Exhibit 4.1
FORM OF FIRST SUPPLEMENTAL INDENTURE AND WAIVER
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This First Supplemental Indenture and Waiver, dated as of September 13, 2005
(this "First Supplemental Indenture and Waiver"), among Fedders Corporation,
Fedders North America, Inc. (together with its successors and assigns, the
"Company"), the Guarantors named in the Indenture (the "Guarantors") and U.S.
Bank National Association, as Trustee under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the Guarantors, including Fedders Corporation,
and the Trustee have duly executed and delivered an Indenture, dated as of March
8, 2004 (as amended, supplemented, waived or otherwise modified, the
"Indenture"), providing for the issuance of an aggregate principal amount of
$155,000,000 of 9.875% Senior Notes due 2014 of the Company (the "Securities");
WHEREAS, Section 9.02 of the Indenture provides that, with the consent
of the Holders of a majority in aggregate principal amount of the outstanding
Securities, and when authorized by a resolution of the Board of Directors and
the boards of directors of the Guarantors, the Company, Fedders Corporation, the
Guarantors and the Trustee may enter into an indenture supplemental to the
Indenture for the purpose of waiving, amending or supplementing the Indenture or
the Securities.
WHEREAS, the Company has received the written consent from Holders (as
defined in the Indenture) of a majority in aggregate principal amount of the
outstanding Securities to certain waivers of and amendments to the Indenture
upon the terms and subject to the conditions set forth in the consent form
provided to such holders;
WHEREAS, the Board of Directors (as defined in the Indenture) has by
resolution dated September 9, 2005 authorized the execution and delivery of this
First Supplemental Indenture and Waiver dated September 13, 2005;
WHEREAS, the boards of directors of the Guarantors, including Fedders
Corporation, have by resolution dated September 9, 2005 each authorized the
execution and delivery of this First Supplemental Indenture and Waiver dated
September 13, 2005; and
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, Fedders
Corporation, the Guarantors, the Company and the Trustee mutually covenant and
agree for the equal and ratable benefit of the Holders of the Securities as
follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Defined Terms. As used in this First Supplemental Indenture
and Waiver, terms defined in the Indenture or in the preamble or recital hereto
are used herein as therein defined. The words "herein," "hereof" and "hereby"
and other words of similar import used in this First Supplemental Indenture and
Waiver refer to this First Supplemental Indenture and Waiver as a whole and not
to any particular section hereof.
ARTICLE II
AMENDMENTS
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SECTION 2.1 Amendments to the Definitions in the Indenture and the
Securities.
(a) Section 1.01 of the Indenture is hereby amended by
inserting the following terms:
(i) "Fedders Corporation Board of Directors" means
the board of directors of Fedders Corporation or any authorized
committee of such board of directors.
(ii) "Pant Nagar Facility" means the manufacturing
facility proposed to be built by Universal Comfort Products Private,
Ltd in Pant Nagar, Uttaranchal State, India.
(iii) "Quarterly Conference Call" means quarterly
earnings conference calls with the Holders to update the Holders on the
performance of Fedders Corporation and the Company, which conference
calls shall commence for the quarterly period ended September 30, 2005
and include a question and answer period.
(b) Section 1.01 of the Indenture is hereby amended by
amending and restating the terms set forth below in their entirety as follows:
(i) "Affiliate" means any of the following: (i) any
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with Fedders Corporation or the
Company; (ii) any spouse, immediate family member or other relative who
has the same principal residence as any Person described in clause (i)
above; (iii) any trust in which any such Person described in clause (i)
or (ii) above has a beneficial interest; and (iv) any corporation or
other organization of which any such Person described above
collectively owns 10% or more of the equity of such entity.
(ii) "Asset Sale" means the sale, lease, conveyance
or other disposition by Fedders Corporation, the Company or a
Restricted Subsidiary or any Non-FNA Subsidiary, in a single
transaction or in a series of related transactions, including any
disposition by means of a merger, consolidation or similar transaction
of (1) any share of Capital Stock of a Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than Fedders Corporation, the Company or a
Restricted Subsidiary, or a Non-FNA Subsidiary, as the case may be);
(2) all or substantially all the assets of any division or line of
business of Fedders Corporation, the Company or any Restricted
Subsidiary, or a Non-FNA Subsidiary, as the case may be; (3) any other
assets of Fedders Corporation, the Company or any Restricted
Subsidiary, or a Non-FNA Subsidiary, as the case may be, outside the
ordinary course of business of such Person; provided that Asset Sales
will not include such sales, leases, conveyances or dispositions in
connection with (i) the surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of
any kind; (ii) the sale of inventory in the ordinary course of
business; (iii) a sale-leaseback of assets within one year following
the acquisition of such assets; (iv) the grant of any license of
patents, trademarks, registration therefor and other similar
intellectual property; (v) a transfer of assets by Fedders Corporation,
the Company or a Restricted Subsidiary to Fedders Corporation, the
Company or a Restricted Subsidiary; (vi) the designation of a
Restricted Subsidiary as a Non-Restricted Subsidiary pursuant to
Section 4.16; (vii) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of Fedders Corporation or the
Company as permitted under Section 5.01; (viii) the sale or disposition
of obsolete equipment or other obsolete assets; (ix) Restricted
Payments permitted by Section 4.06; (x) the exchange of assets for
other non-cash assets that (a) are useful in the business of Fedders
Corporation and its Subsidiaries and (b) have a fair market value at
least equal to the fair market value of the assets being exchanged (as
determined in good faith by the Fedders Corporation Board of Directors
or the board of directors of the Subsidiary of Fedders Corporation
which owns such assets); or (xi) a transfer of assets by a Non-FNA
Subsidiary (other than any Restricted Subsidiaries) to a Non-FNA
Subsidiary (other than any Restricted Subsidiaries).
(iii) "Change of Control" means the occurrence of any
of the following: (i) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Permitted Holders, is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of more than 50% of the total Voting Stock of the Company or of Fedders
Corporation; or (ii) the Company or Fedders Corporation consolidates
with, or merges with or into, another person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person
consolidates with, or merges with or into, the Company or Fedders
Corporation, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company or of Fedders Corporation is
converted into or exchanged for cash, securities or other property,
other than any such transaction where (A) the outstanding Voting Stock
of the Company or of Fedders Corporation is converted into or exchanged
for (1) Voting Stock (other than Disqualified Stock) of the surviving
or transferee corporation or (2) cash, securities and other property in
an amount which could be paid by the Company as a Restricted Payment
under the Indenture and (B) immediately after such transaction no
"person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), excluding the Permitted Holders, is the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total Voting
Stock of the surviving or transferee corporation; or (iii) during any
consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors or the Fedders Corporation
Board of Directors (together with any new directors whose election by
the Fedders Corporation's Board of Directors or the Board of Directors,
as the case may be, or whose nomination for election by the
stockholders of Fedders Corporation or the Company, as the case may be,
was approved by a vote of a majority of the directors then still in
office who are entitled to vote to elect such new director and were
either directors at the beginning of such period or persons whose
election as directors or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors or the Fedders Corporation Board of Directors then in office.
(iv) "Consolidated Interest Expense" means, for any
given period and Person, the aggregate of (i) the interest expense in
respect of all Indebtedness of such Person and the Restricted
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP (including amortization of original issue discount
on any such Indebtedness, all non-cash interest payments, the interest
portion of any deferred payment obligation and the interest component
of capital lease obligations, but excluding amortization of deferred
financing fees if such amortization would otherwise be included in
interest expense) and (ii) the product of (a) all cash dividend
payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) on any series of Preferred Stock of such
Person and the Restricted Subsidiaries payable to a party other than
Fedders Corporation or a wholly owned Subsidiary of Fedders
Corporation, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed
as a decimal, on a consolidated basis and in accordance with GAAP;
provided, however, that for the purpose of the Cash Flow Coverage
Ratio, Consolidated Interest Expense shall be calculated on a Pro Forma
Basis.
(v) "Consolidated Net Income" means, for any given
period and Person, the aggregate of the Net Income of such Person, and
the Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided, however, that: (i) the
Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded;
(ii) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person; (iii)
the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (which has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders; (iv) the
cumulative effect of a change in accounting principles shall be
excluded; (v) income or loss attributable to discontinued operations
shall be excluded; (vi) all other extraordinary, unusual or
nonrecurring gains or losses shall be excluded; (vii) non-cash gains
and losses from foreign currency translation shall be excluded; (viii)
any write down or write off of intangible assets pursuant to the
operation of SFAS 142 shall be excluded; (ix) intentionally omitted;
and (x) any expenses or charges related to the offering of the
Securities, including the writeoff of deferred financing costs, the
payment of redemption or other premiums and any other loss on the early
extinguishment of Indebtedness shall be excluded; provided, however,
that for purposes of determining the Cash Flow Coverage Ratio,
Consolidated Net Income shall be calculated on a Pro Forma Basis.
(vi) Intentionally Omitted.
(vii) "Foreign Subsidiary" means any Restricted
Subsidiary of the Company or any Subsidiary of Fedders Corporation that
is not organized under the laws of the United States of America of any
State thereof or the District of Columbia.
(viii) "Investment" means any capital contribution
to, or other debt or equity investment in, any Person. For the purposes
of Section 4.06, the amount of any Investment shall be the original
cost of such Investment plus the cost of all additional Investments by
Fedders Corporation, the Company or any of the Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in connection with
such Investment or any other amounts received by Fedders Corporation,
the Company or any Restricted Subsidiary in respect of such Investment
to the extent not included in Consolidated Net Income.
(ix) "Other Permitted Indebtedness" means (i)
Indebtedness of Fedders Corporation, the Company and the Restricted
Subsidiaries existing as of the Issue Date and all related Obligations
as in effect on such date; (ii) Indebtedness of Fedders Corporation,
the Company and the Restricted Subsidiaries in respect of bankers
acceptances and letters of credit (including, without limitation,
letters of credit in respect of workers' compensation claims) issued in
the ordinary course of business, or other Indebtedness in respect of
reimbursement-type obligations regarding workers' compensation claims;
(iii) Refinancing Indebtedness; provided that: (A) the principal amount
of such Refinancing Indebtedness shall not exceed the outstanding
principal amount of Indebtedness (including unused commitments)
extended, refinanced, renewed, replaced, substituted or refunded plus
any amounts incurred to pay premiums, fees and expenses in connection
therewith, (B) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Indebtedness being extended, refinanced,
renewed, replaced, substituted or refunded and (C) a Restricted
Subsidiary that is not a Subsidiary Guarantor may not refinance
Indebtedness of Fedders Corporation, the Company or of any Subsidiary
Guarantor; (iv) intercompany Indebtedness of and among Fedders
Corporation, the Company and the Restricted Subsidiaries (excluding
guarantees by Restricted Subsidiaries of Indebtedness of Fedders
Corporation or the Company not issued in compliance with Section 4.19);
(v) Indebtedness of any Non-Restricted Subsidiary created after the
Issue Date; provided that such Indebtedness is nonrecourse to Fedders
Corporation, the Company and the Restricted Subsidiaries and Fedders
Corporation, the Company and the Restricted Subsidiaries have no
Obligations with respect to such Indebtedness; (vi) Indebtedness of
Fedders Corporation, the Company and the Restricted Subsidiaries under
Hedging Obligations; (vii) Indebtedness of Fedders Corporation, the
Company and the Restricted Subsidiaries arising from the honoring by a
bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight overdrafts,
which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business; (viii)
guarantees by a Restricted Subsidiary of Indebtedness of Fedders
Corporation or the Company if the Indebtedness so guaranteed is
permitted under this Indenture and the Securities are guaranteed by
such Restricted Subsidiary to the extent required by Section 4.19; (ix)
Indebtedness of Fedders Corporation, the Company and the Restricted
Subsidiaries in connection with performance, surety, statutory, appeal
or similar bonds in the ordinary course of business; (x) intentionally
omitted; (xi) the Existing Notes (but no Refinancing Indebtedness in
respect thereof); or (xii) guarantees by Fedders Corporation of not
more than $4,000,000 principal amount of Indebtedness to be incurred by
Universal Comfort Products Private, Ltd for the purpose of financing
the construction of the Pant Nagar Facility.
(x) "Permitted Liens" means with respect to Fedders
Corporation, the Company and its Restricted Subsidiaries, (i) Liens for
taxes, assessments, governmental charges or claims which are being
contested in good faith by appropriate proceedings promptly instituted
and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall
have been made therefor; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or
other appropriate provision, if any, as shall be required in conformity
with GAAP shall have been made therefor; (iii) Liens incurred on
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred on deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, government contracts, performance and return of money
bonds and other obligations of a like nature incurred in the ordinary
course of business (exclusive of obligations for the payment of
borrowed money); (v) easements, rights-of-way, zoning or other
restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect
with the business of Fedders Corporation, the Company or any of the
Restricted Subsidiaries incurred in the ordinary course of business;
(vi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with
the importation of goods; (vii) judgment and attachment Liens not
giving rise to an Event of Default; (viii) leases or subleases granted
to others not interfering in any material respect with the business of
Fedders Corporation, the Company or any of the Restricted Subsidiaries;
(ix) Liens securing Indebtedness under Hedging Obligations; (x) Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements; (xi) Liens arising
out of consignment or similar arrangements for the sale of goods
entered into by Fedders Corporation, the Company or the Restricted
Subsidiaries in the ordinary course of business; (xii) Liens arising
from filing Uniform Commercial Code financing statements regarding
leases; (xiii) Liens existing on the Issue Date and any extensions,
refinancings, renewals, replacements, substitutions or refundings
thereof; (xiv) any Lien granted to the Trustee and any substantially
equivalent Lien granted to any trustee or similar institution under any
indenture for the Existing Notes or any Senior Indebtedness permitted
by the terms of this Indenture; (xv) Liens securing Indebtedness of
Fedders Corporation, the Company or a Subsidiary Guarantor if such
Indebtedness is permitted to be incurred pursuant to Section
4.04(b)(i); (xvi) Liens securing Indebtedness of Fedders Corporation,
the Company and the Restricted Subsidiaries in connection with capital
leases, sale and leaseback transactions, purchase money obligations,
capital expenditures or similar financing transactions, which
Indebtedness is permitted under Section 4.04 or 4.18; (xvii) Liens on
property existing at the time of acquisition thereof by Fedders
Corporation, the Company or a Restricted Subsidiary; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(xviii) Liens securing Senior Indebtedness of Fedders Corporation, the
Company or a Restricted Subsidiary; provided, however, that the
aggregate amount of Senior Indebtedness secured by a Lien pursuant to
this clause (xviii) shall not exceed $25.0 million outstanding at any
time; provided further, however, that Liens outstanding pursuant to any
other clause of this definition shall not be counted for purposes of
this calculation if not outstanding pursuant to this clause (xviii);
and (xix) additional Liens at any one time outstanding in respect of
properties or assets where aggregate fair market value does not exceed
$2,000,000 (the fair market value to be determined on the date such
Lien is granted on such properties or assets).
(xi) "Refinancing Indebtedness" means Indebtedness of
Fedders Corporation, the Company and the Restricted Subsidiaries issued
or given in exchange for, or the proceeds of which are used to, extend,
refinance, renew, replace, substitute for or refund the Securities or
Indebtedness contemplated by clause (i) of the definition of Other
Permitted Indebtedness or any Indebtedness issued to so extend,
refinance, renew, replace, substitute for or refund such Indebtedness.
(xii) "Restricted Investments" means any Investment
in any Person; provided that Restricted Investments will not include:
(i) Investments in marketable securities and other negotiable
instruments permitted by this Indenture; (ii) Investments in Fedders
Corporation or the Company; (iii) Investments in any Restricted
Subsidiary or in a Person that becomes a Restricted Subsidiary as a
result of such investment (provided that any Investment in a Restricted
Subsidiary or in a Person that becomes a Restricted Subsidiary is made
for fair market value as determined by the Board of Directors in good
faith)); (iv) Investments which existed on the Issue Date; (v)
Investments in joint ventures not to exceed in aggregate $5 million
outstanding at any time; (vi) Receivables owing to Fedders Corporation,
the Company or any Restricted Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as Fedders Corporation, the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (vii) 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; (viii) loans or advances to employees made
in the ordinary course of business consistent with past practices of
Fedders Corporation, the Company or such Restricted Subsidiary; (ix)
stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Fedders
Corporation, the Company or any Restricted Subsidiary or in
satisfaction of judgments; (x) Investments acquired by Fedders
Corporation, the Company or any of its Restricted Subsidiaries (A) in
exchange for any Investment or accounts receivable held by Fedders
Corporation, the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization
or recapitalization of the issuer of such other Investment or accounts
receivable or (B) as a result of a foreclosure by Fedders Corporation,
the Company or any of its Restricted Subsidiaries with respect to any
secured Investment or other transfer of title with respect to any
secured Investment in default; (xi) Investments consisting of prepaid
expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits made
in the ordinary course of business by Fedders Corporation, the Company
or any Restricted Subsidiary; (xii) investments consisting of Hedging
Obligations otherwise permitted under Section 4.04; (xiii) extensions,
modifications or renewals of any Investments existing on the Issue
Date; (xiv) Investments made in exchange for Capital Stock (other than
Disqualified Stock) of the Company or Fedders Corporation or (xv)
investments in Universal Comfort Products Private, Ltd not to exceed
$2,000,000 for the purpose of financing the construction of the Pant
Nagar Facility. The amount of any Restricted Investment shall be the
amount of cash and the fair market value at the time of transfer of all
other property (as determined by the Fedders Corporation Board of
Directors or the Board of Directors, as the case may be, in good faith)
initially invested or paid for such Restricted Investment, plus all
additions thereto, without any adjustments for increases or decreases
in value of or write-ups, write-downs or write-offs with respect to,
such Restricted Investment.
(xiii) "Restricted Subsidiary" means: (i) any
Subsidiary of Fedders Corporation other than Fedders Indoor Air Quality
(Suzhou) Company Ltd., Quanzhou Melcor Xxx Xx Thermoelectric Company,
Ltd., Xxxx Xxxxxxx Xxxx Xxxx Air Conditioner Compressor Co., Ltd.,
Fedders Asia Ptd. Ltd., Fedders Europe, S.L., Fedders Suning Nanjing
Co. Ltd., Trion Limited, FC Acquisition Corp., Fedders Xxxxxx, Xxxxxxx
International Air Conditioning PVT LTD., Fedders Management GmbH,
Fedders GmbH & Co. KG, Xxxxxx GmbH, Trion GmbH, Universal Comfort
Products Pvt. Ltd., Fedders Xinle Co. Ltd., Fedders Ningbo
International Trading Co. Ltd., Fedders Trading Co., Ltd., Fedders R&D
Center, Xxxxxxx Xxxxxxxx, Xxxxxxx Shanghai Co., Ltd., Fedders Mauritius
Co Inc., Fedders Investment Corporation, and any subsidiary of such
companies whether now existing or hereinafter created and (ii) any
other Subsidiary of Fedders Corporation or the Company formed, acquired
or existing after the Issue Date that is designated as a "Restricted
Subsidiary" by Fedders Corporation or the Company pursuant to a
resolution approved by a majority of the Fedders Corporation Board of
Directors or the Board of Directors, as the case may be; provided,
however, that the term Restricted Subsidiary shall not include any
Subsidiary of Fedders Corporation or the Company that has been
redesignated by Fedders Corporation or the Company pursuant to a
resolution approved by a majority of the Fedders Corporation Board of
Directors or the Board of Directors, as the case may be, as a
Non-Restricted Subsidiary in accordance with Section 4.16 unless such
Subsidiary shall have been subsequently redesignated a Restricted
Subsidiary in accordance with clause (ii) of this definition. The
Company is deemed to be a Restricted Subsidiary for all purposes of the
Indenture.
(xiv) "Senior Indebtedness" means the principal of,
premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on any
Indebtedness of Fedders Corporation or the Company, whether outstanding
on the Issue Date or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right
of payment to the Securities. Without limiting the generality of the
foregoing, "Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is
an allowed claim under applicable law) on, and all other amounts owing
in respect of, all monetary obligations (including guarantees thereof)
of every nature of Fedders Corporation or the Company under the Credit
Agreement, including, without limitation, obligations to pay principal
and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities and the guarantee of any obligations owing by
any Subsidiary under the Credit Agreement. "Senior Indebtedness" shall
not include (i) any Indebtedness of Fedders Corporation or the Company
to a Subsidiary of Fedders Corporation or the Company, respectively;
(ii) Indebtedness to, or guaranteed on behalf of, any shareholder,
director, officer or employee of either Fedders Corporation, the
Company or any Subsidiary of Fedders Corporation or the Company,
respectively (including, without limitation, amounts owed for
compensation); (iii) Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services;
(iv) Indebtedness represented by Disqualified Stock; (v) any liability
for federal, state, local or other taxes owed or owing by Fedders
Corporation or the Company; (vi) that portion of any Indebtedness
incurred in violation of the Indenture provisions set forth in Section
4.04; and (vii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of Fedders
Corporation or the Company.
(xv) "Senior Lender" see Section 7.12.
(xvi) "Significant Subsidiary" means any Restricted
Subsidiary of the Company or Fedders Corporation that would be a
"significant subsidiary" as defined in clause (2) of the definition of
such term in Rule 1-02 of Regulation S-X under the Securities Act and
the Exchange Act.
(xvii) "Subsidiary Guarantor" means each Subsidiary
of Fedders Corporation or the Company that executes this Indenture as a
guarantor on the Issue Date and each other Subsidiary of Fedders
Corporation or the Company that thereafter guarantees the Securities
pursuant to the terms of this Indenture.
SECTION 2.2 Amendment to Section 4.03 of the Indenture. Section 4.03 of
the Indenture is hereby amended and restated in its entirety to read as follows:
"SECTION 4.03 Transactions with Affiliates.
(a) Fedders Corporation and the Company shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or
indirectly, make any loan, advance, guarantee or capital contribution
to, or for the benefit of, or sell, lease, transfer or dispose of any
properties or assets to, or for the benefit of, or purchase or lease
any property or assets from, or enter into or amend any contract,
agreement or understanding with, or for the benefit of, an Affiliate
(each such transaction or series of related transactions that are part
of a common plan are referred to as an "Affiliate Transaction"), except
in good faith and on terms that are no less favorable to Fedders
Corporation and the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction on an
arm's length basis from an unrelated person.
(b) Fedders Corporation and the Company shall not, and shall
not permit any Restricted Subsidiary to, engage in any Affiliate
Transaction involving aggregate payments or other transfers by Fedders
Corporation, the Company and the Restricted Subsidiaries in excess of
$3,500,000 (including cash and non-cash payments and benefits valued at
their fair market value by the Fedders Corporation Board of Directors
or the Board of Directors, as the case may be, in good faith) unless
Fedders Corporation or the Company, as the case may be, delivers to the
Trustee:
(i) a resolution of the Fedders Corporation Board of
Directors or the Board of Directors, as the case may be,
stating that the Fedders Corporation Board of Directors or the
Board of Directors, as the case may be, (including a majority
of the disinterested directors, if any) has, in good faith,
determined that such Affiliate Transaction complies with the
provisions of the Indenture, and
(ii) (A) with respect to any Affiliate Transaction
involving the incurrence of Indebtedness, a written opinion of
a nationally recognized investment banking or accounting firm
experienced in the review of similar types of transactions,
(B) with respect to any Affiliate Transaction involving the
transfer of real property, fixed assets or equipment, either
directly or by a transfer of 50% or more of the Capital Stock
of a Restricted Subsidiary which holds any such real property,
fixed assets or equipment, a written appraisal from a
nationally recognized appraiser, experienced in the review of
similar types of transactions or (C) with respect to any
Affiliate Transaction not otherwise described in (A) and (B)
above, a written certification from a nationally recognized
professional or firm experienced in evaluating similar types
of transactions, in each case, stating that the terms of such
transaction are fair to Fedders Corporation, the Company or
such Restricted Subsidiary, as the case may be, from a
financial point of view.
(c) Notwithstanding paragraphs (a) and (b) of this Section
4.03, this Section 4.03 shall not apply to: (i) transactions between
Fedders Corporation and the Company, Fedders Corporation or the Company
and any wholly owned Restricted Subsidiary or between wholly owned
Restricted Subsidiaries; (ii) transactions permitted by Section 4.06;
(iii) compensation paid to officers, employees or consultants of
Fedders Corporation, the Company or any Subsidiary as determined in
good faith by the Board of Directors, or executives; (iv) transactions
between Fedders Corporation, the Company or any Restricted Subsidiaries
and any Subsidiary of Fedders Corporation in the ordinary course of
business on terms substantially consistent with past practice; or (v)
transactions between Fedders International, Inc. and any of its
Subsidiaries, or any of its or their joint ventures, minority
shareholders, less than wholly-owned subsidiaries, or joint venture
partners pursuant to the terms of any agreement in place as of the date
of this First Supplemental Indenture and Waiver (provided that such
agreements were either (i) entered in the ordinary course on terms that
are no less favorable to Fedders International, Inc. or any of its
Subsidiaries than those that would have been obtained in a comparable
transaction on an arm's length basis from an unrelated person or (ii)
entered into pursuant to a good faith determination by the board of
directors of Fedders International, Inc. that such transaction was in
the best interest of Fedders International, Inc.) or entered into
pursuant to a good faith determination by the board of directors of
Fedders International, Inc. that such transaction is in the best
interest of Fedders International, Inc.."
SECTION 2.3 Amendment to Section 4.04 of the Indenture. Section 4.04 of
the Indenture is hereby amended and restated in its entirety to read as follows:
"SECTION 4.04 Limitation on Incurrence of Indebtedness. (a)
Fedders Corporation and the Company shall not, and shall not cause or
permit any Restricted Subsidiary to, directly or indirectly, issue any
Indebtedness (other than the Indebtedness represented by the Securities
issued on the Issue Date in an aggregate principal amount not to exceed
$155,000,000); provided, however, that Fedders Corporation, the Company
and the Subsidiary Guarantors will be entitled to issue Indebtedness if
Fedders Corporation's Cash Flow Coverage Ratio for its four full fiscal
quarters next preceding the date such additional Indebtedness is issued
would have been at least 2.5 to 1 determined on a Pro Forma Basis
(including, for this purpose, any other Indebtedness incurred since the
end of the applicable four-quarter period) as if such additional
Indebtedness and any other Indebtedness issued since the end of such
four-quarter period had been issued at the beginning of such
four-quarter period.
(b) The foregoing limitations will not apply to the issuance
of:
(i) Indebtedness of Fedders Corporation, the Company
and/or the Subsidiary Guarantors under one or more Credit
Facilities as measured on such date of issuance in an
aggregate principal amount outstanding on any such date of
issuance not exceeding the greater of (x) the sum of (A) 85%
of the book value of the accounts receivable of Fedders
Corporation, the Company and the Subsidiary Guarantors on a
consolidated basis and (B) 70% of the book value of the
inventory of Fedders Corporation, the Company and the
Subsidiary Guarantors on a consolidated basis or (y)
$100,000,000;
(ii) Indebtedness of Fedders Corporation, the Company
and the Restricted Subsidiaries in connection with capital
leases, purchase money obligations, capital expenditures or
similar financing transactions relating to their properties,
assets and rights up to $15,000,000 in aggregate principal
amount;
(iii) additional Indebtedness of Fedders Corporation,
the Company and the Subsidiary Guarantors in an aggregate
principal amount of up to $15,000,000; and
(iv) Other Permitted Indebtedness.
(c) Notwithstanding paragraphs (a) and (b) of this Section
4.04, no Restricted Subsidiary shall under any circumstances issue a
guarantee of any Indebtedness of Fedders Corporation or the Company
except for guarantees issued by Restricted Subsidiaries pursuant to
Section 4.19; provided, however, that the foregoing will not limit or
restrict guarantees issued by Restricted Subsidiaries in respect of
Indebtedness of other Restricted Subsidiaries."
SECTION 2.4 Amendment to Section 4.06 of the Indenture. Section 4.06 of
the Indenture is hereby amended and restated in its entirety to read as follows:
"SECTION 4.06. Limitation on Restricted Payments. Fedders
Corporation and the Company shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, (i) declare or
pay any dividend or make any distribution on account of Fedders
Corporation's, the Company's or such Restricted Subsidiary's Capital
Stock or other Equity Interests (other than dividends or distributions
payable in Capital Stock or other Equity Interests (other than
Disqualified Stock) of Fedders Corporation or the Company and dividends
or distributions payable by a Restricted Subsidiary, the Company or
Fedders Corporation to a Restricted Subsidiary, the Company or to
Fedders Corporation); (ii) purchase, redeem or otherwise acquire or
retire for value any Capital Stock or other Equity Interests of Fedders
Corporation, the Company or any Restricted Subsidiaries; (iii) make any
principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of Fedders Corporation or the Company that is subordinate
or junior in right of payment to the Securities; or (iv) make any
Restricted Investment (all such dividends, distributions, purchases,
redemptions, acquisitions, retirements, prepayments and Restricted
Investments being collectively referred to as "Restricted Payments"),
if, at the time of such Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
(b) immediately after such Restricted Payment and after giving
pro forma effect thereto, Fedders Corporation shall not be able to
issue $1.00 of additional Indebtedness pursuant to paragraph (a) of
Section 4.04; or
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made after the Issue Date, without
duplication, exceeds the sum of (1) 50% of the aggregate Consolidated
Net Income (including, for this purpose, gains or losses from Asset
Sales) of Fedders Corporation (or, in case such aggregate is a loss,
100% of such loss) for the period (taken as one accounting period) from
January 1, 2006 and ended as of Fedders Corporation's most recently
ended fiscal quarter at the time of such Restricted Payment; plus (2)
100% of the aggregate net cash proceeds and the fair market value of
any property or securities (as determined by the Board of Directors in
good faith) received by Fedders Corporation from the issue or sale of
Capital Stock or other Equity Interests of Fedders Corporation
subsequent to the Issue Date (other than (w) Capital Stock or other
Equity Interests issued or sold to Fedders Corporation, the Company or
a Restricted Subsidiary, (x) the issuance or sale of Disqualified
Stock, (y) the Capital Stock of NYCOR North America, Inc. and its
Subsidiaries contributed to the Company and (z) other than Excess
Proceeds contributed to Fedders Corporation or the Company for purposes
of making an Asset Sale Offer in accordance with Section 4.05); plus
(3) the amount by which the principal amount of and any accrued
interest on either (A) Indebtedness of Fedders Corporation or the
Company or (B) any Indebtedness of any Restricted Subsidiary is reduced
on Fedders Corporation's consolidated balance sheet upon the conversion
or exchange other than by the Company or a Restricted Subsidiary
subsequent to the Issue Date of any Indebtedness of Fedders
Corporation, the Company or any Restricted Subsidiary (not held by
Fedders Corporation, the Company or any Restricted Subsidiary) for
Capital Stock or other Equity Interests (other than Disqualified Stock)
of Fedders Corporation or the Company, as the case may be, (less the
amount of any cash, or the fair market value of any other property or
securities (as determined by the Fedders Corporation Board of Directors
in good faith), distributed by Fedders Corporation, the Company or any
Restricted Subsidiary (to Persons other than Fedders Corporation, the
Company or any other Restricted Subsidiary) upon such conversion or
exchange); plus (4) if any Non-Restricted Subsidiary is redesignated as
a Restricted Subsidiary, the value of the Restricted Payment that would
result if such Subsidiary were redesignated as a Non-Restricted
Subsidiary at such time, as determined in accordance with Section
4.16(b).
Notwithstanding the foregoing, paragraphs (b) and (c) shall
not prohibit as Restricted Payments:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of
declaration, such payment would comply with all covenants of
this Indenture (including, but not limited to, this Section
4.06); provided that payments made pursuant to this paragraph
shall count as a Restricted Payment for purposes of the
calculation in paragraph (c) of this Section 4.06;
(ii) intentionally omitted;
(iii) intentionally omitted;
(iv) the redemption, repurchase, retirement or other
acquisition of any Capital Stock or other Equity Interests of
Fedders Corporation, the Company or any Restricted Subsidiary
in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of Fedders
Corporation or the Company) of other Capital Stock or other
Equity Interests of Fedders Corporation or the Company (other
than any Disqualified Stock) or the redemption, repurchase,
retirement or other acquisition of any Capital Stock or other
Equity Interests of any Restricted Subsidiary in exchange for,
or out of the proceeds of, the substantially concurrent sale
(other than to Fedders Corporation, the Company or a
Subsidiary of Fedders Corporation or the Company) of other
Capital Stock or other Equity Interests of such Restricted
Subsidiary; provided that, in each case, any net cash proceeds
that are utilized for any such redemption, repurchase,
retirement or other acquisition, and any Net Income resulting
therefrom, shall be excluded from paragraph (c) of this
Section 4.06;
(v) Restricted Investments made or received in
connection with the sale, transfer or disposition of any
business, properties or assets of Fedders Corporation, the
Company or any Restricted Subsidiary; provided that, if such
sale, transfer or disposition constitutes an Asset Sale and
Fedders Corporation and the Company complies with the
provisions of Section 4.05, such Restricted Investments shall
not count as a Restricted Payment for purposes of the
calculation in paragraph (c) of this Section 4.06;
(vi) intentionally Omitted;
(vii) intentionally Omitted;
(viii) any cash advances or loans to Fedders
Corporation or any Non-FNA Subsidiaries made in connection
with ordinary course of business cash management practices of
Fedders Corporation and its Subsidiaries; provided that
amounts paid pursuant to this clause (viii) shall not count as
a Restricted Payment for purposes of the calculation in
paragraph (c) of this Section 4.06;
(ix) intentionally omitted;
(x) one or more dividends or other distributions to
Fedders Corporation to the extent they consist of the Capital
Stock of or other Equity Interests in each of Fedders Indoor
Air Quality (Suzhou) Co., Ltd., Xi'an Fedders Xxxx Xxxx Air
Conditioner Compressor Co., Ltd. and Quanzhou Melcor Xxx Xx
Thermoelectric Co., Ltd.; provided, however, that (A) prior to
the payment of such dividends neither the Company nor any
Subsidiary Guarantor shall have contributed or otherwise
transferred to any such persons any material assets other than
in the ordinary course of business consistent with past
practice, (B) substantially concurrent with such dividend or
other distribution, Fedders Corporation contributes such
Capital Stock to Fedders International, Inc. or one of its
Subsidiaries and (C) such dividends shall not count as
Restricted Payments for purposes of the calculation in
paragraph (c) of this Section 4.06; and
(xi) Restricted Payments in an amount which, when
taken together with all Restricted Payments pursuant to this
clause (xi) does not exceed $9,000,000 from the date hereof;
provided that payments made pursuant to this paragraph (xi)
shall not be for the payment of any dividend in respect of
Fedders Corporation's Series A Cumulative Preferred Stock and
shall count as a Restricted Payment for purposes of the
calculation in paragraph (c) of this Section 4.06.
SECTION 2.5 Amendment to Section 4.07. Section 4.07 of the Indenture is
hereby amended and restated in its entirety to read as follows:
"SECTION 4.07. Corporate Existence. Subject to Article Five,
the Company and Fedders Corporation shall do or shall cause to be done
all things necessary to preserve and keep in full force and effect
their respective corporate existence and the corporate, partnership or
other existence of each Restricted Subsidiary in accordance with the
respective organizational documents of each of them (as the same may be
amended from time to time) and the rights (charter and statutory) and
material franchises of the Company, Fedders Corporation and the
Restricted Subsidiaries; provided, however, that the Company and
Fedders Corporation shall not be required to preserve any such right or
franchise, or the corporate existence of any Restricted Subsidiary, if
the Board of Directors or the Fedders Corporation Board of Directors,
as the case may be, shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company, Fedders
Corporation and the Restricted Subsidiaries, taken as a whole, and that
the loss thereof is not, and will not be, adverse in any material
respect to the Holders."
SECTION 2.6 Amendment to Section 4.10(a). Section 4.10(a) of the
Indenture is hereby amended and restated in its entirety to read as follows:
"(a) The Company and Fedders Corporation shall cause all
material properties owned by or leased to either of them or any
Restricted Subsidiary and used or useful in the conduct of their
business or the business of any Restricted Subsidiary to be maintained
and kept in normal condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company or Fedders Corporation may be
necessary, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.10 shall prevent the Company,
Fedders Corporation or any Restricted Subsidiary from discontinuing the
use, operation or maintenance of any of such properties, or disposing
of any of them, if such discontinuance or disposal is, in the judgment
of the Board of Directors or the Fedders Corporation Board of
Directors, as the case may be, or the Restricted Subsidiary concerned,
or of an officer (or other agent employed by the Company, Fedders
Corporation or any Restricted Subsidiary) of the Company, Fedders
Corporation or such Restricted Subsidiary having managerial
responsibility for any such property, desirable in the conduct of the
business of the Company, Fedders Corporation or any Restricted
Subsidiary, and if such discontinuance or disposal is not adverse in
any material respect to the Holders."
SECTION 2.7 Amendment to Section 4.12. Section 4.12 of the Indenture is
hereby amended by inserting the following paragraph at the end of the last
paragraph of the Section:
"Fedders Corporation shall host Quarterly Conference Calls no
later than 10-days following the earlier of Fedders Corporation's (i)
release of its quarterly or year-end results, as the case may be, or
(ii) filing of its notification of late filing on Form 12b-25 for its
quarterly or annual reports, as the case may be, commencing on the
quarterly period ending September 30, 2005."
SECTION 2.8 Amendment to Section 4.15 of the Indenture. Section 4.15 of
the Indenture is hereby amended and restated in its entirety to read as follows:
"SECTION 4.15. Limitations on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. Fedders Corporation and
the Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective, any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary that is not a
Subsidiary Guarantor to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or
participation in, or measured by, its profits, owned by Fedders
Corporation, the Company or any Restricted Subsidiary, or pay any
Indebtedness owed to, Fedders Corporation, the Company or any
Restricted Subsidiary, (b) make loans or advances to Fedders
Corporation or the Company, or (c) transfer any of its properties or
assets to Fedders Corporation or the Company, except for such
encumbrances or restrictions existing under or by reason of:
(i) any agreement, obligation or instrument in effect
on the Issue Date, and any amendment, restatement or extension
of such agreement, obligation or instrument to the extent such
encumbrances or restrictions are not materially more
restrictive to the Securityholders than those in effect on the
Issue Date;
(ii) Indebtedness permitted (A) under paragraph (a)
of Section 4.04, (B) under clauses (i) or (iii) of paragraph
(b) of Section 4.04 or clauses (i), (v), (vi) or (viii) of the
definition of Other Permitted Indebtedness, or (C) by
agreements and transactions permitted under Section 4.06;
(iii) customary provisions restricting subletting or
assignment of any lease or license of Fedders Corporation, the
Company or any Restricted Subsidiary;
(iv) any instrument governing Indebtedness or any
other encumbrance or restriction of a Person acquired by
Fedders Corporation, the Company or any Restricted Subsidiary
at the time of such acquisition, which encumbrance or
restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(v) the Credit Agreement;
(vi) any Refinancing Indebtedness permitted under
Section 4.04 or clauses (i), (v) or (viii) of the definition
of Other Permitted Indebtedness; provided that the
encumbrances and restrictions created in connection with such
Refinancing Indebtedness are no more restrictive in any
material respect with regard to the interests of the Holders
of Securities than the encumbrances and restrictions in the
refinanced Indebtedness;
(vii) the Existing Notes; or
(viii) the terms of purchase money obligations, but
only to the extent such purchase money obligations restrict or
prohibit the transfer of the property so acquired.
Nothing contained in this Section 4.15 shall prevent Fedders
Corporation or the Company from entering into any agreement or
instrument providing for the incurrence of Permitted Liens or
restricting the sale or other disposition of property or assets of
Fedders Corporation, the Company or any of the Restricted Subsidiaries
that are subject to Permitted Liens."
SECTION 2.9 Amendment to Section 4.16 of the Indenture. Section 4.16 of
the Indenture is hereby amended and restated in its entirety to read as follows:
"SECTION 4.16 Designation of Restricted and Non-Restricted
Subsidiaries. (a) As of the date of this Indenture, Trion, Inc.,
Envirco Corporation, Melcor Corporation, Xxxxxx Manufacturing
Enterprises, Inc., Xxxxxxx Quiet Kool Corporation, Fedders Inc.,
Columbia Specialties, Inc., Rotorex Company, Inc. Fedders Outlet, Inc.,
Fedders Xxxxxx Company, Inc., Fedders Addison Company, Inc., Fedders
Islandaire, Inc., Island Metal Fabricating, Inc., the Company and
Fedders International, Inc. shall be Restricted Subsidiaries. Subject
to the exceptions described below, from and after the Issue Date,
Fedders Corporation or the Company may designate any existing or newly
formed or acquired Subsidiary as a Non-Restricted Subsidiary; provided
that either (i) the Subsidiary to be so designated has total assets of
$1,000,000 or less or (ii) immediately before and after giving effect
to such designation: (I) Fedders Corporation could incur $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 4.04
determined on a Pro Forma Basis; (II) no Default or Event of Default
shall have occurred and be continuing; (III) all Investments made by
Fedders Corporation, the Company or a Restricted Subsidiary of Fedders
Corporation or the Company in such Restricted Subsidiary which is being
designated a Non-Restricted Subsidiary prior to or on the date such
Restricted Subsidiary is being designated a Non-Restricted Subsidiary
shall have been permitted pursuant to Section 4.06 as if all of such
Restricted Payments had been made on the day such Restricted Subsidiary
is designated a Non-Restricted Subsidiary (to the extent not previously
included as a Restricted Payment) in the amount of the greater of (A)
the fair market value (as determined by the Fedders Corporation Board
of Directors or the Board of Directors, as the case may be, in good
faith) of the Equity Interests of such Subsidiary held by Fedders
Corporation, the Company and the Restricted Subsidiaries on such date
or (B) the amount of the Investments determined in accordance with GAAP
made by Fedders Corporation, the Company and any of the Restricted
Subsidiaries in such Restricted Subsidiary; and (IV) all transactions
between the Subsidiary to be so designated and its Affiliates remaining
in effect are permitted pursuant to Section 4.03.
(b) Fedders Corporation and the Company may redesignate any
Non-Restricted Subsidiary as a Restricted Subsidiary. Fedders
Corporation and the Company may not, and may not permit any Restricted
Subsidiary to, take any action or enter into any transaction or series
of transactions that would result in a Person becoming a Restricted
Subsidiary (whether through an acquisition, the redesignation of a
Non-Restricted Subsidiary or otherwise, but not including through the
creation of a new Restricted Subsidiary) unless, immediately before and
after giving effect to such action, transaction or series of
transactions, (i) Fedders Corporation could incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 4.04 on a
Pro Forma Basis and (ii) no Default or Event of Default shall have
occurred and be continuing.
(c) The designation of a Subsidiary as a Restricted Subsidiary
or the removal of such designation shall be made by a resolution
adopted by a majority of the Fedders Corporation Board of Directors or
the Board of Directors, as the case may be, stating that the Fedders
Corporation Board of Directors or the Board of Directors has made such
designation in accordance with this Indenture, and Fedders Corporation
or the Company, as the case may be, shall deliver to the Trustee such
resolution together with an Officers' Certificate certifying that the
designation complies with this Indenture. Such designation will be
effective as of the date specified in the applicable resolution which
may not be before the date the applicable Officers' Certificate is
delivered to the Trustee."
SECTION 2.10 Amendment to Section 4.17 of the Indenture. Section 4.17
of the Indenture is hereby amended and restated in its entirety to read as
follows:
"SECTION 4.17. Limitation on Liens. Fedders Corporation and
the Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer
to exist any Lien (other than Permitted Liens) upon any property or
asset now owned or hereafter acquired by them, or any income or profits
therefrom, or assign or convey any right to receive income therefrom;
provided, however, that in addition to creating Permitted Liens on its
properties or assets, Fedders Corporation, the Company and any of the
Subsidiary Guarantors may create any Lien upon any of their properties
or assets (including, but not limited to, any Capital Stock of their
Subsidiaries) if the Securities are equally and ratably secured."
SECTION 2.11 Amendment to Section 4.18 of the Indenture. Section 4.18
of the Indenture is hereby amended and restated in its entirety to read as
follows:
"SECTION 4.18. Limitation on Sale and Leaseback Transactions.
Fedders Corporation and the Company shall not, and shall not cause or
permit any of the Restricted Subsidiaries to, enter into any sale and
leaseback transaction; provided that Fedders Corporation, the Company
and the Subsidiary Guarantors may enter into a sale and leaseback
transaction if (i) Fedders Corporation, the Company or such Subsidiary
Guarantor could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction
pursuant to Fedders Corporation's Cash Flow Coverage Ratio test set
forth in paragraph (a) of Section 4.04; (ii) the net cash proceeds of
such sale and leaseback transaction are at least equal to the fair
market value (as determined in good faith by the Fedders Corporation
Board of Directors or the Board of Directors, as the case may be, and
set forth in an Officers' Certificate delivered to the Trustee) of the
property that is the subject of such sale and leaseback transaction;
and (iii) the transfer of assets in such sale and leaseback transaction
is permitted by, and the proceeds of such transaction are applied in
compliance with, Section 4.05."
SECTION 2.12 Amendments to Section 6.01. Section 6.01 of the Indenture
is hereby amended by inserting the following sentence following subsection (ix)
of the Section.
"(x) the failure of Fedders Corporation to hold a Quarterly
Conference Call within 10-days after the earlier of Fedders
Corporation's (i) release of its quarterly or year-end results, as the
case may be or (ii) filing of its notification of late filing on Form
12b-25 for its quarterly or annual reports, as the case may be."
SECTION 2.13 Amendment to Section 7.12. Section 7.12 of the Indenture
is hereby amended by inserting the following paragraphs at the end of the last
paragraph of Section 7:
"Section 7.12 Subordination of Lien on Stock of Fedders
International, Inc. The Trustee hereby acknowledges and agrees, on
behalf of itself and all of the Holders, that (a) Fedders Corporation
has granted to the lender under the Credit Agreement (the "Senior
Lender") a Lien upon all of the issued and outstanding capital stock of
Fedders International, Inc. (the "FII Stock") pursuant to the Credit
Agreement to secure the obligations under the Credit Agreement, (b)
notwithstanding the order or time of attachment, or the order, time or
manner of perfection, or the order or time of filing or recordation of
any document or instrument, or other method of perfecting a Lien in
favor of the Senior Lender or the Trustee in the FII Stock, the Liens
upon the FII Stock of the Senior Lender have and shall have priority
over the Liens therein of the Trustee, for the benefit of the Holders,
to the full extent of the obligations under the Credit Agreement at any
time owing to the Senior Lender, regardless of whether such Liens upon
the FII Stock of the Senior Lender are avoided, disallowed, set aside
or otherwise invalidated in any judicial proceeding, (c)
notwithstanding any rights or remedies available to the Trustee under
any of the Indenture and any other documents ancillary thereto,
applicable law or otherwise, until such time as all obligations (other
than contingent indemnification obligations) under the Credit Agreement
have been indefeasibly paid in full to the Senior Lender, the Trustee
shall not (i) directly or indirectly, seek to foreclose, take
possession of, sell or otherwise realize upon (judicially or
non-judicially) its Lien on any of the FII Stock, assert any claims or
interests therein or exercise any remedies with respect thereto or
commence any legal proceedings against or with respect to any of the
FII Stock to facilitate the actions proscribed above, or (ii) have any
responsibilities to assert such remedies on behalf of the Holders or
otherwise and (d) until such time as all obligations (other than
contingent indemnification obligations) under the Credit Agreement have
been indefeasibly paid in full, in the event of the sale or other
disposition of all, or substantially all, of the FII Stock either by
(i) the Senior Lender or its agents, or (ii) Fedders Corporation, with
the consent of the Senior Lender, the Trustee shall, promptly upon the
request of the Senior Lender (which request shall specify the proposed
terms of the sale or other disposition of the FII Stock and the type
and amount of consideration to be received in connection therewith),
release or otherwise terminate its Liens on the FII Stock, provided
that, such release by the Trustee shall not extend to or otherwise
affect any Lien of the Trustee to the proceeds from any such sale or
other disposition of the FII Stock, subject to the prior and senior
Lien therein of Senior Lender, to the extent that such proceeds are not
applied by Senior Lender to the payment of the obligations under the
Credit Agreement.
ARTICLE III
WAIVERS AND OTHER AGREEMENTS
----------------------------
The waivers and other agreements described in this Section 3.1 shall be
applicable to the Indenture as supplemented by this First Supplemental Indenture
and Waiver.
SECTION 3.1 Default Waiver. During the period beginning on the date
this First Supplemental Indenture and Waiver is executed and ending at 5:30
p.m., New York City time, on the earliest to occur of (i) the Business Day
following the occurrence of any Default or Event of Default other than a
Specified Default (as defined below) or (ii) December 31, 2005 (the "Waiver
Period"), all Defaults and Events of Defaults arising under Section 4.12 of this
Indenture (i) for the failure by Fedders Corporation to timely file its Annual
Report on Form 10-K for the year ended December 31, 2004 and its Quarterly
Reports on Form 10-Q for the three months ended March 31, 2005 and June 30,
2005, respectively, and (ii) if Fedders Corporation is unable to timely file its
Quarterly Report on Form 10-Q for the three months ended September 30, 2005, for
the failure to make such filing (each an "SEC Report" and collectively, the "SEC
Reports") (each a "Specified Default" and collectively, the "Specified
Defaults") are hereby temporarily waived; provided, however, that during the
Waiver Period upon the filing by Fedders Corporation of each SEC Report with the
Commission in a form that causes Fedders Corporation to be current in all
material respects in its filing obligations with respect to such SEC Report
under the Exchange Act, such Specified Default shall be permanently waived and
for purposes of the Indenture shall be deemed to have been cured and not to have
occurred.
SECTION 3.2 Restricted Payments. During the Waiver Period, Fedders
Corporation and the Company shall not and shall not cause or permit any
Restricted Subsidiaries to make any Restricted Payments and all payments
permitted pursuant to subclauses (i) - (vii), (ix) and (xi) of Section 4.06 of
the Indenture shall be prohibited.
SECTION 3.3 Asset Sales. Notwithstanding the terms of Section 4.05 of
the Indenture, the Net Proceeds of all Asset Sales consummated by Fedders
Corporation, the Company or any Restricted Subsidiaries during the Waiver Period
shall be used to pay amounts outstanding under the Credit Agreement; provided,
that if such Asset Sales generate Net Proceeds in excess of amounts outstanding
under the Credit Agreement, such Net Proceeds shall be applied pursuant to the
terms of Section 4.05 of the Indenture.
SECTION 3.4 8-K Conference Call. Fedders Corporation shall hold a
conference call on September 21, 2005 with the Holders.
SECTION 3.5 Transactions with Affiliates. During the Waiver Period,
Fedders Corporation and the Company shall not and shall not permit any
Restricted Subsidiary to engage in any Affiliate Transaction. Notwithstanding
the foregoing, this Section 3.5 shall not apply to matters specified or
permitted by subclauses (i) through (v) of Section 4.03(c) of the Indenture.
SECTION 3.6 Indebtedness. During the Waiver Period, Fedders Corporation
and the Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, issue any Indebtedness other than
issuances pursuant to Sections 4.04(b)(i) and (iv) of the Indenture.
SECTION 3.7 Acquisitions. During the Waiver Period, Fedders Corporation
and the Company shall not, and shall not cause or permit any Restricted
Subsidiary to consummate any Acquisitions. For purposes of this Section 3.7, the
term "Acquisition" shall mean the acquisition (including by merger,
consolidation or otherwise) of any Person (as such term is defined in the
Indenture) (or substantially all of the assets of any Person constituting a
business) in consideration of cash or cash equivalents, exchange of property or
securities, or for any other value or by any other method.
SECTION 3.8 Stock Pledge. Fedders Corporation shall enter into a pledge
agreement pursuant to which it grants a second lien in the FII Stock to secure
its Guaranteed Obligations; provided, that after such time as all obligations
(other than contingent indemnification obligations) under the Credit Agreement
have been indefeasibly paid in full to the Senior Lender (other than in
connection with the refinancing of the Credit Agreement), the Company and the
Trustee shall enter into an amended and restated Pledge Agreement which is
reasonably acceptable to both parties granting a first priority lien in the FII
Stock in favor of the Trustee to secure Fedders Corporation's Guaranteed
Obligations.
SECTION 3.9 Default Interest. During the Waiver Period an additional
100 basis points of interest will accrue on the principal amount of the Notes,
which amount shall be payable with the interest payment due on March 1, 2006.
SECTION 3.10 FII Stock. The Senior Lender and the Trustee acknowledge
that, to the extent that the FII Stock is held in the possession of the Senior
Lender, or a third party on its behalf, the Senior Lender is also holding such
items in its possession as agent and bailee of the Trustee for the benefit of,
and for purposes of perfecting the second priority security interest of the
Trustee in such FII Stock. The Senior Lender further acknowledges that in
accordance with Section 8-301(a)(2) of the UCC, the Senior Lender agrees to hold
FII stock in its possession for the Trustee solely for the purpose of perfecting
the Trustee's security interest and lien in the FII Stock granted by Fedders
Corporation, subject to Section 7.12.
SECTION 3.11 Legal Opinion. Promptly following the date of execution of
this First Supplemental Indenture and Waiver (but in no case later than
September 16, 2005), the Company shall deliver to the Trustee an Opinion of
Counsel pursuant to Section 314(b)(1) of the Trust Indenture Act of 1939 in a
form reasonably agreed to by the Company and the Trustee.
ARTICLE IV
MISCELLANEOUS
-------------
SECTION 4.1 Effect of Supplemental Indenture. From and after the
Amendment Operative Date (as defined in Section 4.13 hereof), the Indenture and
the Securities shall be supplemented in accordance herewith, and this First
Supplemental Indenture and Waiver shall form a part of the Indenture and the
Securities for all purposes, and every Holder heretofore or hereafter
authenticated and delivered under the Indenture shall be bound thereby.
SECTION 4.2 Indenture Remains in Full Force and Effect. Except as
supplemented by this First Supplemental Indenture and Waiver, all provisions in
the Indenture and the Securities shall remain in full force and effect.
SECTION 4.3 References to Supplemental Indenture. Any and all notices,
requests, certificates and other instruments executed and delivered after the
execution and delivery of this First Supplemental Indenture and Waiver may refer
to the Indenture without making specific reference to this First Supplemental
Indenture and Waiver, but nevertheless all such references shall include this
First Supplemental Indenture and Waiver unless the context requires otherwise.
SECTION 4.4 Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture and Waiver limits, qualifies or conflicts with any
provision of the TIA that is required under the TIA to be part of and govern any
provision of this First Supplemental Indenture and Waiver, the provision of the
TIA shall control. If any provision of this First Supplemental Indenture and
Waiver modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture and Waiver,
as the case may be.
SECTION 4.5 Severability. If any court of competent jurisdiction shall
determine that any provision in this First Supplemental Indenture and Waiver
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 4.6 Headings. The Article and Section headings of this First
Supplemental Indenture and Waiver have been inserted for convenience of
reference only, are not to be considered a part of this First Supplemental
Indenture and Waiver and shall in no way modify or restrict any of the terms or
provisions hereof.
SECTION 4.7 Benefits of First Supplemental Indenture and Waiver.
Nothing in this First Supplemental Indenture and Waiver or the Securities,
express or implied, shall give to any Person, other than the parties hereto and
thereto and their successors hereunder and thereunder and the Holders any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture and Waiver or the Securities.
SECTION 4.8 Successors. All agreements of Fedders Corporation, the
Company and the Guarantors in this First Supplemental Indenture and Waiver shall
bind their respective successors. All agreements of the Trustee in this First
Supplemental Indenture and Waiver shall bind its successors.
SECTION 4.9 Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of the Company and the Trustee
assumes no responsibility for their correctness.
SECTION 4.10 Certain Duties and Responsibilities of the Trustee. In entering
into this First Supplemental Indenture and Waiver, the Trustee shall be entitled
to the benefit of every provision of the Indenture and the Securities relating
to the conduct or affecting the liability or affording protection to the
Trustee, whether or not elsewhere herein so provided.
SECTION 4.11 Governing Law. This First Supplemental Indenture and
Waiver shall be governed by, and construed in accordance with, the laws of the
State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 4.12 Counterpart Originals. The parties may sign any number of
copies of this First Supplemental Indenture and Waiver. Each signed copy shall
be an original, but all of them together represent the same agreement.
SECTION 4.13 Effectiveness. This First Supplemental Indenture and
Waiver shall become effective upon execution by Fedders Corporation, the
Company, Fedders International, Inc., the Guarantors and the Trustee (the
"Amendment Operative Date").
SECTION 4.14 Confirmation. Each of Fedders Corporation, the Company,
the Guarantors and the Trustee hereby confirms and reaffirms the Original
Indenture in every particular except as amended and supplemented by this First
Supplemental Indenture and Waiver.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture and Waiver to be duly executed as of the date first above
written.
FEDDERS CORPORATION
By:
-------------------------------
Name:
Title:
FEDDERS NORTH AMERICA, INC.,
By:
-------------------------------
Name:
Title:
XXXXXXX QUIET KOOL CORPORATION
COLUMBIA SPECIALTIES, INC.
ROTOREX COMPANY, INC.
FEDDERS OUTLET, INC.
FEDDERS INC.
TRION, INC.
MELCOR CORPORATION
ENVIRCO CORPORATION
FEDDERS INTERNATIONAL, INC.
FEDDERS XXXXXX COMPANY, INC.
FEDDERS ADDISON COMPANY, INC.
FEDDERS ISLANDAIRE, INC.
ISLAND METAL FABRICATING, INC.
By:
-------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
-------------------------------
Name:
Title:
For the purposes of Sections 2.13 and
3.10 hereof, agreed to and accepted by:
WACHOVIA BANK NATIONAL ASSOCIATION, as
Senior Lender
By:
-------------------------------
Name:
Title:
