and Indemnity....................................78
SECTION 7.08. Replacement of Trustee........................................79
SECTION 7.09. Successor Trustee by Merger...................................80
SECTION 7.10. Eligibility; Disqualification.................................80
SECTION 7.11. Preferential Collection of Claims
Against Company...............................................81
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance........................................81
SECTION 8.02. Conditions to Defeasance......................................82
SECTION 8.03. Application of Trust Money....................................84
SECTION 8.04. Repayment to Company..........................................84
SECTION 8.05. Indemnity for Government
Obligations...................................................84
SECTION 8.06. Reinstatement.................................................84
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders....................................85
SECTION 9.02. With Consent of Holders.......................................85
SECTION 9.03. Compliance with Trust Indenture
Act...........................................................87
SECTION 9.04. Revocation and Effect of Consents
and Waivers...................................................87
SECTION 9.05. Notation on or Exchange of
Securities....................................................87
SECTION 9.06. Trustee To Sign Amendments....................................88
SECTION 9.07. Payment for Consent...........................................88
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ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls.................................88
SECTION 10.02. Notices......................................................88
SECTION 10.03. Communication by Holders with
Other Holders................................................89
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent.........................................89
SECTION 10.05. Statements Required in Certificate
or Opinion...................................................90
SECTION 10.06. When Securities Disregarded..................................90
SECTION 10.07. Rules by Trustee, Paying Agent
and Registrar................................................91
SECTION 10.08. Legal Holidays...............................................91
SECTION 10.09. Governing Law................................................91
SECTION 10.10. No Recourse Against Others...................................91
SECTION 10.11. Successors...................................................91
SECTION 10.12. Multiple Originals...........................................91
SECTION 10.13. Table of Contents; Headings..................................91
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Appendix A - Provisions Relating to Initial Securities
and Exchange Securities
Exhibit 1 to
Appendix A - Form of Initial Security
Exhibit A - Form of Exchange Security
Exhibit B - Form of Transferee Letter of Representation
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310 (a)(1)...............................................................7.10
(a)(2)...............................................................7.10
(a)(3)...............................................................N.A.
(a)(4)...............................................................N.A.
(b) ..............................................................7.08;
7.10
(c) ...............................................................N.A.
311 (a) ...............................................................7.11
(b) ...............................................................7.11
(c) ...............................................................N.A.
312 (a) ...............................................................2.06
(b) ..............................................................10.03
(c) ..............................................................10.03
313 (a) ...............................................................7.06
(b)(1)...............................................................N.A.
(b)(2)...............................................................7.06
(c) ..............................................................7.06;
10.02
(d) ...............................................................7.06
314 (a) ..............................................................4.02;
4.10;
10.02
(b) ...............................................................N.A.
(c)(1)..............................................................10.04
(c)(2)............................................................. 10.04
(c)(3)...............................................................N.A.
(d) ...............................................................N.A.
(e) ..............................................................10.05
(f) ...............................................................4.10
315 (a) ...............................................................7.01
(b) ..............................................................7.05;
10.02
(c) ...............................................................7.01
(d) ...............................................................7.01
(e) ...............................................................6.11
316 (a)
(last sentence) ....................................................10.06
(a)(1)(A)............................................................6.05
(a)(1)(B)............................................................6.04
(a)(2)...............................................................N.A.
(b) ...............................................................6.07
317 (a)(1)...............................................................6.08
(a)(2)...............................................................6.09
(b) ...............................................................2.05
318 (a) ...............................................................10.01
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purposes, be deemed to be
part of this Indenture.
INDENTURE dated as of June 27, 2001, RITE
AID CORPORATION, a Delaware corporation (the
"Company") and BNY MIDWEST TRUST COMPANY, an Illinois
trust company, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 11
1/4% Senior Notes due 2008, to be issued, from time to time, in one or more
series as provided in this Indenture (the "Initial Securities") and, if and when
issued pursuant to a registered or private exchange for the Initial Securities,
the Company's 11 1/4% Senior Notes due 2008 (the "Exchange Securities" and,
together with the Initial Securities, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means:
(a) any Property (other than cash, cash equivalents and
securities) to be owned by the Company or any Restricted Subsidiary and
used in a Related Business; or
(b) Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the
Company or another Restricted Subsidiary from any Person other than the
Company or an Affiliate of the Company; provided, however, that, in the
case of clause (b), such Restricted Subsidiary is primarily engaged in
a Related Business.
"Affiliate" of any specified Person means:
(a) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such
specified Person; or
(b) any other Person who is a director or
executive officer of:
(1) such specified Person;
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(2) any Subsidiary of such specified Person;
or
(3) any Person described in clause (a) above.
For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Annualized EBITDA" and "Annualized Interest Expense" means,
as of any date of determination:
(a) if the most recent fiscal quarter for which financial
statements have been filed with the SEC is the Company's fourth fiscal
quarter of 2001, the product of EBITDA or Consolidated Interest
Expense, as the case may be, for that fiscal quarter multiplied by
four;
(b) if the most recent fiscal quarter for which financial
statements have been filed with the SEC is the Company's first fiscal
quarter of 2002, the product of the aggregate amount of EBITDA or
Consolidated Interest Expense, as the case may be, for the most recent
two consecutive quarters multiplied by two;
(c) if the most recent fiscal quarter for which financial
statements have been filed with the SEC is the Company's second fiscal
quarter of 2002, the product of the aggregate amount of EBITDA or
Consolidated Interest Expense, as the case may be, for the most recent
three consecutive fiscal quarters multiplied by 4/3; and
(d) if the most recent fiscal quarter for which financial
statements have been filed with the SEC is any subsequent fiscal
quarter of the Company, the aggregate amount of EBITDA or Consolidated
Interest Expense, as the case may be, for the most recent four
consecutive fiscal quarters ending on the last day of the most recent
fiscal quarter for which financial statements have been filed with the
SEC.
"Asset Sale" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by
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means of a merger, consolidation or similar transaction (each referred to for
the purposes of this definition as a "disposition"), of:
(a) any shares of Capital Stock of a Restricted
Subsidiary (other than directors' qualifying shares);
or
(b) any other assets of the Company or any
Restricted Subsidiary outside of the ordinary course of
business of the Company or such Restricted Subsidiary,
in the case of either clause (a) or clause (b) above, whether in a single
transaction or a series of related transactions, (i) that have a Fair Market
Value in excess of $10 million or (ii) for aggregate consideration in excess of
$10 million, other than, in the case of clause (a) or (b) above:
(1) any disposition by a Restricted Subsidiary to the
Company or by the Company or a Restricted Subsidiary to a
Wholly Owned Restricted Subsidiary;
(2) any disposition that constitutes a Permitted
Investment or Restricted Payment permitted by Section 4.04;
(3) any disposition effected in compliance with
Section 5.01(a);
(4) a sale of accounts receivable and related assets
of the type specified in the definition of "Qualified
Receivables Transaction" to a Receivables Entity;
(5) a transfer of accounts receivable and related
assets of the type specified in the definition of "Qualified
Receivables Transaction" (or a fractional undivided interest
therein) by a Receivables Entity in connection with a
Qualified Receivables Transaction; or
(6) a sale by the Company or a Restricted Subsidiary
of Property by way of a Sale and Leaseback Transaction but
only if (A) such Property was owned by the Company or a
Restricted Subsidiary on the Issue Date, (B) the requirements
of Section 4.11 are satisfied with respect to such Sale and
Leaseback Transaction, (C) the requirements of Section
4.06(a), (b) and (c) are
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satisfied as though such Sale and Leaseback Transaction
constituted an Asset Sale and (D) the aggregate Fair Market
Value of such Property, when added to the Fair Market Value of
all other sales of Property pursuant to this clause (6) since
the Issue Date, does not exceed $150 million.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction or Synthetic Lease means, at any date of determination:
(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the
definition of "Capital Lease Obligation," and
(b) in all other instances, the greater of:
(1) the Fair Market Value of the Property subject to
such Sale and Leaseback Transaction or Synthetic Lease; and
(2) the present value (discounted at the interest
rate borne by the Securities, compounded annually) of the
total obligations of the lessee for rental payments during the
remaining term of the lease included in such Sale and
Leaseback Transaction or such Synthetic Lease (in each case
including any period for which such lease has been extended).
"Average Life" means, as of any date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:
(a) the sum of the product of the numbers of years (rounded to
the nearest one-twelfth of one year) from the date of determination to
the dates of each successive scheduled principal payment of such Debt
or redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by
(b) the sum of all such payments.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly constituted and duly authorized to act on
behalf of such Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the
5
Company to have been duly adopted by the Board of Directors or a duly authorized
committee therof and to be in full force and effect on the date of such
certification.
"Business Day" means each day that is not a Legal Holiday.
"Capital Lease Obligations" means any obligation under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of Debt represented by such obligation
shall be the capitalized amount of such obligations determined in accordance
with GAAP; and the Stated Maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
For purposes of Section 4.05, a Capital Lease Obligation shall be deemed secured
by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares
or other equivalents (however designated) of any class of corporate stock or
partnership interests or any other participations, rights, warrants, options or
other interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash
proceeds received by the Company from the issuance or sale (other than to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees) by the Company of its Capital Stock (other than Disqualified Stock)
after the Issue Date (and excluding any issuance or sale as part of the
Refinancing Transactions), net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Change of Control" means the occurrence of any of the
following events:
(a) if any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act or any successor
provisions to either of the foregoing), including any group acting for
the purpose of acquiring, holding, voting or disposing of securities
6
within the meaning of Rule 13d-5(b)(1) under the Exchange Act (other
than one or more Permitted Holders), becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 40% or more of the total voting power of the Voting Stock of the
Company (for purposes of this clause (a), such person or group shall be
deemed to beneficially own any Voting Stock of a corporation held by
any other corporation (the "parent corporation") so long as such person
or group beneficially owns, directly or indirectly, in the aggregate a
majority of the total voting power of the Voting Stock of such parent
corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the
assets of the Company and the Restricted Subsidiaries, considered as a
whole (other than a disposition of such assets as an entirety or
virtually as an entirety to a Wholly Owned Restricted Subsidiary) shall
have occurred, or the Company merges, consolidates or amalgamates with
or into any other Person or any other Person merges, consolidates or
amalgamates with or into the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is
reclassified into or exchanged for cash, securities or other Property,
other than any such transaction where:
(1) the outstanding Voting Stock of the Company is
reclassified into or exchanged for other Voting Stock of the
Company or for Voting Stock of the surviving corporation; and
(2) the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of
the Company or the surviving corporation immediately after
such transaction and in substantially the same proportion as
before the transaction; or
(c) during any period of two consecutive years commencing
after June 30, 2001, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors
whose election or appointment by such Board or whose nomination for
election by the shareholders of the Company was approved by a vote of
not less than three-fourths of the directors then still in office who
were either directors at the beginning of such period or
7
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office; or
(d) the shareholders of the Company shall have approved any
plan of liquidation or dissolution of the Company.
"Class A Cumulative Preferred Stock" means Rite Aid Lease
Management Company's Preferred Stock, par value $100.00 per share, designated as
Class A Cumulative.
"Class C Cumulative Preferred Stock" means the Rite Aid Risk
Management Corp.'s Preferred Stock, par value $1.00 per share, designated as
Class C Cumulative Participating Voting.
"Class D Cumulative Preferred Stock" means the Rite Aid Risk
Management Corp.'s Preferred Stock, par value $100.00 per share, designated as
Class D Cumulative Participating Voting.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Price Protection Agreement" means, in respect of a
Person, any forward contract, commodity swap agreement, commodity option
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in commodity prices.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the applicable provisions hereof and,
thereafter, means the successor and, for purposes of any provision contained
herein and expressly required by the TIA, each other obligor on the indenture
securities.
"Consolidated Interest Coverage Ratio" means, as of any date
of determination, the ratio of:
(a) Annualized EBITDA; to
(b) Annualized Interest Expense;
8
provided, however, that:
(1) if
(A) since the beginning of the period used
to calculate Annualized EBITDA and Annualized
Interest Expense the Company or any Restricted
Subsidiary has Incurred any Debt that remains
outstanding or Repaid any Debt; or
(B) the transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio
is an Incurrence or Repayment of Debt,
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Incurrence or Repayment as
if such Debt was Incurred or Repaid on the first day of such period,
provided that, in the event of any such Repayment of Debt, EBITDA for
such period shall be calculated as if the Company or such Restricted
Subsidiary had not earned any interest income actually earned during
such period in respect of the funds used to Repay such Debt, and
(2) if
(A) since the beginning of such period the
Company or any Restricted Subsidiary shall have made
any Asset Sale or an Investment (by merger or
otherwise) in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary) or an
acquisition of Property which constitutes all or
substantially all of an operating unit of a business;
(B) the transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio
is such an Asset Sale, Investment or acquisition; or
(C) since the beginning of such period any
Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or
any Restricted Subsidiary since the beginning of such
period) shall have made such an Asset Sale,
Investment or acquisition,
9
EBITDA for such period shall be calculated after giving pro forma
effect to such Asset Sale, Investment or acquisition as if such Asset
Sale, Investment or acquisition occurred on the first day of such
period.
If any Debt bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Debt shall be calculated as
if the base interest rate in effect for such floating rate of interest on the
date of determination had been the applicable base interest rate for the entire
period (taking into account any Interest Rate Agreement applicable to such Debt
if such Interest Rate Agreement has a remaining term in excess of 12 months). In
the event the Capital Stock of any Restricted Subsidiary is sold during the
period, the Company shall be deemed, for purposes of clause (1) above, to have
Repaid during such period the Debt of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiaries are no longer liable for
such Debt after such sale.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries (excluding the non-cash interest expense related to (x) litigation
reserves, (y) closed store liability reserves and (z) self-insurance reserves),
plus, to the extent not included in such total interest expense, and to the
extent Incurred by the Company or its Restricted Subsidiaries, and without
duplication:
(a) interest expense attributable to Capital Lease
Obligations;
(b) amortization of debt discount and debt issuance cost,
including commitment fees;
(c) capitalized interest;
(d) non-cash interest expense other than expenses under
clauses (x), (y) and (z) above;
(e) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
(f) net costs associated with Hedging Obligations (including
amortization of fees but excluding costs associated with forward
contracts for inventory in the ordinary course of business);
(g) Disqualified Stock Dividends;
10
(h) Preferred Stock Dividends;
(i) interest Incurred in connection with Investments in
discontinued operations;
(j) interest accruing on any Debt of any other Person to the
extent such Debt is Guaranteed by the Company or any Restricted
Subsidiary; and
(k) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Debt Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the
Company) if such Person is not a Restricted Subsidiary, except that:
(1) subject to the exclusion contained in clause (d)
below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash distributed by
such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (c) below);
and
(2) the Company's equity in a net loss of any such
Person other than an Unrestricted Subsidiary for such period
shall be included in determining such Consolidated Net Income;
(b) for purposes of Section 4.04 only, any net income (loss)
of any Person acquired by the Company or any of its consolidated
Subsidiaries in a pooling of interests transaction for any period prior
to the date of such acquisition;
(c) any net income (loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of
11
dividends or the making of distributions, directly or indirectly, to
the Company, except that:
(1) subject to the exclusion contained in clause (d)
below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of
cash distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a
dividend or other distribution to another Restricted
Subsidiary, to the limitation contained in this clause); and
(2) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(d) any gain or loss realized upon the sale or other
disposition of any Property of the Company or any of its consolidated
Subsidiaries (including pursuant to any Sale and Leaseback Transaction)
that is not sold or otherwise disposed of in the ordinary course of
business;
(e) any extraordinary gain or loss;
(f) the cumulative effect of a change in accounting
principles;
(g) any non-cash compensation expense realized for grants of
performance shares, stock options or other rights to officers,
directors and employees of the Company or any Restricted Subsidiary,
provided that such shares, options or other rights can be redeemed at
the option of the holder only for Capital Stock of the Company (other
than Disqualified Stock);
(h) store closing costs;
(i) non-cash charges or credits that relate to use of the
last-in-first-out method of accounting for inventory; and
(j) loss on debt modifications.
Notwithstanding the foregoing, for purposes of Section 4.04 only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other
12
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted by Section 4.04 pursuant to
clause (c)(4) thereof.
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt or commercial paper facilities with
banks or other institutional lenders (including the Senior Credit Facilities),
providing for revolving credit loans, term loans, receivables or inventory
financing (including through the sale of receivables or inventory to such
lenders or to special purpose, bankruptcy remote entities formed to borrow from
such lenders against such receivables or inventory), Synthetic Leases or trade
letters of credit, in each case together with Refinancings thereof on any basis
so long as such Refinancing constitutes Debt.
"Currency Exchange Protection Agreement" means, in respect of
a Person, any foreign exchange contract, currency swap agreement, currency
option or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
"Debt" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of:
(1) debt of such Person for money borrowed;
and
(2) debt evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person
is responsible or liable;
(b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions and
Synthetic Leases entered into by such Person;
(c) all obligations of such Person issued or assumed as the
deferred purchase price of Property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
13
(d) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (a)
through (c) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect
to the Repayment of any Disqualified Stock or, with respect to any
Subsidiary of such Person, any Preferred Stock (but excluding, in each
case, any accrued dividends);
(f) all obligations of the type referred to in clauses (a)
through (e) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(g) all obligations of the type referred to in clauses (a)
through (f) of other Persons secured by any Lien on any Property of
such Person (whether or not such obligation is assumed by such Person),
the amount of such obligation being deemed to be the lesser of the
value of such Property or the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Debt of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date. The amount of Debt represented by a
Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant
to clause (g) or (h) of Section 4.03 or
14
(2) the notional amount of such Hedging Obligation if not
Incurred pursuant to such clauses.
"Debt Issuances" means, with respect to the Company or any
Restricted Subsidiary, one or more issuances of Debt evidenced by notes,
debentures, bonds or other similar securities or instruments.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable, in either case at the option of
the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(b) is or may become redeemable or repurchaseable at the
option of the holder thereof, in whole or in part; or
(c) is convertible or exchangeable at the option of the holder
thereof for Debt or Disqualified Stock;
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the Securities.
"Disqualified Stock Dividends" means all dividends with
respect to Disqualified Stock of the Company held by Persons other than a Wholly
Owned Restricted Subsidiary. The amount of any such dividend shall be equal to
the quotient of such dividend divided by the difference between one and the
maximum statutory federal income tax rate (expressed as a decimal number between
1 and 0) then applicable to the Company.
"EBITDA" means, for any period, an amount equal to, for the
Company and its consolidated Restricted Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus
the following to the extent reducing Consolidated Net Income for such
period:
(1) the provision for taxes based on income or
profits or utilized in computing net loss;
15
(2) Consolidated Interest Expense and non-cash
interest expense related to litigation reserves, closed store
liability reserves and self-insurance reserves, to the extent
excluded from Consolidated Interest Expense;
(3) depreciation;
(4) amortization of intangibles;
(5) non-cash impairment charges;
(6) non-cash losses relating to the Investment in
xxxxxxxxx.xxx resulting from accounting for xxxxxxxxx.xxx on
the equity method of accounting, except to the extent such
losses relate to Investments made after the Issue Date;
(7) charges relating to the investigations of the
Company pending on the Issue Date by the United States
Attorney and by the U.S. Department of Labor and amounts paid
in satisfaction of any judgment, fine or settlement resulting
therefrom; and
(8) any other non-cash items (other than any such
non-cash item to the extent that it represents an accrual of
or reserve for cash expenditures in any future period), minus
(b) all non-cash items increasing Consolidated Net Income for
such period (other than any such non-cash item to the extent that it
will result in the receipt of cash payments in any future period).
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and non-cash items of a Restricted Subsidiary shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its shareholders.
"Equipment Financing Transaction" means any arrangement
(together with any Refinancing thereof) with any
16
Person pursuant to which the Company or any Restricted Subsidiary Incurs Debt
secured by a Lien on equipment or equipment related property of the Company or
any Restricted Subsidiary.
"Equity Offering" means (i) an underwritten offering of common
stock of the Company by the Company pursuant to an effective registration
statement under the Securities Act or (ii) so long as the Company's common stock
is, at the time, listed or quoted on a national securities exchange (as such
term is defined in the Securities Exchange Act of 1934), an offering of common
stock by the Company in a transaction exempt from or not subject to the
registration requirements of the Securities Act.
"Event of Default" has the meaning set forth under Section
6.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing 5.25% Convertible Notes" means the Company's 5.25%
Convertible Subordinated Notes Due 2002 issued under the indenture dated as of
September 10, 1997 between the Company and Xxxxxx Trust and Savings Bank as
trustee.
"Existing 10.5% Notes" means the Company's 10.50% Senior
Secured Notes Due 2002 issued under the indenture dated as of June 14, 2000,
among the Company, the subsidiary guarantors named therein and State Street Bank
and Trust Company, as trustee, and the Exchange Notes (as defined therein) that
may be issued in exchange therefore.
"Expansion Capital Expenditure" means any capital expenditure
incurred by the Company or any Restricted Subsidiary in developing, relocating,
remodeling and refurbishing a warehouse, distribution center, store or other
facility (other than ordinary course maintenance) for carrying on the business
of the Company and its Restricted Subsidiaries that the Board of Directors
determines in good faith will enhance the income generating ability of the
warehouse, distribution center, store or other facility.
"Fair Market Value" means, with respect to any Property, the
price that could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair
17
Market Value shall be determined, except as otherwise provided:
(a) if such Property has a Fair Market Value equal to or less
than $25 million, by any Officer of the Company; or
(b) if such Property has a Fair Market Value in excess of $25
million, by a majority of the Board of Directors and evidenced by a
Board Resolution, dated within 30 days of the relevant transaction,
delivered to the Trustee.
"GAAP" means United States generally accepted accounting
principles as in effect on the Issue Date, including those set forth:
(a) in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants;
(b) in the statements and pronouncements of the Financial
Accounting Standards Board;
(c) in such other statements by such other entity as approved
by a significant segment of the accounting profession; and
(d) the rules and regulations of the Commission governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements
in staff accounting bulletins and similar written statements from the
accounting staff of the Commission.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt of such other Person (whether arising
by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise); or
18
(b) entered into for the purpose of assuring in any other
manner the obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include:
(1) endorsements for collection or deposit in the
ordinary course of business; or
(2) a contractual commitment by one Person to invest
in another Person for so long as such Investment is reasonably
expected to constitute a Permitted Investment under clause (b)
of the definition of "Permitted Investment."
The term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of
such Person pursuant to any Interest Rate Agreement, Currency Exchange
Protection Agreement, Commodity Price Protection Agreement or any other similar
agreement or arrangement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Security register described in Section 2.04.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such Debt
or other obligation or the recording, as required pursuant to GAAP or otherwise,
of any such Debt or obligation on the balance sheet of such Person (and
"Incurrence" and "Incurred" shall have meanings correlative to the foregoing);
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as Debt,
becoming Debt shall not be deemed an Incurrence of such Debt; provided further,
however, that any Debt or other obligations of a Person existing at the time
such Person becomes a Subsidiary (whether by merger, consolidation, acquisition
or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary; and provided further, however, that solely for purposes of
determining compliance with Section 4.03, amortization of debt discount shall
not be deemed to be the Incurrence of Debt, provided that in the case of Debt
sold at a discount, the amount of such Debt
19
Incurred shall at all times be the aggregate principal amount at Stated
Maturity.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Independent Financial Advisor" means an investment banking
firm of national standing or any third party appraiser of national standing,
provided that such firm or appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect against fluctuations in interest
rates.
"Investment" by any Person means any direct or indirect loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person), advance or
other extension of credit or capital contribution (by means of transfers of cash
or other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, or Incurrence of a Guarantee of any
obligation of, or purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities or evidence of Debt issued by, any other Person.
For purposes of Sections 4.04 and 4.10 and the definition of "Restricted
Payment," "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the Fair Market Value of the net assets
of any Subsidiary of the Company at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary of an amount (if
positive) equal to:
(a) the Company's "Investment" in such Subsidiary at the time
of such redesignation; less
(b) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets
of such Subsidiary at the time of such redesignation.
In determining the amount of any Investment made by transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such Investment.
20
"Issue Date" means the date on which the Offered Securities
are initially issued.
"Lien" means, with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Moody's" means Xxxxx'x Investors Service, Inc. or any
successor to the rating agency business thereof.
"Net Available Cash" from any Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Debt or other obligations
relating to the Property that is the subject of such Asset Sale or received in
any other non-cash form), in each case net of:
(a) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Sale;
(b) all payments made on any Debt that is secured by any
Property subject to such Asset Sale, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to
such Property, or which must by its terms, or in order to obtain a
necessary consent to such Asset Sale, or by applicable law, be repaid
out of the proceeds from such Asset Sale;
(c) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Sale; and
(d) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the Property
21
disposed in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.
"New 12.5% Notes" means the Company's 12.5% Senior Secured
Notes due 2006 to be issued as part of the Refinancing Transactions in exchange
for a portion of the Existing 10.5% Notes, and the exchange notes that may be
issued in exchange therefor pursuant to the terms thereof.
"Offering Memorandum" means the Company's offering memorandum
dated June 20, 2001 in respect of the $150,000,000 11 1/4% Senior Notes due
2008.
"Officer" means the Chief Executive Officer, the President,
the Chief Financial Officer or any Executive Vice President of the Company.
"Officers' Certificate" means a certificate signed by two
Officers of the Company, at least one of whom shall be the principal executive
officer or principal financial officer of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holder" means Xxxxxxx Xxxxx & Partners L.P. or any
of its Affiliates.
"Permitted Investment" means any Investment by the Company or
a Restricted Subsidiary in:
(a) (i) the Company, (ii) any Restricted Subsidiary or (iii)
any Person that will, upon the making of such Investment, become a
Restricted Subsidiary;
(b) any Person if as a result of such Investment such Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its Property to, the Company or a Restricted
Subsidiary;
(c) cash and Temporary Cash Investments;
(d) receivables owing to the Company or a Restricted
Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary
trade terms as the Company or such Restricted Subsidiary deems
reasonable under the circumstances;
22
(e) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(f) loans and advances to employees made in the ordinary
course of business consistent with past practices of the Company or
such Restricted Subsidiary, as the case may be, provided that such
loans and advances do not exceed $25 million at any one time
outstanding;
(g) stock, obligations or other securities received in
settlement of debts created in the ordinary course of business and
owing to the Company or a Restricted Subsidiary or in satisfaction of
judgments;
(h) any Person to the extent such Investment represents the
non-cash portion of the consideration received in connection with an
Asset Sale consummated in compliance with Section 4.06;
(i) Hedging Obligations permitted under clause (g), (h) or (i)
of Section 4.03;
(j) any Person if the Investments are outstanding on the Issue
Date and not otherwise described in clauses (a) through (i) above;
(k) Investments in Unrestricted Subsidiaries or joint venture
entities (including purchasing cooperatives) that do not exceed $10
million outstanding at any one time in the aggregate;
(l) other Investments that do not exceed $5 million
outstanding at any one time in the aggregate; and
(m) Investments in any entity, formed by the Company or a
Restricted Subsidiary, organized under Section 501(c)(3) of the Code,
that do not exceed an aggregate amount of $5 million in any fiscal
year.
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under clause
(b),(c),(d) or (l) of Section 4.03;
23
(b) Liens to secure Debt permitted to be Incurred under clause
(e), (p), (q) or (r) of Section 4.03; provided that (i) any such Lien
may not extend to any Property of the Company or any Restricted
Subsidiary, other than the Property acquired, developed, constructed or
leased with the proceeds of such Debt and any improvements or additions
to such Property;
(c) Liens for taxes, assessments or governmental charges or
levies on the Property of the Company or any Restricted Subsidiary if
the same shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision that shall be
required in conformity with GAAP shall have been made therefor;
(x) Xxxxx imposed by law, such as carriers', warehousemen's
and mechanics' Liens and other similar Liens, on the Property of the
Company or any Restricted Subsidiary arising in the ordinary course of
business and securing payment of obligations that are not more than 60
days past due or are being contested in good faith and by appropriate
proceedings;
(e) Liens on the Property of the Company or any Restricted
Subsidiary Incurred in the ordinary course of business to secure
performance of obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety bonds or
other obligations of a like nature and Incurred in a manner consistent
with industry practice, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of Property and
which do not in the aggregate impair in any material respect the use of
Property in the operation of the business of the Company and the
Restricted Subsidiaries taken as a whole;
(f) Liens on Property at the time the Company or any
Restricted Subsidiary acquired such Property, including any acquisition
by means of a merger or consolidation with or into the Company or any
Restricted Subsidiary; provided, however, that any such Lien may not
extend to any other Property of the Company or any Restricted
Subsidiary; provided further, however, that such Liens shall not have
been Incurred in anticipation of or in connection with the transaction
or series of transactions pursuant to which such Property was acquired
by the Company or any Restricted Subsidiary;
24
(g) Liens on the Property of a Person at the time such Person
becomes a Restricted Subsidiary; provided, however, that any such Lien
may not extend to any other Property of the Company or any other
Restricted Subsidiary that is not a direct Subsidiary of such Person;
provided further, however, that any such Lien was not Incurred in
anticipation of or in connection with the transaction or series of
transactions pursuant to which such Person became a Restricted
Subsidiary;
(h) pledges or deposits by the Company or any Restricted
Subsidiary under workmen's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Debt) or leases
to which the Company or any Restricted Subsidiary is party, or deposits
to secure public or statutory obligations of the Company or any
Restricted Subsidiary, or deposits for the payment of rent, in each
case Incurred in the ordinary course of business;
(i) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar character;
(j) Liens arising out of judgments or awards against the
Company or a Restricted Subsidiary with respect to which the Company or
the Restricted Subsidiary shall then be proceeding with an appeal or
other proceeding for review and which do not give rise to an Event of
Default;
(k) leases or subleases of real property granted by the
Company or a Restricted Subsidiary to any other Person in the ordinary
course of business and not materially impairing the use of the real
property in the operation of the business of the Company or the
Restricted Subsidiary;
(l) Liens existing on the Issue Date not otherwise described
in clauses (a) through (k) above;
(m) Liens on the Property of the Company or any Restricted
Subsidiary to secure any Refinancing, in whole or in part, of any Debt
secured by Xxxxx referred to in clause (a) (but only to the extent it
relates to clause (d) referred to therein), (b) (other than Liens
25
securing Debt Incurred pursuant to clause (p) or (r) referred to
therein), (f), (g), or (l) above; provided, however, that any such Lien
shall be limited to all or part of the same Property that secured the
original Lien (together with improvements and accessions to such
Property) and the aggregate principal amount of Debt that is secured by
such Lien shall not be increased to an amount greater than the sum of:
(1) the outstanding principal amount, or, if greater,
the committed amount, of the Debt secured by Xxxxx described
under clause (b) (except as referred to above), (f), (g), or
(l) above, as the case may be, at the time the original Lien
became a Permitted Lien under the Indenture; and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, incurred by the
Company or such Restricted Subsidiary in connection with such
Refinancing; and
(n) Liens not otherwise permitted by clauses (a) through (m)
above encumbering assets that have an aggregate Fair Market Value not
in excess of $2 million.
"Permitted Refinancing Debt" means any Debt that Refinances
any other Debt, including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) not in
excess of the sum of:
(1) the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value)
then outstanding of the Debt being Refinanced; and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, related to such
Refinancing;
(b) the Average Life of such Debt is equal to or greater than
the Average Life of the Debt being Refinanced;
(c) the Stated Maturity of such Debt is no earlier than the
Stated Maturity of the Debt being Refinanced; and
26
(d) the new Debt shall not be senior in right of payment to
the Debt that is being Refinanced;
provided, however, that Permitted Refinancing Debt shall not include: (x) Debt
of a Subsidiary that Refinances Debt of the Company, or (y) Debt of the Company
or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including
any limited liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect
to Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Wholly Owned Restricted Subsidiary. The amount of any such dividend
shall be equal to the quotient of such dividend divided by the difference
between one and the maximum statutory federal income rate (expressed as a
decimal number between 1 and 0) then applicable to the issuer of such Preferred
Stock.
"principal" of any Debt (including the Securities) means the
principal amount of such Debt plus the premium, if any, on such Debt.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms hereof, a calculation performed in
accordance with Article 11 of Regulation S-X promulgated under the Securities
Act, as interpreted in good faith by the Board of Directors after consultation
with the independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including Capital Stock in, and other securities of,
any
27
other Person. For purposes of any calculation required pursuant to the
Indenture, the value of any Property shall be its Fair Market Value.
"Purchase Money Debt" means Debt Incurred to finance the
acquisition, development, construction or lease by the Company or a Restricted
Subsidiary of Property, including additions and improvements thereto, where the
maturity of such Debt does not exceed the anticipated useful life of the
Property being financed; provided, however, that such Debt is Incurred within 24
months after the acquisition, development construction or lease of such Property
by the Company or such Restricted Subsidiary.
"Qualified Consideration" means, with respect to any Asset
Sale (or any other transaction or series of related transactions required to
comply with clause (b) of the first paragraph of Section 4.06), any one or more
of (a) cash or cash equivalents, (b) notes or obligations that are converted
into cash (to the extent of the cash received) within 90 days of such Asset
Sale, (c) equity securities listed on a national securities exchange (as such
term is defined in the Securities Exchange Act of 1934) or quoted on the Nasdaq
National Market and converted into cash (to the extent of the cash received)
within 120 days of such Asset Sale, (d) the assumption by the purchaser of
liabilities of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Securities) as a result of which the
Company and the Restricted Subsidiaries are no longer obligated with respect to
such liabilities, (e) Additional Assets or (f) other Property, provided that the
aggregate Fair Market Value of all Property received since the Issue Date by the
Company and its Restricted Subsidiaries pursuant to Asset Sales (or such other
transactions) that is used to determine Qualified Consideration pursuant to this
clause (f) does not exceed $100 million.
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
convey or otherwise transfer to:
(a) a Receivables Entity (in the case of a transfer by the
Company or any of its Subsidiaries); and
(b) any other Person (in the case of a transfer by a
Receivables Entity),
28
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Subsidiaries,
and any assets related thereto including, without limitation, all collateral
securing those accounts receivable, all contracts and all Guarantees or other
obligations in respect of those accounts receivable, proceeds of those 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; provided that:
(1) if the transaction involves a transfer of
accounts receivable with Fair Market Value equal to or greater
than $25.0 million, the Board of Directors shall have
determined in good faith that the Qualified Receivables
Transaction is economically fair and reasonable to the Company
and the Receivables Entity;
(2) all sales of accounts receivable and related
assets to or by the Receivables Entity are made at Fair Market
Value; and
(3) the financing terms, covenants, termination
events and other provisions thereof shall be market terms (as
determined in good faith by the Board of Directors).
"Rating Agencies" means Xxxxx'x and S&P.
"Real Estate Financing Transaction" means any arrangement with
any Person pursuant to which the Company or any Restricted Subsidiary Incurs
Debt secured by a Lien on real property of the Company or any Restricted
Subsidiary and related personal property together with any Refinancings thereof.
"Receivables Entity" means a Wholly Owned Subsidiary of the
Company (or another Person formed for the purposes of engaging in a Qualified
Receivables Transaction with the Company in which the Company or any Subsidiary
of the Company makes an Investment and to which the Company or any Subsidiary of
the Company transfers accounts receivable and related assets) which engages in
no activities other than in connection with the financing of accounts receivable
of the Company and its Subsidiaries, all proceeds thereof and all rights
(contractual or other), collateral and other assets relating thereto, and any
business or activities incidental or related to that business, and (with respect
to any Receivables Entity formed after the Issue Date) which is
29
designated by the Board of Directors (as provided below) as a Receivables Entity
and:
(a) no portion of the Debt or any other obligations
(contingent or otherwise) of which:
(1) is Guaranteed by the Company or any Subsidiary of
the Company (excluding Guarantees of obligations (other than
the principal of, and interest on, Debt) pursuant to Standard
Securitization Undertakings);
(2) is recourse to or obligates the Company or any
Subsidiary of the Company in any way other than pursuant to
Standard Securitization Undertakings; or
(3) subjects any property or asset of the Company or
any Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings;
(b) with which neither the Company nor any Subsidiary of the
Company has any material contract, agreement, arrangement or
understanding other than on terms which the Company reasonably believes
to be no less favorable to the Company or the Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates
of the Company; and
(c) to which neither the Company nor any Subsidiary of the
Company has any obligation to maintain or preserve the entity's
financial condition or cause the entity to achieve certain levels of
operating results other than pursuant to Standard Securitization
Undertakings.
Any designation of this kind by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors giving effect to the designation and an Officers' Certificate
certifying that the designation complied with the foregoing conditions.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or
to issue other Debt, in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
30
"Refinancing Transactions" has the meaning given to the term
"Refinancing" in the Offering Memorandum.
"Related Business" means any business that is related,
ancillary or complementary to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date.
"Repay" means, in respect of any Debt, to repay, prepay,
repurchase, redeem, legally defease or otherwise retire such Debt. "Repayment"
and "Repaid" shall have correlative meanings. For purposes of Section 4.06 and
the definition of "Consolidated Interest Coverage Ratio," Debt shall be
considered to have been Repaid only to the extent the related loan commitment,
if any, shall have been permanently reduced in connection therewith.
"Restricted Payment" means:
(a) any dividend or distribution (whether made in cash,
securities or other Property) declared or paid on or with respect to
any shares of Capital Stock of the Company or any Restricted Subsidiary
(including any payment in connection with any merger or consolidation
with or into the Company or any Restricted Subsidiary), except for any
dividend or distribution that is made solely to the Company or a
Restricted Subsidiary (and, if such Restricted Subsidiary is not a
Wholly Owned Restricted Subsidiary, to the other shareholders of such
Restricted Subsidiary on a pro rata basis or on a basis that results in
the receipt by the Company or a Restricted Subsidiary of dividends or
distributions of greater value than it would receive on a pro rata
basis) or any dividend or distribution payable solely in shares of
Capital Stock (other than Disqualified Stock) of the Company;
(b) the purchase, repurchase, redemption, acquisition or
retirement for value of any Capital Stock of the Company or any
Restricted Subsidiary (other than from the Company or a Restricted
Subsidiary) or any securities exchangeable for or convertible into any
such Capital Stock, including the exercise of any option to exchange
any Capital Stock (other than for or into Capital Stock of the Company
that is not Disqualified Stock);
(c) the purchase, repurchase, redemption, acquisition or
retirement for value, prior to the date for any scheduled maturity,
sinking fund or amortization or other installment payment, of any
Subordinated Obligation (other than the purchase,
31
repurchase or other acquisition of any Subordinated Obligation
purchased in anticipation of satisfying a scheduled maturity, sinking
fund or amortization or other installment obligation, in each case due
within one year of the date of acquisition);
(d) any Investment (other than Permitted Investments) in any
Person; or
(e) the issuance, sale or other disposition of Capital Stock
of any Restricted Subsidiary to a Person other than the Company or
another Restricted Subsidiary if the result thereof is that such
Restricted Subsidiary shall cease to be a Restricted Subsidiary, in
which event the amount of such "Restricted Payment" shall be the Fair
Market Value of the remaining interest, if any, in such former
Restricted Subsidiary held by the Company and the other Restricted
Subsidiaries.
Notwithstanding the foregoing, no payment or other transaction permitted by
clause (c) or (f) under the caption "Limitation on Transactions with Affiliates"
will be considered a Restricted Payment. For the avoidance of doubt, it is
understood that the exercise of the warrants and the issuance of Capital Stock
of the Company to FMR Corp. or any of its Affiliates pursuant to the Warrant
dated as of June 27, 2001, are not Restricted Payments.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement relating to Property now owned or hereafter acquired whereby the
Company or a Restricted Subsidiary transfers such Property to another Person and
the Company or a Restricted Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Senior Credit Facility" means the Senior Credit Agreement
dated as of June 27, 2001 (as amended, modified, supplemented or Refinanced from
time to time), among the Company, the Banks as defined therein, Citicorp USA,
Inc. as
32
senior administrative agent, Citicorp USA, Inc. as senior collateral agent, and
the Chase Manhattan Bank, Credit Suisse First Boston and Fleet Retail Finance
Inc. as the syndication agents.
"Series B Preferred Stock" means the Company's Preferred
Stock, par value $1.00 per share, designated as Series B.
"Series C Preferred Stock" means the Company's Preferred
Stock, par value $1.00 per share, designated as Series C.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are customary in an accounts receivable
securitization transaction involving a comparable company.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Debt of the Company
(whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
company (including any limited liability company), association, partnership,
joint venture or other business entity of which a majority of the total voting
power of the Voting Stock is at the time owned or controlled, directly or
indirectly, by:
(a) such Person;
(b) such Person and one or more Subsidiaries of such Person;
or
33
(c) one or more Subsidiaries of such Person.
"Synthetic Lease" means a lease which is treated as an
operating lease under generally accepted accounting principles but as ownership
of the leased asset by the lessee for purposes of the Internal Revenue Code of
1986, as amended, or any successor statute.
"Temporary Cash Investments" means any of the following:
(a) Investments in U.S. Government Obligations
maturing within 365 days of the date of acquisition
thereof;
(b) Investments in time deposit accounts, certificates of
deposit, money market deposits maturing within 90 days of the date of
acquisition thereof issued by a bank or trust company organized under
the laws of the United States of America or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500
million and whose long- term debt is rated "A-3" or "A-" or higher
according to Xxxxx'x or S&P (or such similar equivalent rating by at
least one "nationally recognized statistical rating organization" (as
defined in Rule 436 under the Securities Act));
(c) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (a)
entered into with:
(1) a bank meeting the qualifications described in
clause (b) above; or
(2) any primary government securities dealer
reporting to the Market Reports Division of the Federal
Reserve Bank of New York;
(d) Investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws
of the United States of America with a rating at the time as of which
any Investment therein is made of "P-1" (or higher) according to
Xxxxx'x or "A-1" (or higher) according to S&P (or such similar
equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities
Act));
34
(e) direct obligations (or certificates representing an
ownership interest in such obligations) of any state of the United
States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of such state is pledged
and which are not callable or redeemable at the issuer's option,
provided that:
(1) the long-term debt of such state is rated "A-3"
or "A-" or higher according to Xxxxx'x or S&P (or such similar
equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under
the Securities Act)); and
(2) such obligations mature within 180 days of the
date of acquisition thereof; and
(f) money market funds at least 95% of the assets of which
constitute Temporary Cash Equivalents of the kinds described in clauses
(a) through (e) of this definition.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the date of this
Indenture, except as provided in Section 9.03.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the Corporate Trust
department of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture 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.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that is designated after the
Issue Date as an Unrestricted Subsidiary as permitted or required
pursuant to Section 4.11 and is not thereafter redesignated as a
Restricted Subsidiary as permitted pursuant thereto; and
35
(b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital
Stock or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means, at any time, a
Restricted Subsidiary all the Voting Stock of which (except directors'
qualifying shares) is at such time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction"......................................... 4.08
"Bankruptcy Law"................................................ 6.01
"Change of Control Offer"....................................... 4.12
"Change of Control Payment Date"................................ 4.12
"Change of Control Purchase Price".............................. 4.12
"covenant defeasance option".................................... 8.01
"Custodian"..................................................... 6.01
"Event of Default".............................................. 6.01
"Exchange Security"............................................. Appendix A
"Global Security"............................................... Appendix A
"legal defeasance option"....................................... 8.01
"Legal Holiday"................................................. 10.08
"Offer Amount".................................................. 4.06
"Offer Period".................................................. 4.06
"OID"........................................................... 2.01
"Original Securities............................................ 2.01
36
"Paying Agent".................................................. 2.04
"Prepayment Offer".............................................. 4.06
"Registered Exchange Offer...................................... Appendix A
"Registrar"..................................................... 2.04
"Securities Custodian".......................................... Appendix A
"Shelf Registration statement................................... Appendix A
"Surviving Person".............................................. 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
37
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the
greater of (i) the maximum liquidation value of such Preferred Stock or
(ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock.
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited. All Securities shall be identical
in all respects other than issue prices and issuance dates. The Securities may
be issued in one or more series; provided, however, that any Securities issued
with original issue discount ("OID") for Federal income tax purposes shall not
be issued as part of the same series as any Securities that are issued with a
different amount of OID or are not issued with OID. All Securities of any one
series shall be substantially identical except as to denomination.
Subject to Section 2.03, the Trustee shall authenticate
Securities for original issue on the Issue Date in the aggregate principal
amount of $150,000,000 (the "Original Securities"). With respect to any
Securities issued after the Issue Date (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A),
there shall be established in or pursuant to a resolution of the Board of
Directors, and subject to Section 2.03, set forth, or determined in the manner
provided in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:
38
(1) whether such Securities shall be issued as part of a new
or existing series of Securities and, if issued as part of a new
series, the title of such Securities (which shall distinguish the
Securities of the series from Securities of any other series);
(2) the aggregate principal amount of such Securities to be
authenticated and delivered under this Indenture, which may be issued
for an unlimited aggregate principal amount (except for Securities
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the same series
pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A and except
for Securities which, pursuant to Section 2.03, are deemed never to
have been authenticated and delivered hereunder);
(3) the issue price and issuance date of such Securities,
including the date from which interest on such Securities shall accrue;
(4) if applicable, that such Securities shall be issuable in
whole or in part in the form of one or more Global Securities and, in
such case, the respective depositories for such Global Securities; the
form of any legend or legends that shall be borne by any such Global
Security in addition to or in lieu of that set forth in Exhibit 1 to
Appendix A and any circumstances in addition to or in lieu of those set
forth in Section 2.3 of Appendix A in which any such Global Security
may be exchanged in whole or in part for Securities registered; and any
transfer of such Global Security in whole or in part may be registered
in the name or names of Persons other than the depository for such
Global Security or a nominee thereof; and
(5) if applicable, that such Securities shall not be issued in
the form of Initial Securities subject to Appendix A, but shall be
issued in the form of Exchange Securities as set forth in Exhibit A.
If any of the terms of any series are established by action
taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the trust indenture supplemental
hereto setting forth the terms of the series.
39
SECTION 2.02. Form and Dating. Provisions relating to the
Initial Securities of each series and the Exchange Securities are set forth in
Appendix A, which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities of each series and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities of each series may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage, provided that any
such notation, legend or endorsement is in a form reasonably acceptable to the
Company. Each Security shall be dated the date of its authentication. The terms
of the Securities of each series set forth in Exhibit 1 to Appendix A and
Exhibit A are part of the terms of this Indenture.
SECTION 2.03. Execution and Authentication. An Officer shall
sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
written order of the Company in the form of an Officers' Certificate for the
authentication and delivery of such Securities, and the Trustee in accordance
with such written order of the Company shall authenticate and deliver such
Securities.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be con clusive evidence that the Security has been
authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authen tication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
40
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency in the city of New York where Securities may be
presented for registration of transfer or for exchange (the "Registrar") and an
office or agency in the city of New York where Securities may be presented for
payment (the "Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Wholly Owned Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
41
SECTION 2.06. Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that such
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
42
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy (subject to the record retention requirements of the Exchange
Act) all Securities surrendered for registration of transfer, exchange, payment
or cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Trustee to deliver canceled Securities to the
Company. The Company may not issue new Securities to replace Securities it has
redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that neither the Company nor the Trustee shall have
any responsibility for any defect in the "CUSIP" number that appears on any
Security, check, advice of payment or redemption notice, and any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers
43
printed on the Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to paragraph 8 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and that such redemption is being made pursuant to either paragraph
5 or paragraph 8 of the Securities.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply with
the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed pursuant to paragraph 5 of the
Securities, the Trustee shall select the Securities to be redeemed pro rata or
by lot or by a method that complies with applicable legal and securities
exchange requirements, if any, and that the Trustee considers fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
44
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date, and
the only remaining right of the Holders is to receive payment of the
redemption price upon surrender to the Paying Agent; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section at least 45 days before the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date that is on or prior to
the date of redemption). Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Wholly Owned
45
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest, if any (subject
to the right of Holders of record on the relevant record date to receive
interest due on the related interest payment date that is on or prior to the
date of redemption), on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate per annum specified therefor in the Securities, and it shall pay interest
on overdue installments of interest at the rate borne by the Securities, to the
extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the Commission and provide the Trustee
and Holders of Securities with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and reports to be so filed and provided at the times
specified for the filing of such information, documents and reports under such
Sections; provided, however, that the Company will not be so obligated to file
such information, documents and reports with the Commission
46
if the Commission does not permit such filings. The Company shall also comply
with the other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Debt. The Company will not, and
will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any
Debt unless, after giving effect to the application of the proceeds thereof, no
Default or Event of Default would occur as a consequence of such Incurrence and
no Default or Event of Default would be continuing following such Incurrence and
application of proceeds and either:
(1) after giving effect to the Incurrence of such Debt and the
application of the proceeds thereof, the Consolidated Interest Coverage
Ratio would be greater than (i) if such Incurrence occurs within two
years of the Issue Date, 1.75 to 1.00 or (ii) if such Incurrence occurs
at any time thereafter, 2.00 to 1.00 provided that, if such Debt is
Debt of a Restricted Subsidiary then, simultaneously with the
Incurrence of such Debt, the Restricted Subsidiary executes and
delivers a supplemental indenture providing for a full and
unconditional Guarantee of payment of the Securities by such Restricted
Subsidiary; or
(2) such Debt is Permitted Debt.
The term "Permitted Debt" is defined to include the following:
(a) Debt of the Company evidenced by the Original
Securities and of Restricted Subsidiaries evidenced by
guarantees relating to the Securities;
(b) Debt of the Company or a Restricted Subsidiary (including
Guarantees thereof) (i) under any Credit Facilities, (ii) Incurred
pursuant to a Real Estate Financing Transaction, a Sale and Leaseback
Transaction or an Equipment Financing Transaction, (iii) Incurred in
respect of Capital Lease Obligations, (iv) Incurred pursuant to Debt
Issuances or (v) Incurred by a Receivables Entity in a Qualified
Receivables Transaction that is not recourse to the Company or any
other Restricted Subsidiary (except for Standard Securitization
Undertakings), provided that the aggregate principal amount of all such
Debt in clauses (i) through (v) hereof at any one time outstanding
together with the aggregate principal amount of all Debt described in
clause (c) below shall not exceed the greater of (1) $2,500 million,
which amount shall be permanently reduced by the amount of
47
Net Available Cash used to Repay Debt under the Credit Facilities, and
not subsequently reinvested in Additional Assets or used to purchase
Securities or Repay other Debt, pursuant to Section 4.06 and (2) the
sum of the amount equal to (A) 60% of the book value of the inventory
(determined using the first-in-first-out method of accounting) of the
Company and the Restricted Subsidiaries and (B) 85% of the book value
of the accounts receivables of the Company and the Restricted
Subsidiaries, in each case as of the most recently ended quarter of the
Company for which financial statements have been filed with the SEC;
(c) Debt of the Company outstanding on the Issue Date after
giving effect to the Refinancing Transactions and evidenced by the
Existing 10.5% Notes and of Restricted Subsidiaries evidenced by
guarantees relating to the Existing 10.5% Notes;
(d) Debt of the Company evidenced by the New 12.5% Notes and
of Restricted Subsidiaries evidenced by guarantees relating to the New
12.5% Notes;
(e) Debt Incurred after the Issue Date in respect of Purchase
Money Debt, provided that the aggregate principal amount of such Debt
does not exceed 80% of the Fair Market Value (on the date of the
Incurrence thereof) of the Property acquired, constructed, developed or
leased, including additions and improvements thereto;
(f) Debt of the Company owing to and held by any consolidated
Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and
held by the Company or any consolidated Restricted Subsidiary;
provided, however, that any subsequent issue or transfer of Capital
Stock or other event that results in any such consolidated Restricted
Subsidiary ceasing to be a consolidated Restricted Subsidiary or any
subsequent transfer of any such Debt (except to the Company or a
consolidated Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Debt by the issuer thereof;
(g) Debt under Interest Rate Agreements entered into by the
Company or a Restricted Subsidiary for the purpose of limiting interest
rate risk in the ordinary course of the financial management of the
Company or such Restricted Subsidiary and not for speculative purposes,
provided that the obligations under such agreements are directly
related to payment obligations
48
on Debt otherwise permitted by the terms of this covenant;
(h) Debt under Currency Exchange Protection Agreements entered
into by the Company or a Restricted Subsidiary for the purpose of
limiting currency exchange rate risks directly related to transactions
entered into by the Company or such Restricted Subsidiary in the
ordinary course of business and not for speculative purposes;
(i) Debt under Commodity Price Protection Agreements entered
into by the Company or a Restricted Subsidiary in the ordinary course
of the financial management of the Company or that Restricted
Subsidiary and not for speculative purposes;
(j) Debt in connection with one or more standby letters of
credit, banker's acceptance, performance or surety bonds or completion
guarantees issued by the Company or a Restricted Subsidiary in the
ordinary course of business or pursuant to self-insurance obligations
and not in connection with the borrowing of money or the obtaining of
advances or credit;
(k) Debt outstanding on the Issue Date not otherwise described
in clauses (a) through (j) above, excluding any Debt being Refinanced
in connection with the Refinancing Transactions but including Debt
Incurred in connection with the Refinancing Transactions;
(l) other Debt of the Company or a Restricted Subsidiary
(including Guarantees thereof) in an aggregate principal amount
outstanding at any one time not to exceed $400 million;
(m) Debt of a Restricted Subsidiary outstanding on the date on
which that Restricted Subsidiary was acquired by the Company or
otherwise became a Restricted Subsidiary (other than Debt Incurred as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
transactions pursuant to which that Restricted Subsidiary became a
Subsidiary of the Company or was otherwise acquired by the Company),
provided that at the time that Restricted Subsidiary was acquired by
the Company or otherwise became a Restricted Subsidiary and after
giving effect to the Incurrence of that Debt, the Company would have
been
49
able to Incur $1.00 of additional Debt pursuant to clause (1) of the
first paragraph of this covenant;
(n) Debt arising from the honoring by a bank or other
financial institution of a check or draft or other similar instrument
inadvertently drawn against insufficient funds in the ordinary course
of business, provided that such Debt is extinguished within five
business days of its Incurrence;
(o) endorsements of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(p) Debt of the Company or a Restricted Subsidiary (including
Guarantees thereof) Incurred in respect of Synthetic Leases in an
aggregate principal amount outstanding at any one time not to exceed
$107 million;
(q) Debt in respect of Sale and Leaseback Transactions or Real
Estate Financing Transactions involving only real property (and the
related personal property) owned by the Company or a Restricted
Subsidiary on the Issue Date in an aggregate principal amount
outstanding at any one time not to exceed $150 million, provided that
such Sale and Leaseback Transactions or Real Estate Financing
Transactions may involve Property other than real property (and the
related personal property) owned on the Issue Date to the extent the
portion of the Debt related to such Property is permitted by another
provision of this covenant at the time of Incurrence;
(r) Debt in respect of Sale and Leaseback Transactions that
are not Capital Lease Obligations Incurred to finance the acquisition,
construction and development of Property after the Issue Date,
including additions and improvements thereto, provided that any
reclassification of such Debt as a Capital Lease Obligation shall be
deemed an Incurrence of such Debt;
(s) Permitted Refinancing Debt Incurred in respect of Debt
Incurred pursuant to clause (1) of the first paragraph of this covenant
and clauses (a), (d), (e), (k) and (q) above; and
(t) Debt arising from agreements of the Company or any
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,
50
assets or a Subsidiary, other than Guarantees of Debt incurred by any
Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition;
provided that (a) such Debt is not reflected on the balance sheet of
the Company or any Restricted Subsidiary (contingent obligations
referred to in a footnote or footnotes to financial statements and not
otherwise reflected on the balance sheet will not be deemed to be
reflected on such balance sheet for purposes of this clause (a)) and
(b) the maximum assumable liability in respect of such Debt will at no
time exceed the gross proceeds including non-cash proceeds (the fair
market value of such non-cash proceeds being measured at the time
received and without giving effect to any subsequent changes in value)
actually received by the Company or such Restricted Subsidiary in
connection with such disposition.
For purposes of determining compliance with this covenant, (1)
in the event that an item of Debt meets the criteria of more than one of the
types of Debt described herein, the Company, in its sole discretion, will
classify such item of Debt at the time of Incurrence and only be required to
include the amount and type of such Debt in one of the above clauses and (2) the
Company will be entitled at the time of such Incurrence to divide and classify
an item of Debt in more than one of the types of Debt described herein;
provided, however, that (x) all outstanding Debt under the Senior Credit
Facility immediately following the Issue Date will be deemed to have been
incurred pursuant to clause (b) of this Section 4.03 and (y) any Permitted Debt
may later be reclassified as having been Incurred pursuant to any other clause
of the second paragraph of this covenant to the extent such Debt could be
Incurred pursuant to such clause at the time of such reclassification.
SECTION 4.04. Limitation on Restricted Payments. The Company
will not make, and will not permit any Restricted Subsidiary to make, directly
or indirectly, any Restricted Payment if at the time of, and after giving effect
to, such proposed Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing;
(b) the Company could not Incur at least $1.00 of additional
Debt pursuant to clause (1) of the first paragraph of Section 4.03; or
51
(c) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made since the Issue Date (the
amount of any Restricted Payment, if made other than in cash, to be
based upon Fair Market Value) would exceed an amount equal to the sum
of:
(1) 50% of the aggregate amount of Consolidated Net
Income accrued during the period (treated as one accounting
period) from the beginning of the first fiscal quarter that
commences after the Issue Date occurs to the end of the most
recent fiscal quarter for which financial statements have been
filed with the SEC (or if the aggregate amount of Consolidated
Net Income for such period shall be a deficit, minus 100% of
such deficit); plus
(2) 100% of Capital Stock Sale Proceeds; plus
(3) the sum of:
(A) the aggregate net cash proceeds received
by the Company or any Restricted Subsidiary from the
issuance or sale after the Issue Date of convertible
or exchangeable Debt that has been converted into or
exchanged for Capital Stock (other than Disqualified
Stock) of the Company; and
(B) the aggregate amount by which Debt
(other than Subordinated Obligations) of the Company
or any Restricted Subsidiary is reduced on the
Company's consolidated balance sheet after the Issue
Date upon the conversion or exchange of any Debt
(other than convertible or exchangeable debt issued
or sold after the Issue Date) for Capital Stock
(other than Disqualified Stock) of the Company;
excluding, in the case of clause (A) or (B):
(x) any such Debt issued or sold to the
Company or a Subsidiary of the Company or an employee
stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of
their employees; and
52
(y) the aggregate amount of any cash or
other Property distributed by the Company or any
Restricted Subsidiary upon any such conversion or
exchange;
plus
(4) an amount equal to the sum of:
(A) the net reduction in Investments in any
Person other than the Company or a Restricted
Subsidiary resulting from dividends, repayments of
loans or advances or other transfers of Property, in
each case to the Company or any Restricted Subsidiary
from such Person less the cost of the disposition of
such Investments; and
(B) the portion (proportionate to the
Company's equity interest in such Unrestricted
Subsidiary) of the Fair Market Value of the net
assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum
shall not exceed, in the case of any Person, the
amount of Investments previously made (and treated as
a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person.
Notwithstanding the foregoing limitation, the Company may:
(a) pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on said declaration date, such dividends could
have been paid in compliance with the Indenture; provided, however,
that at the time of such payment of such dividend, no other Default or
Event of Default shall have occurred and be continuing (or result
therefrom); provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(b) purchase, repurchase, redeem, legally defease, acquire or
retire for value Capital Stock of the Company or Subordinated
Obligations in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued
53
or sold to a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any such Subsidiary for the
benefit of their employees); provided, however, that:
(1) such purchase, repurchase, redemption, legal
defeasance, acquisition or retirement shall be excluded in the
calculation of the amount of Restricted Payments; and
(2) the Capital Stock Sale Proceeds from such
exchange or sale shall be excluded from the calculation
pursuant to clause (c)(2) above;
(c) purchase, repurchase, redeem, legally defease, acquire or
retire for value any Subordinated Obligations in exchange for, or out
of the proceeds of the substantially concurrent sale of, Permitted
Refinancing Debt; provided, however, that such purchase, repurchase,
redemption, legal defeasance, acquisition or retirement shall be
excluded in the calculation of the amount of Restricted Payments;
(d) so long as no Default or Event of Default shall have
occurred or be continuing, declare and pay dividends to the holders of
Series B Preferred Stock, Series C Preferred Stock, Class A Cumulative
Preferred Stock, Class C Cumulative Preferred Stock and Class D
Cumulative Preferred Stock outstanding on the Issue Date or issued
after the Issue Date solely in payment of dividends on the same class
of stock; provided, however, that such dividends shall be included in
the calculation of the amount of Restricted Payments;
(e) so long as no Default or Event of Default has occurred and
is continuing the repurchase or other acquisition of shares of or
options to purchase shares of, Capital Stock of the Company or any of
its Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by the
Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital Stock;
provided, however, that the aggregate amount of such repurchases and
other acquisitions shall not exceed $10 million; provided further,
however, that such repurchases and other acquisitions shall be
54
included in the calculation of the amount of Restricted Payments;
(f) make payments not to exceed $1 million in the aggregate to
enable the Company to make payments to holders of its Capital Stock in
lieu of the issuance of fractional shares of its Capital Stock;
provided, however, that such payments shall be included in the
calculation of the amount of Restricted Payments; and
(g) make any other Restricted Payments not to exceed an
aggregate amount of $25 million; provided, however, that such payments
shall be included in the calculation of the amount of Restricted
Payments.
SECTION 4.05. Limitation on Liens. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, Incur or
suffer to exist, any Lien (other than Permitted Liens) upon any of its Property
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter acquired, or any interest therein or any income or profits
therefrom, unless it has made or will make effective provision whereby the
Securities will be secured by such Lien equally and ratably with (or prior to)
all other Debt of the Company or any Restricted Subsidiary secured by such Lien.
SECTION 4.06. Limitation on Asset Sales. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Sale unless:
(a) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the Property subject to such Asset Sale;
(b) at least 75% of the consideration paid to the Company or
such Restricted Subsidiary in connection with such Asset Sale is in the
form of Qualified Consideration; and
(c) the Company delivers an Officers' Certificate to the
Trustee certifying that such Asset Sale complies with the foregoing
clauses (a) and (b).
The Net Available Cash (or any portion thereof) from Asset
Sales may be applied by the Company or a Restricted Subsidiary, to the extent
the Company or such
55
Restricted Subsidiary elects (or is required by the terms of any Debt):
(a) to Repay the Credit Facilities, the Existing 10.5% Notes,
the New 12.5% Notes or any other Debt of the Company or any Restricted
Subsidiary secured by a Lien on Property of the Company or any
Restricted Subsidiary of the Company (excluding, in any such case, any
Debt owed to the Company or an Affiliate of the Company); or
(b) to reinvest in Additional Assets or Expansion Capital
Expenditures (including by means of an Investment in Additional Assets
or Expansion Capital Expenditures by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted
Subsidiary); provided, however, that the Net Available Cash (or any
portion thereof) from Asset Sales from the Company to any Subsidiary
must be reinvested in Additional Assets or Expansion Capital
Expenditures of the Company.
Pending application of Net Available Cash pursuant to this
covenant, which shall not be required in respect of an Asset Sale if the Net
Available Cash from such Asset Sale is less than $1 million, such Net Available
Cash shall be invested in Temporary Cash Investments or applied to temporarily
reduce revolving credit indebtedness. If the Net Available Cash from an Asset
Sale equals or exceeds $1 million, any Net Available Cash from an Asset Sale not
applied in accordance with the preceding paragraph within 270 days from the date
of the receipt of such Net Available Cash or that is not segregated from the
general funds of the Company for investment in identified Additional Assets in
respect of a project that shall have been commenced, and for which binding
contractual commitments have been entered into, prior to the end of such 270-day
period and that shall not have been completed or abandoned shall constitute
"Excess Proceeds"; provided, however, that the amount of any Net Available Cash
that ceases to be so segregated as contemplated above and any Net Available Cash
that is segregated in respect of a project that is abandoned or completed shall
also constitute "Excess Proceeds" at the time any such Net Available Cash ceases
to be so segregated or at the time the relevant project is so abandoned or
completed, as applicable; provided further, however, that the amount of any Net
Available Cash that continues to be segregated for investment and that is not
actually reinvested within 24 months from the date of the receipt of such Net
Available Cash shall also constitute "Excess Proceeds".
56
When the aggregate amount of Excess Proceeds exceeds $20.0
million (taking into account income earned on such Excess Proceeds, if any), the
Company will be required to make an offer to purchase (the "Prepayment Offer")
the Securities which offer shall be in the amount of the Allocable Excess
Proceeds, on a pro rata basis according to principal amount, at a purchase price
equal to 100% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the purchase date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), in accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Indenture. To the extent that any portion of
the amount of Net Available Cash remains after compliance with the preceding
sentence and provided that all Holders of Securities have been given the
opportunity to tender their Securities for purchase in accordance with the
Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" will mean the product of:
(a) the Excess Proceeds and
(b) a fraction,
(1) the numerator of which is the aggregate
principal amount of the Securities outstanding on
the date of the Prepayment Offer, and
(2) the denominator of which is the sum of the
aggregate principal amount of the Securities outstanding on
the date of the Prepayment Offer and the aggregate principal
amount of other Debt of the Company outstanding on the date of
the Prepayment Offer that is pari passu in right of payment
with the Securities and subject to terms and conditions in
respect of Asset Sales similar in all material respects to
this covenant and requiring the Company to make an offer to
purchase such Debt or otherwise repay such Debt at
substantially the same time as the Prepayment Offer.
Within five business days after the Company is obligated to
make a Prepayment Offer as described in the preceding paragraph, the Company
shall send a written notice, by first-class mail, to the holders of Securities,
57
accompanied by such information regarding the Company and its Subsidiaries as
the Company in good faith believes will enable such Holders to make an informed
decision with respect to such Prepayment Offer. Such notice shall state, among
other things, the purchase price and the purchase date, which shall be, subject
to any contrary requirements of applicable law, a business day no earlier than
30 days nor later than 60 days from the date such notice is mailed.
Not later than the date upon which written notice of a
Prepayment Offer is delivered to the Trustee as provided above, the Company
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Prepayment Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Sales pursuant to which such Prepayment Offer is
being made and (iii) the compliance of such allocation with the provisions of
clause (b) of the second paragraph of Section 4.06. On or before the Purchase
Date, the Company shall also irrevocably deposit with the Trustee or with the
Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) in Temporary Cash Investments (other
than in those enumerated in such clause (b) of the definition of Temporary Cash
Investments), maturing on the last day prior to the Purchase Date or on the
Purchase Date if funds are immediately available by open of business, an amount
equal to the Offer Amount to be held for payment in accordance with the
provisions of this Section. Upon the expiration of the period for which the
Prepayment Offer remains open (the "Offer Period"), the Company shall deliver to
the Trustee for cancellation the Securities or portions thereof that have been
properly tendered to and are to be accepted by the Company. The Trustee or the
Paying Agent shall, on the Purchase Date, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall
deliver the excess to the Company immediately after the expiration of the Offer
Period for application in accordance with this Section.
Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company or its agent at the address specified in the notice at least three
Business Days prior to the Purchase Date. Holders shall be entitled to withdraw
their election if the Trustee or the Company receives not later than one
Business Day prior to the Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
58
principal amount of the Security that was delivered for purchase by the Holder
and a statement that such Xxxxxx is withdrawing its election to have such
Security purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a pro rata basis for
all Securities (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased). Holders whose Securities are purchased
only in part shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
At the time the Company delivers Securities to the Trustee
that are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee or
the Paying Agent mails or delivers payment therefor to the surrendering Holder.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
SECTION 4.07. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist any consensual restriction on the right of any Restricted
Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or
other obligation owed, to the Company or any other Restricted
Subsidiary;
(b) make any loans or advances to the Company or any other
Restricted Subsidiary; or
(c) transfer any of its Property to the Company or any other
Restricted Subsidiary.
59
The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c), to restrictions:
(A) in effect on the Issue Date including
those under the Refinancing Transactions;
(B) relating to Debt of a Restricted Subsidiary and
existing at the time it became a Restricted Subsidiary if such
restriction was not created in connection with or in
anticipation of the transaction or series of transactions
pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company;
(C) that result from the Refinancing of Debt Incurred
pursuant to an agreement referred to in clause (1)(A) or (B)
above or in clause (2)(A) or (B) below, provided such
restriction is no less favorable to the Holders of Securities
in any material respect, as reasonably determined by the Board
of Directors (as evidenced by a resolution of the Board of
Directors), than those under the agreement evidencing the Debt
so Refinanced;
(D) resulting from the Incurrence of any Permitted
Debt described in Section 4.03, provided that (i) the
restriction is no less favorable to the Holders of Securities
in any material respect, as reasonably determined by the Board
of Directors (as evidenced by a resolution of the Board of
Directors), than the restrictions of the same type contained
in the Indenture and (ii) the Board of Directors determines
(as evidenced by a resolution of the Board of Directors) in
good faith that such restrictions will not impair the ability
of the Company to make payments of principal and interest on
the Securities when due;
(E) existing by reason of applicable law; or
(F) any contractual requirements incurred with
respect to Qualified Receivables Transactions relating
exclusively to a Receivables Entity that, in the good faith
determination of the Board of Directors of the Company, are
customary for Qualified Receivables Transactions; and
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(2) with respect to clause (c) only, to restrictions:
(A) relating to Debt that is permitted to be Incurred
and secured without also securing the Securities pursuant to
Sections 4.03 and 4.05 that limit the right of the debtor to
dispose of the Property securing such Debt;
(B) encumbering Property at the time such Property
was acquired by the Company or any Restricted Subsidiary, so
long as such restriction relates solely to the Property so
acquired and was not created in connection with or in
anticipation of such acquisition;
(C) resulting from customary provisions restricting
subletting or assignment of leases or customary provisions in
other agreements that restrict assignment of such agreements
or rights thereunder; or
(D) customary restrictions contained in agreements
relating to the sale or other disposition of Property limiting
the transfer of such Property pending the closing of such
sale.
SECTION 4.08. Limitation on Transactions with Affiliates. The
Company will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, conduct any business or enter into or suffer to exist any
transaction or series of transactions (including the purchase, sale, transfer,
assignment, lease, conveyance or exchange of any Property or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction"), unless:
(a) the terms of such Affiliate Transaction are:
(1) set forth in writing;
(2) in the best interest of the Company or such
Restricted Subsidiary, as the case may be; and
(3) no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that
could be obtained in a comparable arm's-length transaction
with a Person that is not an Affiliate of the Company;
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(b) if such Affiliate Transaction involves aggregate payments
or value in excess of $25.0 million, the Board of Directors (including
a majority of the disinterested members of the Board of Directors)
approves such Affiliate Transaction and, in its good faith judgment,
believes that such Affiliate Transaction complies with clauses (a)(2)
and (3) of this paragraph as evidenced by a Board Resolution promptly
delivered to the Trustee; and
(c) if such Affiliate Transaction involves aggregate payments
or value to the Affiliate in excess of $50.0 million in any 12-month
period, the Company obtains a written opinion from an Independent
Financial Advisor to the effect that the consideration to be paid or
received in connection with such Affiliate Transaction is fair, from a
financial point of view, to the Company and the Restricted
Subsidiaries, taken as a whole.
Notwithstanding the foregoing limitation, the Company or any
Restricted Subsidiary may enter into or suffer to exist the following:
(a) any transaction or series of transactions between the
Company and one or more Restricted Subsidiaries or between two or more
Restricted Subsidiaries in the ordinary course of business, provided
that no more than 5% of the total voting power of the Voting Stock (on
a fully diluted basis) of any such Restricted Subsidiary is owned by an
Affiliate of the Company (other than a Restricted Subsidiary);
(b) any Restricted Payment permitted to be made pursuant to
Section 4.04 or any Permitted Investment (other than pursuant to
clauses (a)(iii), (b), (g), (h), (i), (k) or (l) of the definition of
"Permitted Investment");
(c) the payment of compensation (including amounts paid
pursuant to employee benefit plans) for the personal services of and
related indemnities provided to officers, directors, consultants and
employees of the Company or any of the Restricted Subsidiaries, so long
as the Board of Directors in good faith shall have approved the terms
thereof and deemed the services theretofore or thereafter to be
performed for such compensation to be fair consideration therefor;
(d) loans and advances to employees made in the ordinary
course of business and consistent with the
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past practices of the Company or such Restricted Subsidiary, as the
case may be, provided that such loans and advances do not exceed $25
million in the aggregate at any one time outstanding;
(e) any transaction effected as part of a Qualified
Receivables Transaction or any transaction involving the transfer of
accounts receivable of the type specified in the definition of "Credit
Facilities" and permitted under clause (b) of Section 4.03;
(f) payments of customary fees by the Company or any of its
Restricted Subsidiaries to Xxxxxxx Xxxxx & Partners L.P. or any of its
Affiliates made for any corporate advisory services or financial
advisory, financing, underwriting or placement services or in respect
of other investment banking activities including, without limitation,
in connection with acquisitions or divestitures, which are approved by
a majority of the Board of Directors in good faith;
(g) if such Affiliate Transaction is with any Person solely in
its capacity as a holder of Debt or Capital Stock of the Company or any
of its Restricted Subsidiaries, where such Person is treated no more
favorably than any other holder of such Debt or Capital Stock of the
Company or any of its Restricted Subsidiaries; and
(h) any agreement as in effect on the Issue Date or any
amendment thereto (so long as such amendment is not disadvantageous to
the Holders of the Securities in any material respect) or any
transaction contemplated thereby.
SECTION 4.09. Limitation on Guarantees by Restricted
Subsidiaries. The Company shall not permit any Restricted Subsidiary to
Guarantee the payment of any Debt or Capital Stock of the Company (other than
Guarantees of Debt incurred under clause (a), (b), (c), (d) or (l) of Section
4.03 or Guarantees permitted pursuant to clause (j) of Section 4.03 or
Guarantees permitted by clause (s) of Section 4.03 as it relates to clause (d)
of Section 4.03), except that a Restricted Subsidiary may Guarantee Debt of the
Company provided that:
(a) such Debt and the Debt represented by such Guarantee is
permitted by Section 4.03;
(b) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the
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Indenture providing for a Guarantee of payment of the Securities by
such Restricted Subsidiary and such Guarantee of Debt of the Company:
(1) unless such Debt is a Subordinated Obligation,
shall be pari passu (or subordinate) in right of payment to
and on substantially the same terms as (or less favorable to
such Debt than) such Restricted Subsidiary's Guarantee with
respect to the Securities; and
(2) if such Debt is a Subordinated Obligation, shall
be subordinated in right of payment to such Restricted
Subsidiary's Guarantee with respect to the Securities to at
least the same extent as such Debt is subordinated to the
Securities; and
(c) such Restricted Subsidiary shall deliver to the trustee an
Opinion of Counsel to the effect that:
(1) such Guarantee of the Securities has been duly
executed and authorized; and
(2) such Guarantee of the Securities constitutes a
valid, binding and enforceable obligation of such Restricted
Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including,
without limitation, all laws relating to fraudulent transfers)
and except insofar as enforcement thereof is subject to
general principles of equity.
SECTION 4.10. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Restricted Subsidiary to, enter
into any Sale and Leaseback Transaction with respect to any Property unless:
(a) the Company or such Restricted Subsidiary would be
entitled to:
(1) Incur Debt in an amount equal to the Attributable
Debt with respect to such Sale and Leaseback Transaction
pursuant to Section 4.03; and
(2) create a Lien on such Property securing such
Attributable Debt without also securing the Securities
pursuant to Section 4.05; and
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(b) such Sale and Leaseback Transaction is effected in
compliance with Section 4.06; provided that such Sale and Leaseback
Transaction constitutes an Asset Sale.
SECTION 4.11. Designation of Restricted and Unrestricted
Subsidiaries. The Board of Directors may designate any Subsidiary of the
Company to be an Unrestricted Subsidiary if:
(a) the Subsidiary to be so designated does not own any
Capital Stock or Debt of, or own or hold any Lien on any Property of,
the Company or any other Restricted Subsidiary; and
(b) either:
(1) the Subsidiary to be so designated has total
assets of $1,000 or less; or
(2) such designation is effective immediately upon
such entity becoming a Subsidiary of the Company.
Unless so designated as an Unrestricted Subsidiary, any Person
that becomes a Subsidiary of the Company will be classified as a Restricted
Subsidiary; provided, however, that such Subsidiary shall not be designated a
Restricted Subsidiary and shall be automatically classified as an Unrestricted
Subsidiary if either of the requirements set forth in clauses (x) and (y) of the
second immediately following paragraph will not be satisfied after giving pro
forma effect to such classification as a Restricted Subsidiary or if such Person
is a Subsidiary of an Unrestricted Subsidiary.
Except as provided in the first sentence of the preceding
paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder thereof may (with the passage of time or notice or both) declare a
default thereon or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity upon the occurrence of a default with respect to any
Debt, Lien or other obligation of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary).
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if,
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immediately after giving pro forma effect to such designation, (x) the Company
could Incur at least $1.00 of additional Debt pursuant to clause (1) of the
first paragraph of Section 4.03 and (y) no Default or Event of Default shall
have occurred and be continuing or would result therefrom.
Any such designation or redesignation by the Board of
Directors will be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation or redesignation and an Officers'
Certificate that:
(a) certifies that such designation or redesignation complies
with the foregoing provisions; and
(b) gives the effective date of such designation or
redesignation,
such filing with the Trustee to occur within 45 days after the end of the fiscal
quarter of the Company in which such designation or redesignation is made (or,
in the case of a designation or redesignation made during the last fiscal
quarter of the Company's fiscal year, within 90 days after the end of such
fiscal year).
SECTION 4.12. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require the
Company to repurchase all or any part of such Holder's Securities pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
(the "Change of Control Purchase Price") equal to 101.0% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date (subject
to the right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date). If the purchase date is on
or after a record date and on or before the relevant interest payment date, the
accrued and unpaid interest, if any, will be paid to the person or entity in
whose name the Security is registered at the close of business on that record
date, and no additional interest will be payable to Holders whose Securities
shall be subject to redemption.
(b) Within 30 days following any Change of Control, the
Company shall (i) cause a notice of the Change of Control Offer to be sent at
least once to the Dow Xxxxx News Service or similar business news service in the
United States and (ii) send, by first-class mail, with a copy to the Trustee, to
each Holder of Securities, at such Holder's
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address appearing in the Security Register, a notice stating: (A) that a Change
of Control Offer is being made pursuant to this Section and that all Securities
timely tendered will be accepted for payment; (B) the Change of Control Purchase
Price and the purchase date, which shall be, subject to any contrary
requirements of applicable law, a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed (the "Change of Control Payment
Date"); (C) the circumstances and relevant facts regarding the Change of Control
(including, to the extent reasonably practicable, information with respect to
pro forma historical income, cash flow and capitalization after giving effect to
the Change of Control); and (D) the procedures that Holders of Securities must
follow in order to tender their Securities (or portions thereof) for payment and
the procedures that Holders of Securities must follow in order to withdraw an
election to tender Securities (or portions thereof) for payment.
(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company or its agent at the address specified in the notice at least three
Business Days prior to the Change of Control Payment Date. Holders shall be
entitled to withdraw their election if the Trustee or the Company receives not
later than one Business Day prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Xxxxxx is withdrawing its election to have
such Security purchased.
(d) On or prior to the Change of Control Payment Date, the
Company shall irrevocably deposit with the Trustee or with the Paying Agent (or,
if the Company or any of its Wholly Owned Subsidiaries is acting as the Paying
Agent, segregate and hold in trust) in cash an amount equal to the Change of
Control Purchase Price payable to the Holders entitled thereto, to be held for
payment in accordance with the provisions of this Section. On the Change of
Control Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof that have been properly tendered to and are to be accepted by
the Company for payment. The Trustee or the Paying Agent shall, on the Change of
Control Payment Date, mail or deliver payment to each tendering Holder of the
Change of Control Purchase Price. In the event that the aggregate Change of
Control Purchase Price is less than the amount delivered by the Company to the
Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may
be, shall deliver the
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excess to the Company immediately after the Change of Control Payment Date.
(e) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.13. Further Instruments and Acts. Upon request of
the Trustee, the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. (a) When Company May Merge or Transfer Assets.
The Company will not merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Restricted Subsidiary into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of transactions
unless:
(a) the Company will be the surviving Person (the "Surviving
Person") or the Surviving Person (if other than the Company) formed by
such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made will be
a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
(b) the Surviving Person (if other than the Company) expressly
assumes, by supplemental indenture in form satisfactory to the Trustee,
executed and delivered to the Trustee by such Surviving Person, the due
and punctual payment of the principal of, and interest on, all the
Securities, according to their tenor, and the due and punctual
performance and
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observance of all the covenants and conditions of the Indenture to be
performed by the Company;
(c) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the
Property of the Company, such Property shall have been transferred as
an entirety or virtually as an entirety to one Person;
(d) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating, for purposes of this clause (d) and clause (e) below, any
Debt that becomes, or is anticipated to become, an obligation of the
Surviving Person or any Restricted Subsidiary as a result of such
transaction or series of transactions as having been Incurred by the
Surviving Person or such Restricted Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing;
(e) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, either (i) the Company or
the Surviving Person, as the case may be, would be able to Incur at
least $1.00 of additional Debt under clause (1) of Section 4.03 or (ii)
the Surviving Person would have a Consolidated Interest Coverage Ratio
which is not less than the Consolidated Interest Coverage Ratio of the
Company immediately prior to such transaction or series of
transactions; and
(f) the Company shall deliver, or cause to be delivered, to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction and the supplemental indenture, if any,
in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction have been
satisfied.
The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of the Company under the Indenture, but
the predecessor Company in the case of:
(a) a sale, transfer, assignment, conveyance or other
disposition (unless such sale, transfer, assignment, conveyance or
other disposition is of all the assets of the Company as an entirety or
virtually as an entirety); or
69
(b) a lease,
shall not be released from any obligation to pay the principal of, and interest
on, the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. The following events shall
be "Events of Default":
(1) the Company fails to make the payment of interest on any
Security when the same becomes due and payable, and such failure
continues for a period of 30 days;
(2) the Company fails to make the payment of principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon acceleration, redemption, optional redemption, required repurchase
or otherwise;
(3) the Company fails to comply with Article 5;
(4) the Company fails to comply with any covenant or agreement
in the Securities or in this Indenture (other than a failure that is
the subject of the foregoing clauses (1), (2) or (3)) and such failure
continues for 30 days after written notice is given to the Company as
specified below;
(5) a default by the Company or any Restricted Subsidiary
under any Debt of the Company or any Restricted Subsidiary which
results in acceleration of the final maturity of such Debt, or the
failure to pay any such Debt at final maturity (giving effect to
applicable grace periods), in an aggregate amount in excess of
$35,000,000 or its foreign currency equivalent at the time;
(6) the Company or any 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;
70
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
and in each such case the order or decree remains unstayed and in
effect for 45 days; or
(8) any judgment or judgments for the payment of money in an
unsecured aggregate amount in excess of $35,000,000 or its foreign
currency equivalent at the time is entered against the Company or any
Restricted Subsidiary and shall not be waived, satisfied or discharged
for any period of 30 consecutive days during which a stay of
enforcement shall not be in effect.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until
the Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company (and in the case of such
71
notice by Holders, the Trustee) of the Default and the Company does not cure
such Default within the time specified after receipt of such notice. Such notice
must specify the Default, demand that it be remedied and state that such notice
is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default and any event that with the giving of notice or the
lapse of time would become an Event of Default, its status and what action the
Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(6) or (7) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding by notice to the Company and the Trustee, may declare the principal
of and accrued and unpaid interest to the date of acceleration on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(6) or (7) with respect to the Company occurs, the principal of
and accrued and unpaid interest on all the Securities shall, automatically and
without any action by the Trustee or any Holder, become and be immediately due
and payable. The Holders of a majority in aggregate principal amount of the
outstanding Securities by notice to the Trustee and the Company may rescind any
declaration of acceleration if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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 acquies cence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
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SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may waive an existing Default and its consequences except
(i) a Default in the payment of the principal of or interest on a Security or
(ii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in aggregate principal amount of the Securities then outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee with
respect to the Securities. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action or
following any direction hereunder, the Trustee shall be entitled to reasonable
indemnification against all losses and expenses caused by taking or not taking
such action.
SECTION 6.06. Limitation on Suits. A Security holder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Securities then outstanding shall have made a written request,
and such Holder of or Holders shall have offered reasonable indemnity,
to the Trustee to pursue a remedy; and
(3) the Trustee has failed to institute such proceeding and
has not received from the Holders of at least a majority in aggregate
principal amount of the Securities outstanding a direction inconsistent
with
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such request, within 60 days after such notice, request and offer.
The foregoing limitations on the pursuit of remedies by a
Securityholder shall not apply to a suit instituted by a Holder of Securities
for the enforcement of payment of the principal of or interest on such Security
on or after the applicable due date specified in such Security. A Securityholder
may not use this Indenture to prejudice the rights of another Securityholder or
to obtain a preference or priority over another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including rea sonable 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 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, 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 shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Xxxxxx's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed 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 liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA, and
the provisions of this Article VII shall apply to the Trustee in its role as
Registrar, Paying Agent and Security Custodian.
(i) The Trustee shall not be deemed to have notice of a
Default or an Event of Default unless (a) the Trustee has received written
notice thereof from the Company or any Holder or (b) a Trust Officer shall have
actual knowledge thereof.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
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. The Trustee may, however, in its discretion make such further
inquiry or investigation into such facts or matters as it may see fit and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care and with the consent of the Company.
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(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 its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here-under
in good faith and in accordance with the advice or opinion of such counsel.
(f) The permissive rights of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty unless so
specified herein.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity, priority or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to each Securityholder notice of the Default or Event of Default
within 30 days after it is known to a Trust Officer or written notice of it is
received by the Trustee. Except in the case of a Default or Event of Default in
payment of principal of or interest on any Security, the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days
after June 1 each year beginning with June 1,
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2002, the Trustee shall mail to each Securityholder a brief report dated as of
such June 1 that complies with TIA ss. 313(a), if and to the extent required by
such subsection. The Trustee shall also comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees) incurred by it in
connection with the acceptance and administration of this trust and the
performance of its duties hereunder. 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
unless the Company has been prejudiced thereby. The Company shall defend the
claim, and the Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
The Company need not pay for any settlement made by the Trustee without the
Company's consent, such consent not to be unreasonably withheld. All
indemnifications and releases from liability granted hereunder to the Trustee
shall extend to its officers, directors, employees, agents, successors and
assigns.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
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The Company's payment obligations pursuant to this Section
shall survive the resignation or removal of the Trustee and the discharge of
this Indenture. When the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(6) or (7) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in aggregate
principal amount of the Securities the outstanding may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee, provided that so long
as no Default or Event of Default has occurred and is continuing, the Company
shall have the right to consent to the successor Trustee, such consent not to be
unreasonably withheld. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in aggregate principal amount of the Securities then
outstanding, and such Holders do not reasonably promptly appoint a successor
Trustee, or if a vacancy exists in the office of Trustee for any reason (the
Trustee in such event being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Xxxxxxx does not take office within 60 days
after the retiring Trustee resigns or is removed,
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the retiring Trustee or the Holders of 10% in aggregate principal amount of the
Securities then outstanding may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder who has been a bona fide Holder of a Security for at least six
months may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Xxxxxx. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any such successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
(or, in the case of a corporation included in a bank holding company system, the
related bank holding company shall have) a combined capital and surplus of at
least $50,000,000 as set forth in its (or its related bank holding company's)
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
that there shall be excluded from the operation of TIA ss. 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or
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participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article III and the Company irrevocably deposits with the Trustee
funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all of its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and
the operation of Sections 6.01(5), 6.01(6), 6.01(7) and 6.01(8) (but, in the
case of Sections 6.01(6) and (7), with respect only to Restricted Subsidiaries)
and the limitations contained in clauses (e) and (f) of Article 5 ("covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises
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its covenant defeasance option, payment of the Securities may not be accelerated
because of an Event of Default specified in Sections 6.01(4) (with respect to
the covenants of Article IV identified in the immediately preceding paragraph),
6.01(5), 6.01(6), 6.01(7) and 6.01(8) (with respect only to Significant
Subsidiaries in the case of Sections 6.01(6) and 6.01(7)) or because of the
failure of the Company to comply with the limitations contained in clauses (e)
and (f) of Article 5.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.07 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(6), (7) or (8) with
respect to the Company occurs that is continuing at the end of the
period;
(4) no Default or Event of Default has occurred and is
continuing on the date of the deposit and after giving effect thereto;
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(5) the deposit does not constitute a default under any other
agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in
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accordance with this Indenture to the payment of principal of and interest on
the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the
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Securities without notice to or consent of any Security holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to
secure the Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to make any change to comply with any requirements of the
SEC in connection with qualifying, or maintaining the qualification of,
this Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for the Securities). However, without the consent of each Securityholder
affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;
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(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) impair the right of any Holder to receive payment of
principal of and interest on such Xxxxxx's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Xxxxxx's Securities;
(5) reduce the amount payable upon the redemption of any
Security under Article III or change the time at which any Security may
or shall be redeemed in accordance with Article III;
(6) reduce the premium payable upon a Change of Control or, at
any time after a Change of Control has occurred, amend the definition
of "Change of Control" or change the time at which any Change of
Control Offer must be made or at which the Securities must be
repurchased pursuant to such Change of Control Offer;
(7) at any time after the Company is obligated to make a
Prepayment Offer with the Excess Proceeds from Asset Sales, change the
time at which such Prepayment Offer must be made or at which the
Securities must be repurchased pursuant to such Prepayment Offer;
(8) make any Security payable in money other than that stated
in the Security;
(9) release any security interest that may have been granted
in favor of the Holders;
(10) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(11) subordinate the Securities to any other obligation of the
Company.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to
87
give such notice to all Securityholders, or any defect therein, shall not impair
or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver such Security to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return such
Security to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
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SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If such amendment does adversely affect the rights, duties, liabilities
or immunities of the Trustee, the Trustee may but need not sign it. In signing
such amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision that is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail or sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter)
and addressed as follows:
if to the Company:
Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
facsimile: 000-000-0000
Attention of: Xxxxxx X. Xxxxxx, Esq.
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if to the Trustee:
BNY Midwest Trust Company 0 Xxxxx XxXxxxx
Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000
facsimile: 000-000-0000
Attention of: Corporate Trust
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 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
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) except in the case of Section 3.01 under which an opinion
will not be required, an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent have been complied with;
provided, however, that with respect to matters of fact
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an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with,
Each opinion with respect to compliance with a covenant or condition provided
for in this Indenture shall be in form and substance reasonably satisfactory to
the party requesting such opinion and the party giving such opinion.
SECTION 10.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities that the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent or co-registrar may make
reasonable rules for their functions.
91
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or the State of Illinois. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 10.09. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW.
SECTION 10.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be
part of the consideration for the issue of the Securities.
SECTION 10.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
RITE AID CORPORATION,
by
---------------------------------
Name:
Title:
BNY MIDWEST TRUST COMPANY,
by
----------------------------------
Name:
Title:
APPENDIX A
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE 144A, TO
CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S AND,
SUBJECT TO THE APPLICABLE PURCHASE AGREEMENT, TO INSTITUTIONAL ACCREDITED
INVESTORS.
PROVISIONS RELATING TO INITIAL SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Cedel" means Cedel Bank, S.A., or any successor
securities clearing agency.
"Definitive Security" means a certificated Initial Security or
Exchange Security or Private Exchange Security bearing, if required, the
restricted securities legend set forth in Section 2.3(d).
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Distributed Compliance Period", with respect to any
Securities, means the period of 40 consecutive days beginning on and including
the later of (i) the day on which such Securities are first offered to persons
other than distributors (as defined in Regulation S under the Securities Act) in
reliance on Regulation S and (ii) the Issue Date with respect to such
Securities.
"Exchange Securities" means the 11 1/4% Senior Notes due 2008
to be issued pursuant to the Indenture in connection with a Registered Exchange
Offer pursuant to the Registration Agreement.
"Euroclear" means the Euroclear Clearance System or any
successor securities clearing agency.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Xxxxxxx Xxxxx Xxxxxx Inc., Credit
Suisse First Boston Corporation, X.X. Xxxxxx Securities Inc. and Fleet
Securities, Inc.
2
"Initial Securities" means the 11 1/4% Senior Notes due 2008,
to be issued from time to time, in one or more series as provided for in this
Indenture.
"Original Securities" means Initial Securities in the
aggregate principal amount of $150,000,000 issued on June 27, 2001.
"Private Exchange" means the offer by the Company, pursuant to
Section 2 of the Registration Agreement, or pursuant to any similar provision of
any other Registration Agreement, to issue and deliver to certain purchasers, in
exchange for the Initial Securities held by such purchasers as part of their
initial distribution, a like aggregate principal amount of Private Exchange
Securities.
"Private Exchange Securities" means the 11 1/4% Senior Notes
due 2008 to be issued pursuant to this Indenture in connection with a Private
Exchange pursuant to a Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated June
20, 2001, among the Company and the Initial Purchasers relating to the Original
Securities, or any similar agreement relating to any future sale of Initial
Securities by the Company.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Agreement, to certain Holders of Initial Securities,
to issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration
Rights Agreement dated June 27, 2001, among the Company and the Initial
Purchasers relating to the Original Securities, or any similar agreement
relating to any additional Initial Securities.
"Rule 144A Securities" means all Initial Securities offered
and sold to QIBs in reliance on Rule 144A.
"Securities" means the Initial Securities and the Exchange
Securities, treated as a single class.
3
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository) or any successor person
thereto, who shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement
issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to the Registration
Agreement.
"Transfer Restricted Securities" means Definitive Securities
and any other Securities that bear or are required to bear the legend set forth
in Section 2.3(c) hereto.
1.2 Other Definitions
Defined in
Term Section:
---- -------
"Agent Members"..........................................................2.1(b)
"Global Security"........................................................2.1(a)
"IAI Global Security"....................................................2.1(a)
"Regulation S" ..........................................................2.1
"Regulation S Global Security" ..........................................2.1(a)
"Rule 144A"..............................................................2.1
"Rule 144A Global Security"..............................................2.1(a)
2. The Securities
2.1 Form and Dating
The Initial Securities will be offered and sold by the
Company, from time to time, pursuant to one or more Purchase Agreements. The
Initial Securities will be resold initially only to QIBs in reliance on Rule
144A under the Securities Act ("Rule 144A") and in reliance on Regulation S
under the Securities Act ("Regulation S"). Initial Securities may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1), (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfer set forth herein.
(a) Global Securities. Initial Securities initially resold
pursuant to Rule 144A shall be issued initially in the form of one or more
permanent global Securities in definitive, fully registered form (collectively,
the "Rule 144A Global Security"), Initial Securities initially
4
resold pursuant to Regulation S shall be issued initially in the form of one or
more global securities (collectively, the "Regulation S Global Security") and,
subject to Section 2.4 hereof, Initial Securities transferred subsequent to the
initial resale thereof to IAIs shall be issued initially in the form of one or
more permanent global securities in definitive, fully registered form
(collectively, the "IAI Global Security"), in each case without interest coupons
and with the global securities legend and restricted securities legend set forth
in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the
Initial Securities represented thereby with the Securities Custodian, and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as provided in this
Indenture. The Rule 144A Global Security, IAI Global Security, and Regulation S
Global Security are collectively referred to herein as "Global Securities." The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b) and pursuant to an order of the Company, authenticate
and deliver initially one or more Global Securities that (a) shall be registered
in the name of the Depository for such Global Security or Global Securities or
the nominee of such Depository and (b) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instructions or held by the Trustee
as Securities Custodian.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as Securities
Custodian or under such Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
5
(c) Definitive Securities. Except as provided in Section 2.3
or 2.4, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of Definitive Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1)
Original Securities for original issue in an aggregate principal amount of
$150,000,000, (2) additional Initial Securities, if and when issued, in an
unlimited aggregate principal amount, and (3) the Exchange Securities or Private
Exchange Securities for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to the Registration Agreement, for a like
principal amount of Initial Securities or Private Exchange Securities, as
applicable, upon a written order of the Company signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated and whether the Securities are to be Initial Securities or
Exchange Securities.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of other
authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(ii) if such Definitive Securities bear a restricted
securities legend, they are being transferred or exchanged pursuant to
an effective registration statement under the Securities Act or
pursuant to clause (A), (B)
6
or (C) below, and are accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Securities are being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect; or
(B) if such Definitive Securities are being
transferred to the Company, a certification to that
effect; or
(C) if such Definitive Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act, (i) a
certification to that effect and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions
set forth in the legend set forth in Section 2.3(c)(i).
(b) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Security, and
such account shall be credited in accordance with such instructions with a
beneficial interest in the Global Security, and the account of the Person making
the transfer shall be debited by an amount equal to the beneficial interest in
the Global Security being transferred. In the case of a transfer of a beneficial
interest in a Global Security to an IAI, the transferee must furnish a signed
letter to the Trustee containing certain representations and agreements in the
form of Exhibit B hereto.
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in another
Global Security, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the Global Security
to which such interest is being transferred in an amount equal to the
principal amount of the interest to be so transferred, and the
Registrar shall reflect on
7
its books and records the date and a corresponding decrease in the
principal amount of the Global Security from which such interest is
being transferred.
(iii) Notwithstanding any other provisions of this Appendix A
(other than the provisions set forth in Section 2.4), a Global Security
may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such successor
Depository.
(iv) In the event that a Global Security is exchanged for
Definitive Securities pursuant to Section 2.4 prior to the consummation
of a Registered Exchange Offer or the effectiveness of a Shelf
Registration Statement with respect to such Securities, such Securities
may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of
the Initial Securities intended to ensure that such transfers comply
with Rule 144A, Regulation S or such other applicable exemption from
registration under the Securities Act, as the case may be) and such
other procedures as may from time to time be adopted by the Company.
(c) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each certificate evidencing the Global Securities and
the Definitive Securities (and all Securities issued in exchange
therefor or in substitution thereof) shall bear a legend in
substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
NOTE, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO)
OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER
CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
8
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE
OF THIS NOTE), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE) THAT IS ACQUIRING THIS NOTE
FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE
WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY
THE TRANSFEREE TO THE COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS NOTE
AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS NOTE COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)
PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL DISTRIBUTION
OF THIS SECURITY (OR ANY PREDECESSOR SECURITY), THAT IT IS AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS
HOLDING THIS NOTE FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR
(3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
(OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
Each Definitive Security will also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
9
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Security that does not bear the legends set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Security that does not bear the legends set
forth above and rescind any restriction on the transfer of
such Transfer Restricted Security,
in either case, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities, as the case may be, during the period of the
effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, all requirements
pertaining to restricted securities legends on such Initial Security or
such Private Exchange Security will cease to apply, and an Initial
Security or Private Exchange Security, as the case may be, in global
form without restricted security legends will be available to the
transferee of the beneficial interests of such Initial Securities or
Private Exchange Securities. Upon the occurrence of any of the
circumstances described in this paragraph, the Company will deliver an
Officers' Certificate to the Trustee instructing the Trustee to issue
Securities without restricted security legends.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which certain Holders of
such Initial Securities are offered Exchange Securities in exchange for
their Initial Securities, Exchange Securities in global form without
the restricted security legends will be available to Holders or
beneficial owners that exchange such Initial Securities (or beneficial
interests therein) in such
10
Registered Exchange Offer. Upon the occurrence of any of the
circumstances described in this paragraph, the Company will deliver an
Officers' Certificate to the Trustee instructing the Trustee to issue
Securities without restricted security legends.
(d) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or canceled, such Global
Security shall be returned by the Depository to the Trustee for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for Definitive
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced, and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(e) Obligations with Respect to Transfers and
Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company or the Trustee may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.06, 4.06, 4.12
and 9.05 of this Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 days before the mailing of a notice of redemption or an
offer to repurchase Securities or 15 days before an interest payment
date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is
11
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue,
and none of the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or any other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depository) of
any notice (including any notice of redemption or repurchase) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given or made only
to the registered Holders (which shall be the Depository or its nominee
in the case of a Global Security). The rights of beneficial owners in
any Global Security shall be exercised only through the Depository
subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine
12
substantial compliance as to form with the express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depository or with
the Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred
to the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depository notifies the Company that it is
unwilling or unable to continue as a Depository for such Global Security or if
at any time the Depository ceases to be a "clearing agency" registered under the
Exchange Act, and a successor Depository is not appointed by the Company within
90 days of such notice, or (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive Securities
under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depository to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations.
Definitive Securities issued in exchange for any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depository shall direct. Any Definitive Security
delivered in exchange for an interest in the Global Security shall, except as
otherwise provided by Section 2.3(d), bear the restricted securities legend set
forth in Exhibit 1 hereto.
(c) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action that a Holder
is entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make
available to the Trustee a reasonable supply of Definitive Securities in
definitive, fully registered form without interest coupons.
EXHIBIT 1
to APPENDIX A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO 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.
[Restricted Securities Legend]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE
2
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE
WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS NOTE AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE
SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS NOTE COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) PURCHASING FROM A PERSON NOT
PARTICIPATING IN THE INITIAL DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR
SECURITY), THAT IT IS AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS
HOLDING THIS NOTE FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A
NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION
S UNDER THE SECURITIES ACT.
[Definitive Securities Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]
[FORM OF FACE OF INITIAL SECURITY]
No.:__________ [up to]**$__________
11 1/4% Senior Note due 2008
CUSIP No. ______
RITE AID CORPORATION, a Delaware corporation, promises to pay
to [Cede & Co.]**, or registered assigns, the principal sum [of [ ] Dollars]*
[as set forth on the Schedule of Increases or Decreases annexed hereto]** on
July 1, 2008.
Interest Payment Dates: January 1 and July 1, commencing on
January 1, 2002.
Record Dates: June 15 and December 15.
------------------------
* Insert for Definitive Securities.
** Insert for Global Securities. If the Security is to be issued in global
form, add the Global Securities Legend from Exhibit 1 to Appendix A and the
attachment from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES -
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
2
Additional provisions of this Security are set forth on the
other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.
RITE AID CORPORATION,
by
-----------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
[TRUSTEE],
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by:_________________________
Authorized Signatory
3
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11 1/4% Senior Note due 2008
1. Interest
(a) RITE AID CORPORATION, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on January 1 and July 1 of each year, commencing
January 1, 2002. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from June
27, 2001. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate
per annum borne by the Securities plus 1% per annum, and it shall pay interest
on overdue installments of interest at the rate per annum borne by the
Securities to the extent lawful.
(b) Special Interest. The holder of this Security is entitled
to the benefits of a Exchange and Registration Rights Agreement, dated as of
June 27, 2001, among the Company and the Purchasers named therein (the
"Registration Agreement"). Capitalized terms used in this paragraph (b) but not
defined herein have the meanings assigned to them in the Registration Agreement.
In the event that (i) neither the Exchange Offer Registration Statement nor the
Shelf Registration Statement, as the case may be, is filed with the Commission
on or prior to the date which is 90 days following the date of the original
issuance of the Securities, (ii) the Exchange Offer Registration Statement or
the Shelf Registration Statement, as the case may be, is not declared effective
within 180 days after the original issuance of the Securities, (iii) if the
Exchange Offer Registration Statement is declared effective, the Registered
Exchange Offer is not consummated on or prior to 210 days after the date of the
original issuance of Securities, (iv) if the Company is required to file the
Shelf Registration Statement in accordance with Section 2 of the Registration
Agreement, the Company does not so file the Shelf Registration Statement on or
prior to the 30th day after the Company's obligation to file such Shelf
Registration Statement arises, (v) the applicable Registration Statement is
filed and declared effective but shall thereafter cease to be effective (at any
time that the Company is obligated to maintain the effectiveness thereof)
without being again effective within 30 days or being succeeded within 30 days
by an additional
4
Registration Statement filed and declared effective, provided that such 30-day
period shall toll during a Suspension Period, or (vi) the periods referred to in
the second paragraph of Section 2(b) of the Registration Agreement exceed, in
the aggregate, 75 days during any 365-day period (each such event referred to in
clauses (i) through (vi), a "Registration Default"), interest (the "Special
Interest") shall accrue (in addition to stated interest on the Securities) from
and including the date on which the first such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured, at
a rate of 0.25% per annum on the applicable principal amount of Securities held
by such Holder for the first 90-day period immediately following the occurrence
of a Registration Default, and such rate will increase by an additional 0.25%
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, provided that the maximum additional rate may in no event
exceed 0.50% per annum. The Special Interest will be payable in cash
semiannually in arrears each January 1 and July 1.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the December 15 or June 15 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a Definitive Security (including principal and interest), by mailing
a check to the registered address of each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder of at
least $1,000,000 aggregate principal amount of Securities, by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).
5
3. Paying Agent and Registrar
Initially, BNY Midwest Trust Company, an Illinois trust
company (the "Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 27, 2001 (the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
xx.xx. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA").
Terms defined in the Indenture and not defined in the Securities have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are senior unsecured obligations of the
Company. This Security is one of the Original Securities referred to in the
Indenture issued in an aggregate principal amount of $150,000,000. The
Securities include the Original Securities, an unlimited aggregate principal
amount of additional Initial Securities that may be issued under the Indenture,
and any Exchange Securities issued in exchange for Initial Securities. The
Original Securities, such additional Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, make certain Investments and
other Restricted Payments, pay dividends and other distributions, incur Debt,
enter into consensual restrictions upon the payment of certain dividends and
distributions by such Restricted Subsidiaries, enter into or permit certain
transactions with Affiliates, create or incur Liens and make Asset Sales. The
Indenture also imposes limitations on the ability of the Company to consolidate
or merge with or into any other Person or sell, transfer, assign, lease, convey
or otherwise dispose of all or substantially all of the Property of the Company.
5. Optional Redemption
The Company may choose to redeem the Securities at any time.
If it does so, it may redeem all or any portion of
6
the Securities, at once or over time, after giving the required notice under the
Indenture.
To redeem the Securities prior to July 1, 2005, the Company
must pay a redemption price equal to 100% of the principal amount of the
Securities to be redeemed plus the Applicable Premium as of, and accrued and
unpaid interest, if any, to, the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of redemption).
Any notice to holders of Securities of such a redemption needs to include the
appropriate calculation of the redemption price, but does not need to include
the redemption price itself. The actual redemption price must be set forth in an
Officers' certificate delivered to the Trustee no later than two business days
prior to the redemption date.
"Applicable Premium" means, with respect to any Security on
any redemption date, the greater of (1) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such redemption date of
(1) the redemption price of such Security at July 1, 2005 (such redemption price
being set forth in the table below) plus (2) all required interest payments due
on such Security through July 1, 2005 (excluding accrued but unpaid interest),
computed using a discount rate equal to the Treasury Rate on such redemption
date plus 75 basis points over (B) the principal amount of such Security.
"Treasury Rate" means, as of any redemption date, the yield to
maturity as of such redemption date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to July 1, 2005; provided,
however, that if the period from the redemption date to July 1, 2005 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
On and after July 1, 2005, the Company may redeem the
Securities in whole at any time or in part from time to time at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive
7
interest due on the relevant interest payment date that is on or prior to the
date of redemption), if redeemed during the 12-month period beginning on July 1
of the years set forth below:
Redemption
Period Price
------ ----------
2005................................................... 105.625%
2006................................................... 102.813%
2007................................................... 100.000%
Notwithstanding the foregoing, at any time and from time to
time prior to July 1, 2004, the Company may redeem up to 35% of the original
aggregate principal amount of the Securities (including Securities issued after
June 27, 2001) with the proceeds from one or more Equity Offerings by the
Company, at a redemption price equal to 111.25% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption); provided, however, that after giving effect to any
such redemption, at least 65% of the original aggregate principal amount of the
Securities (including Securities issued after June 27, 2001) remains
outstanding. Any such redemption shall be made within 75 days of such Equity
Offering.
If the optional redemption date is on or after a record date
and on or before the relevant interest payment date, the accrued and unpaid
interest if any, will be paid to the person or entity in whose name the Security
is registered at the close of business on that record date, and no additional
interest will be payable to holders whose Securities shall be subject to
redemption.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is
8
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
8. (a) Repurchase of Securities at the Option of Holders upon Change of
Control
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions specified in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. (b) Prepayment Offer Upon Asset Sale
When the aggregate amount of Excess Proceeds exceeds $20.0
million (taking into acccount income earned on such Excess Proceeds, if any),
the Company will be required to make an offer to purchase (the "Prepayment
Offer") the Securities, which offer shall be in the amount of the Allocable
Excess Proceeds, on a pro rata basis according to principal amount at maturity,
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture. To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided that all Holders have been
given the opportunity to tender their Securities for purchase in accordance with
the Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose premitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer
9
documents and to pay any taxes required by law or permitted by the Indenture.
The Registrar need not register the transfer of or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or to transfer or exchange
any Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Guarantees with respect to the
Securities; (v) to secure the Securities; (vi) to add additional covenants or to
surrender rights and
10
powers conferred on the Company; (vii) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; or (viii) to make any change that does not adversely affect the rights of
any Securityholder.
14. 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 the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be immediately due and payable. Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities being immediately due
and payable upon the occurrence of such Events of Default without any further
act of the Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power under the Indenture. The Holders of a
majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a
11
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the considera tion for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
20. 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 Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon
written request and without charge to the Holder a copy of the Indenture which
has in it the text of this Security.
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint as agent to transfer this
Security 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 other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) that purchases for its
own account or for the account of a qualified
institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in
13
each case pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the
Securities Act of 1933; or
(5) [ ] to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) 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 the
Company); or
(6) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.
--------------------------
Your Signature
Signature Guarantee:
Date: ___________________ __________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
-------------------------------------------------------------------------------
14
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized
Amount of this Amount of this Security following signatory of
Global Security Global Security such decrease or Trustee or
increase Securities
Custodian
16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 4.06 (Asset Sale) or 4.12 (Change of Control)
of the Indenture, check the box:
---
/ /
---
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or 4.12 of the
Indenture, state the amount:
$
Date: __________________ Your Signature: _______________________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a
participant in a recognized signature
guaranty medallion program or other
signature guarantor acceptable to the
Trustee.
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY]
No.___________ [Up to]** $__________
11 1/4% Senior Note due 2008
CUSIP No. ______
RITE AID CORPORATION, a Delaware corporation, promises to pay
to [Cede & Co.]**, or registered assigns, the principal sum [of [ ] Dollars]*
[as set forth on the Schedule of Increases or Decreases annexed hereto]** on
July 1, 2008.
Interest Payment Dates: January 1 and July 1, commencing on
January 1, 2002.
Record Dates: June 15 and December 15.
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* Insert for Definitive Securities.
** Insert for Global Securities. If the Security is to be issued in global
form, add the Global Securities Legend from Exhibit 1 to Appendix A and the
attachment from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES -
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY."
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Additional provisions of this Security are set forth on the
other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.
RITE AID CORPORATION,
by
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Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
[TRUSTEE],
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by:
-----------------------
Authorized Signatory
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[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11 1/4% Senior Note due 2008
1. Interest.
RITE AID CORPORATION, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on January 1 and July 1 of each year, commencing
January 1, 2002. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from June
27, 2001. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate
per annum borne by the Securities plus 1% per annum, and it shall pay interest
on overdue installments of interest at the rate per annum borne by the
Securities to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the December 15 or June 15 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a Definitive Security (including principal and interest), by mailing
a check to the registered address of each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder of at
least $1,000,000 aggregate principal amount of Securities, by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).
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3. Paying Agent and Registrar
Initially, BNY Midwest Trust Company, an Illinois trust
company (the "Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 27, 2001 (the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
xx.xx. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA").
Terms defined in the Indenture and not defined in the Securities have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are senior unsecured obligations of the
Company. This Security is one of the Exchange Securities referred to in the
Indenture issued in exchange for Initial Securities. The Securities include the
Exchange Securities, the Original Securities in the aggregate principal amount
of $150,000,000 and up to an unlimited aggregate principal amount of additional
Initial Securities. The Exchange Securities, the Original Securities and such
additional Initial Securities are treated as a single class of securities under
the Indenture. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Debt, enter into consensual restrictions upon the payment
of certain dividends and distributions by such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates, create or incur Liens and
make Asset Sales. The Indenture also imposes limitations on the ability of the
Company to consolidate or merge with or into any other Person or sell, transfer,
assign, lease, convey or otherwise dispose of all or substantially all of the
Property of the Company.
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5. Optional Redemption
The Company may choose to redeem the Securities at any time.
If it does so, it may redeem all or any portion of the Securities, at once or
over time, after giving the required notice under the Indenture.
To redeem the Securities prior to July 1, 2005, the Company
must pay a redemption price equal to 100% of the principal amount of the
Securities to be redeemed plus the Applicable Premium as of, and accrued and
unpaid interest, if any, to, the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of redemption).
Any notice to holders of Securities of such a redemption needs to include the
appropriate calculation of the redemption price, but does not need to include
the redemption price itself. The actual redemption price must be set forth in an
Officers' certificate delivered to the Trustee no later than two business days
prior to the redemption date.
"Applicable Premium" means, with respect to any Security on
any redemption date, the greater of (1) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such redemption date of
(1) the redemption price of such Security at July 1, 2005 (such redemption price
being set forth in the table below) plus (2) all required interest payments due
on such Security through July 1, 2005 (excluding accrued but unpaid interest),
computed using a discount rate equal to the Treasury Rate on such redemption
date plus 75 basis points over (B) the principal amount of such Security.
"Treasury Rate" means, as of any redemption date, the yield to
maturity as of such redemption date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to July 1, 2005; provided,
however, that if the period from the redemption date to July 1, 2005 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
On and after July 1, 2005, the Company may redeem the
Securities in whole at any time or in part from time to
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time at the following redemption prices (expressed in percentages of principal
amount), plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption), if redeemed during the 12-month period beginning on
July 1 of the years set forth below:
Redemption
Period Price
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2005............................................... 105.625%
2006............................................... 102.813%
2007 and thereafter................................ 100.000%
Notwithstanding the foregoing, at any time and from time to
time prior to July 1, 2004, the Company may redeem up to 35% of the original
aggregate principal amount of the Securities (including Securities issued after
June 27, 2001) with the proceeds from one or more Equity Offerings by the
Company, at a redemption price equal to 111.25% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption); provided, however, that after giving effect to any
such redemption, at least 65% of the original aggregate principal amount of the
Securities (including Securities issued after June 27, 2001) remains
outstanding. Any such redemption shall be made within 75 days of such Equity
Offering.
If the optional redemption date is on or after a record date
and on or before the relevant interest payment date, the accrued and unpaid
interest, if any, will be paid to the person or entity in whose name the
Security is registered at the close of business on that record date, and no
additional interest will be payable to holders whose Securities shall be subject
to redemption.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations
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larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
8. (a) Repurchase of Securities at the Option of Holders upon Change of
Control
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions specified in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. (b) Prepayment Offer Upon Asset Sale
When the aggregate amount of Excess Proceeds exceeds $20.0
million (taking into acccount income earned on such Excess Proceeds, if any),
the Company will be required to make an offer to purchase (the "Prepayment
Offer") the Securities, which offer shall be in the amount of the Allocable
Excess Proceeds, on a pro rata basis according to principal amount at maturity,
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture. To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided that all Holders have been
given the opportunity to tender their Securities for purchase in accordance with
the Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose premitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.
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9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture,
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without the consent of any Holder of Securities, the Company and the Trustee may
amend the Indenture or the Securities (i) to cure any ambiguity, omission,
defect or inconsistency; (ii) to comply with Article V of the Indenture; (iii)
to provide for uncertificated Securities in addition to or in place of
certificated Securities; (iv) to add Guarantees with respect to the Securities;
(v) to secure the Securities; (vi) to add additional covenants or to surrender
rights and powers conferred on the Company; (vii) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; or (viii) to make any change that does not adversely
affect the rights of any Securityholder.
14. 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 the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be immediately due and payable. Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities being immediately due
and payable upon the occurrence of such Events of Default without any further
act of the Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power under the Indenture. The Holders of a
majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
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16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the considera tion for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
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19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
20. 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 Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon
written request and without charge to the Holder a copy of the Indenture which
has in it the text of this Security.
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint as agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
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Date: ________________ Your Signature: ______________________________________
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Sign exactly as your name appears on the other side of this Security. Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program or other signature guarantor acceptable to the Trustee.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.12 (Change
of Control) of the Indenture, check the box:
---
/ /
---
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or 4.12 of the
Indenture, state the amount:
$
Date: __________________ Your Signature: ___________________________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a
participant in a recognized signature
guaranty medallion program or other
signature guarantor acceptable to the
Trustee.
EXHIBIT B
Form of
Transferee Letter of Representation
[Company]
In care of
[ ]
[ ]
[ ]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal
amount of the 11 1/4% Senior Notes due 2008 (the "Securities") of Rite Aid
Corporation (the "Company").
Upon transfer, the Securities would be registered in the name of the new
beneficial owner as follows:
Name:________________________
Address:_____________________
Taxpayer ID Number:__________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We 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 Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing
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Securities to offer, sell or otherwise transfer such Securities prior to the
date that is two years after the later of the date of original issue and the
last date on which the Company or any affiliate of the Company was the owner of
such Securities (or any predecessor thereto) (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a registration
statement that has been declared effective under the Securities Act, (c) in a
transaction complying with the requirements of Rule 144A under the Securities
Act ("Rule 144A"), to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that is purchasing for its own
account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Securities
of $100,000, or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Securities
is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities Act.
Each purchaser acknowledges that the Company and the Trustee reserve the right
prior to the offer, sale or other transfer prior to the Resale Restriction
Termination Date of the
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Securities pursuant to clause (d), (e) or (f) above to require the delivery of
an opinion of counsel, certifications or other information satisfactory to the
Company and the Trustee.
TRANSFEREE:_________________,
by:_______________________
