Exhibit 4.1
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EXECUTION COPY
RITE AID CORPORATION
9 1/2% Senior Secured Notes due 2011
____________________
INDENTURE
Dated as of February 12, 2003
____________________
BNY Midwest Trust Company,
Trustee
TABLE OF CONTENTS
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PAGE
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.....................................................................1
SECTION 1.02. Other Definitions..............................................................45
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..............................46
SECTION 1.04. Rules of Construction..........................................................46
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series.......................................47
SECTION 2.02. Form and Dating................................................................48
SECTION 2.03. Execution and Authentication...................................................49
SECTION 2.04. Registrar and Paying Agent.....................................................50
SECTION 2.05. Paying Agent To Hold Money in Trust............................................50
SECTION 2.06. Holder Lists...................................................................51
SECTION 2.07. Replacement Securities.........................................................51
SECTION 2.08. Outstanding Securities.........................................................51
SECTION 2.09. Temporary Securities...........................................................52
SECTION 2.10. Cancellation...................................................................52
SECTION 2.11. Defaulted Interest.............................................................52
SECTION 2.12. CUSIP Numbers..................................................................52
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee.............................................................53
SECTION 3.02. Selection of Securities To Be Redeemed.........................................53
SECTION 3.03. Notice of Redemption...........................................................53
SECTION 3.04. Effect of Notice of Redemption.................................................54
SECTION 3.05. Deposit of Redemption Price....................................................55
SECTION 3.06. Securities Redeemed in Part....................................................55
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities..........................................................55
SECTION 4.02. SEC Reports....................................................................55
SECTION 4.03. Limitation on Debt.............................................................56
SECTION 4.04. Limitation on Restricted Payments..............................................61
SECTION 4.05. Limitation on Liens............................................................64
SECTION 4.06. Limitation on Asset Sales and Specified Collateral Dispositions................65
SECTION 4.07. Limitation on Restrictions on Distributions from Restricted Subsidiaries.......70
SECTION 4.08. Limitation on Transactions with Affiliates.....................................72
SECTION 4.09. Guarantees by Subsidiaries.....................................................74
SECTION 4.10. Limitation on Sale and Leaseback Transactions..................................75
SECTION 4.11. Designation of Restricted and Unrestricted Subsidiaries........................76
SECTION 4.12. Additional Security Documents..................................................77
SECTION 4.13. Change of Control..............................................................78
SECTION 4.14. Further Instruments and Acts...................................................79
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets......................................80
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default..............................................................83
SECTION 6.02. Acceleration...................................................................85
SECTION 6.03. Other Remedies.................................................................86
SECTION 6.04. Waiver of Past Defaults........................................................86
SECTION 6.05. Control by Majority............................................................86
SECTION 6.06. Limitation on Suits............................................................87
SECTION 6.07. Rights of Holders to Receive Payment...........................................87
SECTION 6.08. Collection Suit by Trustee.....................................................88
SECTION 6.09. Trustee May File Proofs of Claim...............................................88
SECTION 6.10. Priorities.....................................................................88
SECTION 6.11. Undertaking for Costs..........................................................89
SECTION 6.12. Waiver of Stay or Extension Laws...............................................89
SECTION 6.13. Enforcement of Remedies........................................................89
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee..............................................................89
SECTION 7.02. Rights of Trustee..............................................................91
SECTION 7.03. Individual Rights of Trustee...................................................92
SECTION 7.04. Trustee's Disclaimer...........................................................92
SECTION 7.05. Notice of Defaults.............................................................92
SECTION 7.06. Reports by Trustee to Holders..................................................92
SECTION 7.07. Compensation and Indemnity.....................................................93
SECTION 7.08. Replacement of Trustee.........................................................93
SECTION 7.09. Successor Trustee by Merger....................................................95
SECTION 7.10. Eligibility; Disqualification..................................................95
SECTION 7.11. Preferential Collection of Claims Against Company..............................95
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability of Securities; Defeasance...............................96
SECTION 8.02. Conditions to Defeasance.......................................................97
SECTION 8.03. Application of Trust Money.....................................................98
SECTION 8.04. Repayment to Company...........................................................99
SECTION 8.05. Indemnity for Government Obligations...........................................99
SECTION 8.06. Reinstatement..................................................................99
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders.....................................................99
SECTION 9.02. With Consent of Holders........................................................101
SECTION 9.03. Compliance with Trust Indenture Act............................................106
SECTION 9.04. Revocation and Effect of Consents and Waivers..................................107
SECTION 9.05. Notation on or Exchange of Securities..........................................107
SECTION 9.06. Trustee To Sign Amendments.....................................................107
SECTION 9.07. Payment for Consent............................................................108
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls...................................................108
SECTION 10.02. Notices........................................................................108
SECTION 10.03. Communication by Holders with Other Holders....................................109
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.............................109
SECTION 10.05. Statements Required in Certificate or Opinion..................................109
SECTION 10.06. When Securities Disregarded....................................................110
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar...................................110
SECTION 10.08. Legal Holidays.................................................................110
SECTION 10.09. Governing Law..................................................................110
SECTION 10.10. No Recourse Against Others.....................................................111
SECTION 10.11. Successors.....................................................................111
SECTION 10.12. Multiple Originals.............................................................111
SECTION 10.13. Table of Contents; Headings....................................................111
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).................................................................................10.02
(b)(2).................................................................................7.06
(c)....................................................................................7.06;10.02
(d)....................................................................................7.06
314(a)......................................................................................4.02;
.......................................................................................4.09;10.02
(b)....................................................................................4.09;
.......................................................................................7.02;10.02
(c)(1).................................................................................7.02
(c)(2).................................................................................7.02
(c)(3).................................................................................N.A.
(d)....................................................................................4.09;7.02
(e)....................................................................................10.05
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 February 12, 2003, among RITE AID
CORPORATION, a Delaware corporation (the "Company"), each of the
SUBSIDIARY GUARANTORS named in Schedule A hereto 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 9
1/2% Senior Secured Notes due 2011, 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 9 1/2% Senior Secured Notes due 2011 (the "Exchange
Securities" and, together with the Initial Securities, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
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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 this
clause (b), such Restricted Subsidiary is primarily engaged in a Related
Business.
"Additional Senior Debt" means any other Debt of the Company
Guaranteed by the Subsidiary Guarantors pursuant to the Senior Subsidiary
Guarantee Agreement with such Guarantees secured by the Senior Collateral on a
pari passu basis with the Senior Bank Obligations; provided, however, that
such Debt is permitted to be incurred, secured and guaranteed on such basis by
this Indenture and the Second Priority Collateral Documents.
"Additional Senior Debt Documents" means, with respect to any
series, issue or class of Additional Senior Debt, the promissory notes,
indentures, Collateral Documents or other operative agreements evidencing or
governing such Debt, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Additional Senior Debt Facility" means the indenture or other
governing agreement with respect to any Additional Senior Debt, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Additional Senior Debt Obligations" means, with respect to any
series, issue or class of Additional Senior Debt, (a) all principal of and
interest (including any interest which accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim
in any such proceeding) on such Additional Senior Debt, (b) all other amounts
payable by the Company to the related Additional Senior Debt Parties under the
related Additional Senior Debt Documents and (c) any renewals, extensions or
Refinancings of the foregoing.
"Additional Senior Debt Parties" means, with respect to any
series, issue or class of Additional Senior Debt, the holders of such
indebtedness from time to time, any trustee or agent therefore under any
related Additional Senior Debt Documents and the beneficiaries of each
indemnification obligation undertaken by the Company or any Obligor under any
related Additional Senior Debt Documents, but shall not include the Obligors
or any controlled Affiliates thereof.
"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;
(2) any Subsidiary of such specified Person; or
(3) any Person described in clause (a) above.
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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.
"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 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
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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 clause (a)
of Section 4.10 are satisfied with respect to such Sale and
Leaseback Transaction, (C) the requirements of clauses (a), (b)
and (c) of the first paragraph of Section 4.06 are 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
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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) he sum of all such payments.
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company
or any duly authorized and constituted committee thereof.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in The City of New York, New York are
authorized or obligated by law, regulation, executive order or governmental
decree to close.
"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
5
Subsidiary for the benefit of their employees) by the Company of its Capital
Stock (other than Disqualified Stock) after the Issue Date, 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 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
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(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
February 1, 2003, 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 of Directors 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 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.
"Collateral" means all the collateral described in the Collateral
Documents.
"Collateral Disposition" means (a) any sale, transfer or other
disposition of Collateral (including any property or assets that would
constitute Collateral but for the release of the Senior Lien and the Second
Priority Lien with respect thereto in connection with such sale, transfer or
other
7
disposition), or (b) any casualty or other insured damage or Condemnation with
respect to Collateral.
"Collateral Documents" means (a) the Senior Collateral Documents
and (b) the Second Priority Collateral Documents.
"Collateral Subsidiary Guarantor" means any Subsidiary of the
Company that is a party to the Senior Subsidiary Guarantee Agreement or the
Second Priority Subsidiary Guarantee Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"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 Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person and, for purposes of any provision
contained herein and expressly required by the TIA, each other obligor on the
indenture securities.
"Condemnation" means any action or proceeding for the taking of
any assets of the Company or its Subsidiaries, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any similar public improvement or condemnation proceeding.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four
consecutive fiscal quarters ending at least 45 days prior to such
determination date to
(b) Consolidated Interest Expense for such four fiscal quarters;
8
provided, however, that:
(1) if
(A) since the beginning of such period 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, EBITDA for such period
shall be calculated after giving pro forma
9
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);
10
(g) Disqualified Stock Dividends;
(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;
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(c) any net income (loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of 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.
12
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 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.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located in the City of
Chicago, State of Illinois).
"corporation" means a corporation, association, company, limited
liability company, joint-stock company, partnership or business trust.
"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.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"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
13
(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);
(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
14
(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 the second paragraph of Section
4.03; or
(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.
"Depositary" means, with respect to any Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Securities (or any successor
securities clearing agency so registered).
"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.
15
"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;
(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
16
(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.
"11 1/4 % Notes Issue Date" means June 27, 2001.
"Equipment Financing Transaction" means any arrangement (together
with any Refinancing thereof) with any 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 (a) an underwritten offering of common
stock of the Company by the Company pursuant to an effective registration
statement under the Securities Act or (b) 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 Exchange Act), 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.
"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
17
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 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.
"Foreign Subsidiary" means any Subsidiary of the Company which (a)
is organized under the laws of any jurisdiction outside of the United States,
(b) is organized under the laws of Puerto Rico or the U.S. Virgin Islands, (c)
has substantially all its operations outside of the United States, (d) has
substantially all its operations in Puerto Rico or the U.S. Virgin Islands, or
(e) does not own any material assets other than Capital Stock of one or more
Subsidiaries of the type described in (a) through (d) above.
"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
18
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
(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" means a Person in whose name a Security is registered in
the Security Register.
"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
19
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 Incurred shall at all times be the aggregate principal
amount at Stated Maturity.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"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.
"Intercreditor Agreement" means the Collateral Trust and
Intercreditor Agreement, dated as of June 27, 2001, among the Company, the
Subsidiary Guarantors, the Second Priority Collateral Trustee, the Senior
Collateral Agent, State Street Bank and Trust Company, as trustee under the
Company's 10.50% Senior Secured Notes due 2002, Citicorp USA, Inc., as agent
for the Synthetic Lease Parties under the Synthetic Lease Documents and each
Second Priority Representative, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"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.
20
"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 4.11, 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.
"Issue Date" means the date on which the Original 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).
21
"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 disposed in such Asset Sale and retained by the Company
or any Restricted Subsidiary after such Asset Sale.
"Obligors" means the Company, the Subsidiary Guarantors and any
other Person who is liable for any of the Secured Obligations.
"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
22
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.
"Original Exchange Securities" means the 9 1/2% Senior Secured
Notes due 2011 to be issued pursuant to this Indenture in connection with a
Registered Exchange Offer or Private Exchanges pursuant to the Registration
Agreement.
"Original Securities" has the meaning specified in Section 2.01.
"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) (1) the Company, (2) any Restricted Subsidiary or (3) 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;
(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
23
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;
(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;
and
(n) any assets, Capital Stock or other securities to the extent
acquired in exchange for shares of Capital Stock of the Company (other
than Disqualified Stock).
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under clause
(a), (b), (d) or (l) of the second paragraph of Section 4.03 provided,
however, that:
(1) if such Debt is Incurred pursuant to such clause (b)
(other than pursuant to a Sale and Leaseback Transaction, a
Capital Lease Obligation or by a Receivables Entity in a Qualified
Receivables
24
Transaction) or clause (l), a second priority Lien
(subject to Permitted Liens) upon the Property (if such Property
does not otherwise constitute Second Priority Collateral at such
time) subject to such Lien is concurrently granted as security for
the Securities such that such Property also constitutes Second
Priority Collateral subject to the Second Priority Collateral
Documents, except to the extent such Property constitutes cash or
cash equivalents securing only letter of credit obligations under
Credit Facilities following a default under such Credit
Facilities; and
(2) if such Debt is Incurred pursuant to such clause (d), a
second priority Lien (subject to Permitted Liens) upon the
Property subject to such Lien is concurrently granted as security
for the Securities such that such Property constitutes Second
Priority Collateral subject to the Second Priority Lien or the
Second Priority Mortgage and the Securities are secured by such
Lien equally and ratably (or prior to) such Debt pursuant to the
Second Priority Collateral Documents, except as required by the
terms of the 12.5% Notes, but only to the extent the terms as in
effect on the Issue Date would have so required, with respect to
proceeds of Collateral Dispositions.
(b) Liens to secure Debt permitted to be Incurred under clause
(e), (p), (q) or (r) of the second paragraph of Section 4.03, provided
that (1) except as provided in clause (2) below, 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
and (2) if such Debt is Incurred pursuant to clause (p), any Property
subject to such Lien other then Property described in clause (1) above
constitutes Second Priority Collateral subject to the Second Priority
Lien or the Second Priority Mortgage and the Debt secured by the Lien on
such Property constitutes Second Priority Debt and does not constitute
Senior Obligations;
(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
25
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;
(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
26
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) licenses of intellectual property in the ordinary course of
business;
(m) Liens existing on the Issue Date not otherwise described in
clauses (a) through (l) above;
(n) 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 Liens referred to in clause (a) (but only to the extent it
relates to clause (a), (c) or (d) referred to therein), (b) (other than
Liens securing Debt Incurred pursuant to clause (p) or (r) referred to
therein), (f), (g), or (m) above; provided, however, that (1) in the case
of clause (a) or (b) above, the proviso to such clause remains satisfied
and (2) any such Lien shall be limited to all or part of the same
Property that secured the original Lien (together with
27
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:
(A) 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 (m) above,
as the case may be, at the time the original Lien became a
Permitted Lien under this Indenture; and
(B) 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
(o) Liens not otherwise permitted by clauses (a) through (n) 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
(d) the new Debt shall not be senior in right of payment to the
Debt that is being Refinanced;
28
provided, however, that Permitted Refinancing Debt shall not include: (x) Debt
of a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of the
Company or a Subsidiary Guarantor, 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.
"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 other Person. For purposes of any calculation required pursuant to this
Indenture, the value of any Property shall be its Fair Market Value.
"Public Debt" means obligations of the Company or of a Subsidiary
Guarantor evidenced by bonds, debentures, notes and
29
similar instruments issued in a manner and pursuant to documentation customary
in the market for obligations publicly traded or traded in the high yield bond
or other private placement or similar market primarily among financial
institutions (other than any such obligations that are traded primarily among
commercial banks).
"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 completion of 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 Exchange Act) 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
30
(b) any other Person (in the case of a transfer by a Receivables
Entity),
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 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).
"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,
31
and (with respect to any Receivables Entity formed after the Issue
Date) which is 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 Board
Resolution 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.
32
"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.
"Representatives" means each of the Senior Collateral Agent and
the Second Priority Representatives.
"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);
(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, repurchase or other
acquisition of any Subordinated Obligation purchased in anticipation of
satisfying a scheduled maturity, sinking fund or
33
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) of the second paragraph of Section 4.08 will be considered a
Restricted Payment.
"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.
"Second Priority Collateral" means all the "Second Priority
Collateral" as defined in any Second Priority Collateral Documents and shall
also include the mortgaged properties described in the Senior Credit Facility
and the proceeds thereof.
"Second Priority Collateral Documents" means the Second Priority
Mortgages, the Second Priority Subsidiary Security Agreement, the Second
Priority Subsidiary Guarantee Agreement, the Second Priority Indemnity,
Subrogation and Contribution Agreement, the Intercreditor Agreement and each
of the mortgages, security agreements and other instruments and documents
executed and delivered by any Subsidiary Guarantor pursuant to any of the
foregoing for purposes of providing collateral security or credit support for
any Second Priority Debt Obligation or obligation under the Second Priority
34
Subsidiary Guarantee Agreement (including, in each case, any schedules,
exhibits or annexes thereto), in each case as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Second Priority Collateral Trustee" means Wilmington Trust
Company, in its capacity as collateral trustee under the Intercreditor
Agreement and the Second Priority Collateral Documents, and its successors.
"Second Priority Debt" means (a) the Securities, the 12.5% Notes
and any other Debt of the Company Guaranteed by the Subsidiary Guarantors
pursuant to the Second Priority Subsidiary Guarantee Agreement with such
Guarantee secured on a pari passu basis by the Second Priority Collateral and
(b) the Senior Second Priority Debt; provided, however, that such Debt is
permitted to be incurred, secured and guaranteed on such basis by each Senior
Debt Document and each Second Priority Debt Document.
"Second Priority Debt Documents" means (a) with respect to the
Securities, this Indenture, the Securities and the Registration Agreement and
(b) with respect to any other series, issue or class of Second Priority Debt,
the promissory notes, indentures, Collateral Documents or other operative
agreements evidencing or governing such Debt, in each case as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Second Priority Debt Facility" means the indenture or other
governing agreement with respect to any Second Priority Debt.
"Second Priority Debt Obligations" means, with respect to any
series, issue or class of Second Priority Debt, (a) all principal of and
interest (including any interest which accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim
in any such proceeding) on such Second Priority Debt, (b) all other amounts
payable by the Company to the related Second Priority Debt Parties under the
related Second Priority Debt Documents and (c) any renewals, extensions or
Refinancings thereof of the foregoing.
"Second Priority Debt Parties" means, with respect to any series,
issue or class of Second Priority Debt, the holders of such indebtedness from
time to time, any trustee or agent
35
therefor under any related Second Priority Debt Documents and the
beneficiaries of each indemnification obligation undertaken by the Company or
any Obligor under any related Second Priority Debt Documents, but shall not
include the Obligors or any controlled Affiliates thereof.
"Second Priority Indemnity, Subrogation and Contribution
Agreement" means the Second Priority Indemnity, Subrogation and Contribution
Agreement, dated as of June 27, 2001, among the Company, the Subsidiary
Guarantors and the Second Priority Collateral Trustee, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Second Priority Instructing Group" means Second Priority
Representatives with respect to Second Priority Debt Facilities under which at
least a majority of the then aggregate amount of Second Priority Debt
Obligations are outstanding.
"Second Priority Lien" means the liens on the Second Priority
Collateral in favor of the Second Priority Debt Parties under the Second
Priority Collateral Documents.
"Second Priority Mortgages" means the mortgages, deeds of trust,
leasehold mortgages, assignments of leases and rents, modifications and other
security documents which create a lien in favor of the Second Priority
Collateral Trustee for the benefit of the Second Priority Debt Parties,
delivered pursuant to the Second Priority Debt Documents, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Second Priority Representative" means, in respect of a Second
Priority Debt Facility, the Trustee, the collateral agent under the Synthetic
Lease Facility and the administrative agent or agent under each other Second
Priority Debt Facility, as the case may be, and each of their successors in
such capacities.
"Second Priority Subsidiary Guarantee Agreement" means the Second
Priority Subsidiary Guarantee Agreement, dated as of June 27, 2001, made by
the Subsidiary Guarantors (including any additional Subsidiary Guarantor
becoming party thereto after June 27, 2001) in favor of the Second Priority
Collateral Trustee for the benefit of the Second Priority Debt Parties, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
36
"Second Priority Subsidiary Security Agreement" means the Second
Priority Subsidiary Security Agreement, dated as of June 27, 2001, made by the
Subsidiary Guarantors (including any additional Subsidiary Guarantor becoming
party thereto after June 27, 2001) in favor of the Second Priority Collateral
Trustee for the benefit of the Second Priority Debt Parties, as the same may
be amended, restated, supplemented or otherwise modified from time to time.
"Secured Debt" means indebtedness for money borrowed which is
secured by a mortgage, pledge, lien, security interest or encumbrance on
property of the Company or any Restricted Subsidiary, but shall not include
guarantees arising in connection with the sale, discount, guarantee or pledge
of notes, chattel mortgages, leases, accounts receivable, trade acceptances
and other paper arising, in the ordinary course of business, out of
installment or conditional sales to or by, or transactions involving title
retention with, distributors, dealers or other customers, of merchandise,
equipment or services.
"Secured Obligations" means the Senior Obligations, the Second
Priority Debt Obligations and any other Debt or obligations related to such
Debt that is secured by a Lien on any Collateral.
"Securities" means Securities designated in the first paragraph of
this Indenture.
"Securities Act" means the Securities Act of 1933, as it may be
amended and any successor act thereto.
"Senior Bank" means a "Bank" as defined in the Senior Credit
Facility.
"Senior Bank Obligations" means (a) the principal of each loan
made under the Senior Credit Facility, (b) all reimbursement and cash
collateralization obligations in respect of letters of credit issued under the
Senior Credit Facility, (c) all monetary obligations of the Company or any
Subsidiary under each Senior Interest Rate Agreement (as defined in the Senior
Credit Facility) entered into (1) prior to June 27, 2001 with any counterparty
that was a Senior Bank (or an Affiliate thereof) on June 27, 2001 or (2) on or
after June 27, 2001 with any counterparty that was a Senior Bank (or an
Affiliate thereof) at the time such Senior Interest Rate Agreement was entered
into, (d) all interest on the loans, letter of credit reimbursement and other
obligations under the Senior Credit
37
Facility or such Senior Interest Rate Agreements (including any interest which
accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Company or any
Subsidiary Guarantor, whether or not allowed or allowable as a claim in such
proceeding), (e) all other amounts payable by the Company under the Senior
Debt Documents and (f) all increases, renewals, extensions and Refinancings of
the foregoing.
"Senior Bank Parties" means each party to the Senior Credit
Facility from time to time other than any Obligor, each counterparty to a
Senior Interest Rate Agreement, the beneficiaries of each indemnification
obligation undertaken by the Company or any other Obligor under any Senior
Debt Document, and the successors and permitted assigns of each of the
foregoing.
"Senior Collateral" means all the "Senior Collateral" as defined
in any Senior Collateral Document and shall also include the mortgaged
properties described in the Senior Credit Facility and the proceeds thereof.
"Senior Collateral Agent" means Citicorp USA, Inc., in its
capacity as Senior Collateral Agent under the Senior Collateral Documents, and
its successors.
"Senior Collateral Documents" means the Senior Mortgages, the
Senior Subsidiary Security Agreement, the Senior Subsidiary Guarantee
Agreement, the Senior Indemnity, Subrogation and Contribution Agreement, the
Intercreditor Agreement and each of the mortgages, security agreements and
other instruments and documents executed and delivered by any Subsidiary
Guarantor pursuant to any of the foregoing or pursuant to the Senior Credit
Facility or any Additional Senior Debt Facility or for purposes of providing
collateral security or credit support for any Senior Bank Obligation or
Additional Senior Debt Obligation or obligation under the Senior Subsidiary
Guarantee Agreement (including, in each case, any schedules, exhibits or
annexes thereto), as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Senior Credit Facility" means the Senior Credit Agreement dated
as of June 27, 2001 (as heretofore amended, modified or supplemented and as
may be further amended, modified, supplemented or Refinanced from time to
time), among the Company, the Banks as defined therein, Citicorp USA, Inc. as
senior administrative agent, Citicorp USA, Inc. as senior collateral agent,
and the Chase Manhattan Bank, Credit Suisse
38
First Boston and Fleet Retail Finance Inc. as the syndication agents.
"Senior Debt Documents" means (a) the Senior Credit Facility, each
"Loan Document" as defined in the Senior Credit Facility, each Senior Interest
Rate Agreement and the Senior Collateral Documents and (b) any Additional
Senior Debt Documents.
"Senior Facilities" means the Senior Credit Facility and any
Additional Senior Debt Facilities.
"Senior Indemnity, Subrogation and Contribution Agreement" means
the Senior Indemnity, Subrogation and Contribution Agreement, dated as of June
27, 2001 among the Company, the Subsidiary Guarantors (including Subsidiary
Guarantors becoming party thereto after June 27, 2001) and the Senior
Collateral Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Senior Lien" means the liens on the Senior Collateral in favor of
the Senior Bank Parties under the Senior Collateral Documents.
"Senior Mortgages" means the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to the Senior Credit Facility.
"Senior Obligations" means the Senior Bank Obligations and any
Additional Senior Debt Obligations.
"Senior Second Priority Debt" means the Synthetic Lease
Obligations and any other Debt of the Company Guaranteed by the Subsidiary
Guarantors pursuant to the Second Priority Subsidiary Guarantee Agreement with
such Guarantees secured on a pari passu basis with the Synthetic Lease
Obligations or otherwise junior to the Senior Obligations and prior to the
Securities in any respect; provided, however, that such Debt is permitted to
be incurred, secured and guaranteed on such basis by this Indenture and the
Second Priority Collateral Documents.
"Senior Second Priority Debt Documents" means, with respect to any
series, issue or class of Senior Second Priority Debt, the promissory notes,
indentures or other operative agreements evidencing or governing such
indebtedness, in each case as the same may be amended, restated, supplemented
or otherwise modified from time to time.
39
"Senior Second Priority Debt Obligations" means, with respect to
any series, issue or class of Senior Second Priority Debt, (a) all principal
of and interest (including any interest which accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Company, whether or not allowed or allowable as a
claim in any such proceeding) on such Senior Second Priority Debt, (b) all
other amounts payable by the Company to the related Senior Second Priority
Debt Parties under the related Senior Second Priority Debt Documents and (c)
any renewals, extensions or Refinancings of the foregoing.
"Senior Second Priority Debt Parties" means, with respect to any
series, issue or class of Senior Second Priority Debt, the holders from time
to time of such indebtedness, any trustee or agent therefore under any related
Senior Second Priority Debt Documents and the beneficiaries of each
indemnification obligation undertaken by the Company or any Obligor under any
related Senior Second Priority Debt Documents, but shall not include the
Obligors or any controlled Affiliates thereof.
"Senior Secured Parties" means the Senior Bank Parties and any
Additional Senior Debt Parties.
"Senior Subsidiary Guarantee Agreement" means the Senior
Subsidiary Guarantee Agreement, made by the Subsidiary Guarantors (including
Subsidiary Guarantors that become parties thereto after June 27, 2001) in
favor of the Senior Collateral Agent for the benefit of the Senior Secured
Parties, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Senior Subsidiary Security Agreement" means the Senior Subsidiary
Security Agreement, made by the Subsidiary Guarantors (including Subsidiary
Guarantors that become parties thereto after June 27, 2001) in favor of the
Senior Collateral Agent for the benefit of the Senior Secured Parties, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"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.
40
"Series D Preferred Stock" means the Company's Preferred Stock,
par value $1.00 per share, designated as Series D.
"Shareholder Notes" means the Company's Senior Secured Notes Due
2006 issued under the indenture dated as of April 4, 2002, among the Company,
the Subsidiary Guarantors and BNY Midwest Trust Company as trustee, and
outstanding on the Issue Date.
"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.
"Specified Collateral Disposition" means any Collateral
Disposition (other than a Collateral Disposition occurring following the
occurrence of a Triggering Event) in respect of which all or a portion of the
resulting proceeds are required by the terms of any Second Priority Debt
Obligations to be used or allocated to Repay such Second Priority Debt
Obligations.
"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 or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities
or the applicable Subsidiary Guarantee 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
41
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
(c) one or more Subsidiaries of such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor
of the Company's obligations with respect to the Securities pursuant to the
Second Priority Subsidiary Guarantee Agreement or otherwise on the terms set
forth in this Indenture.
"Subsidiary Guarantor" means each Subsidiary that is a party to
the Second Priority Subsidiary Guarantee Agreement as of the Issue Date and
any other Person that Guarantees the Securities pursuant to Section 4.09.
"Synthetic Lease" means a lease which is treated as an operating
lease under GAAP but as ownership of the leased asset by the lessee for
purposes of the Code.
"Synthetic Lease Documents" means the documents governing the
Synthetic Lease Facility, as the same may be amended, restated, supplemented
or otherwise modified from time to time.
"Synthetic Lease Facility" means the Synthetic Lease entered into
by Rite Aid Realty Corp. and guaranteed by the Company on June 27, 2001.
"Synthetic Lease Obligations" means all rent and supplemental
rent, all fees and all other expenses or amounts payable by Rite Aid Realty
Corp. or the Company to any Synthetic Lease Parties under any Synthetic Lease
Document and all increases, renewals, extensions or Refinancings of the
foregoing.
"Synthetic Lease Parties" means all parties to the Synthetic Lease
Documents from time to time other than the Obligors.
"Temporary Cash Investments" means any of the following:
42
(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));
(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
43
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.
"Triggering Event" at any time has the meaning set forth in the
Intercreditor Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was executed, except
as provided in Section 9.03; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939
as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"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.
"12.5% Notes" means the Company's 12.5% Senior Secured Notes Due
2006 issued under the indenture dated as of June 27, 2001, among the Company,
the Subsidiary Guarantors and State Street Bank and Trust Company, as trustee,
and outstanding on the Issue Date.
"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
44
permitted or required pursuant to Section 4.11 and is not thereafter
redesignated as a Restricted Subsidiary as permitted pursuant thereto;
and
(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
"Asset Sales Prepayment Offer"........................ 4.06
"Bankruptcy Law"....................................... 6.01
"Change of Control Offer".............................. 4.13
"Change of Control Payment Date"....................... 4.13
"Change of Control Purchase Price"..................... 4.13
"covenant defeasance option"........................... 8.01
"Custodian"............................................ 6.01
"Exchange Security".................................... Appendix A
"Global Security"...................................... Appendix A
"legal defeasance option".............................. 8.01
"Legal Holiday"........................................ 10.08
"Offer Amount"......................................... 4.06
45
"Offer Period"......................................... 4.06
"OID".................................................. 2.01
"Original Securities".................................. 2.01
"Paying Agent"......................................... 2.04
"Registered Exchange Offer"............................ Appendix A
"Registrar"............................................ 2.04
"Registration Agreement"............................... Appendix A
"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 Holder.
"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;
46
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(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
$300,000,000 (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
47
to a Board Resolution, 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:
(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.
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
48
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 (and for
purposes of this Section 2.03, the term Officer shall include any Vice
President of the Company authorized by the Board of Directors) 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 conclusive 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 authentication by such
49
agent. An authenticating agent has the same rights as any Registrar, Paying
Agent or agent for service of notices and demands.
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 Holders 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 2.05, the Paying Agent shall
have no further liability for the money delivered to the Trustee.
50
SECTION 2.06. Holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. 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 Holders.
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 2.08 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.
51
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 Holders 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 Holder
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
52
numbers 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 3.01 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.
53
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 3.03 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.
54
SECTION 3.05. Deposit of Redemption Price. Prior to or on the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Wholly Owned 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 shall file with the Commission and provide the
Trustee with such annual and quarterly 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 shall not be so obligated to
file such information, documents and reports with the Commission
55
if the Commission does not permit such filings; provided further, however,
that the Company shall be required also to provide to Holders any such
information, documents or reports that are not so filed. The Company shall
also comply with the other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Debt. The Company shall not, and shall
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) such Debt is Debt of the Company or a Subsidiary Guarantor and
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 11
1/4% Notes Issue Date, 1.75 to 1.00 or (ii) if such Incurrence occurs at
any time thereafter, 2.00 to 1.00; 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
the Original Exchange Securities and of Subsidiary Guarantors evidenced
by Subsidiary Guarantees relating to the Original Securities and the
Original Exchange Securities;
(b) Debt of the Company or a Subsidiary Guarantor (including
Guarantees thereof) (1) under any Credit Facilities, (2) Incurred
pursuant to a Real Estate Financing Transaction, a Sale and Leaseback
Transaction or an Equipment Financing Transaction, (3) Incurred in
respect of Capital Lease Obligations, (4) Incurred pursuant to Debt
Issuances or (5) 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
(1) through (5) hereof at any one time outstanding shall not exceed the
greater of (A) $2,500 million, which amount shall be permanently reduced
by the amount of Net Available Cash used to Repay Debt under the Credit
Facilities, and
56
not subsequently reinvested in Additional Assets or used to purchase
Securities or Repay other Debt, pursuant to Section 4.06 and (B) the sum
of the amount equal to (i) 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 (ii) 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 Commission;
(c) [Intentionally omitted];
(d) Debt of the Company outstanding on the Issue Date and
evidenced by the 12.5% Notes and of Subsidiary Guarantors, including any
future Guarantor, evidenced by guarantees relating to the 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 on Debt otherwise permitted by the terms of this
Section 4.03;
(h) Debt under Currency Exchange Protection Agreements entered
into by the Company or a Restricted Subsidiary for
57
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 or clauses (p) through (q) below, excluding
the Shareholder Notes;
(l) other Debt of the Company or a Subsidiary Guarantor (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 able to Incur $1.00 of
additional Debt pursuant to clause (1) of the first paragraph of this
Section 4.03;
(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
58
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 Subsidiary Guarantor (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 Subsidiary Guarantor
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 Section 4.03 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 Section
4.03 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, 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, however, that (1) such Debt is not
reflected on the balance sheet of the Company or any Restricted
59
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 (1)) and (2) 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.
Notwithstanding anything to the contrary contained in this Section
4.03, the Company shall not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to Incur any Debt pursuant to this Section 4.03 if the
proceeds thereof are used, directly or indirectly, to Refinance any Debt of
the Company or any Subsidiary Guarantor. In addition, the Company shall not,
and shall not permit any Subsidiary Guarantor to, Incur, directly or
indirectly, any Senior Obligation that is subordinate or junior in right of
payment to any other Debt of the Company or any Subsidiary Guarantor.
For purposes of determining compliance with this Section 4.03, (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, (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 and (3)
with respect to Debt permitted under clause (k) or (p) of this Section 4.03 in
respect of Synthetic Lease Obligations or Sale and Leaseback Transactions that
are not Capital Lease Obligations on the Issue Date, any reclassification of
such Debt as a Capital Lease Obligation shall not be deemed an Incurrence of
such Debt; provided, however, that (A) 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, (B) all outstanding
obligations under the Synthetic Lease Facility immediately following the Issue
Date will be deemed to be Debt Incurred pursuant to clause (p) of this Section
4.03 and (C) any Permitted Debt may later be reclassified as having been
Incurred pursuant to any other Permitted Debt clause of this Section 4.03 to
the extent such
60
Debt could be Incurred pursuant to such clause at the time of such
reclassification.
SECTION 4.04. Limitation on Restricted Payments. The Company shall
not make, and shall 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
(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 Commission (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
61
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
(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 this
62
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 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, Series D 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,
63
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
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 shall not, and
shall 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. If the Company or any Subsidiary Guarantor
creates any additional Lien upon any Property to secure any Secured
Obligations, it must concurrently grant a second priority Lien (subject to
Permitted Liens) upon such Property as security for the Securities or
Subsidiary Guarantees of the Securities such that the Property subject to such
Lien becomes Second Priority Collateral subject to the Second Priority Liens
or the Second Priority Mortgages, except (a) to the extent the terms of the
12.5% Notes as in effect on the Issue Date require, with respect to proceeds
of Collateral Dispositions and (b) to the extent such Property constitutes
cash or cash equivalents required to secure only letter of credit obligations
under Credit Facilities following a default under such Credit Facilities.
64
Notwithstanding anything in the preceding paragraph, (1) (A) the
aggregate principal amount of all Secured Debt at any one time outstanding
under clauses (a), (b), (l) and (s) (as it relates to clauses (a)) of Section
4.03 shall not exceed the aggregate amount of Debt that at such time may be
outstanding at any one time under such clauses (b) and (l) and (B) the
aggregate principal amount of Senior Obligations constituting Debt, Senior
Second Priority Debt Obligations constituting Debt and any other Debt secured
by a Lien on the Collateral that shares in the distribution of proceeds of
Collateral prior to the Securities, at any one time outstanding shall not
exceed the sum of the aggregate amount of Debt that at such time may be
outstanding at any one time under such clause (b) and $200 million; and (2)
the Company shall not, and shall not permit any of its Subsidiaries to, create
or suffer to exist any Lien upon any of the Collateral (including Collateral
consisting of Capital Stock or Debt of any Subsidiary of the Company) now
owned or hereafter acquired by it securing any Public Debt unless the holders
of such Public Debt share in the distribution of proceeds from the foreclosure
on Collateral either (A) on an equal and ratable basis with the holders of the
Senior Obligations or (B) on an equal and ratable basis with the Holders (and
any other obligations that share on an equal and ratable basis with the
Holders).
SECTION 4.06. Limitation on Asset Sales and Specified Collateral
Dispositions. The Company shall not, and shall 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
and Specified Collateral Dispositions may be applied by the Company or a
Restricted Subsidiary, to the extent the
65
Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt):
(a) to Repay the Secured Obligations (or, to the extent required
by the terms of the 12.5% Notes (but only to the extent the terms as in
effect on the Issue Date would have so required) with respect to proceeds
of Specified Collateral Dispositions, to provide for such Repayment) 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); provided, however, that to the extent the
proceeds from a Specified Collateral Disposition will be allocated
pursuant to the terms of any other Second Priority Debt Obligations
(other than any Senior Second Priority Debt Obligations) to Repay or
provide for the Repayment of such Second Priority Debt Obligations, a pro
rata portion of such proceeds must be allocated to Repay the Securities
pursuant to an Asset Sales Prepayment Offer and the full amount of such
allocated portion (1) will be deemed Excess Proceeds and (2) will, upon
such Asset Sales Prepayment Offer, be deemed Allocable Excess Proceeds;
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 (1) 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 and (2) if the assets that were the subject of such Asset
Disposition constituted Collateral, then such Net Available Cash must be
reinvested in Additional Assets that are pledged at the time as
Collateral to secure the Securities or Subsidiary Guarantees of the
Securities, subject to the Collateral Documents, or in Expansion Capital
Expenditures to improve assets that constitute Collateral securing the
Securities or Subsidiary Guarantees of the Securities at the time.
Pending application of Net Available Cash pursuant to this Section
4.06, which shall not be required in respect of an Asset Sale that is not a
Specified Collateral Disposition 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
66
indebtedness. If the Net Available Cash from an Asset Sale that is not a
Specified Collateral Disposition equals or exceeds $1 million, any Net
Available Cash from such 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".
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 "Asset Sales
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 herein. 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 this Indenture, the Company or such Restricted
Subsidiary may use such remaining amount for any purpose permitted by this
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
67
(b) a fraction,
(1) the numerator of which is the aggregate principal amount
of the Securities outstanding on the date of the Asset Sales
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
Asset Sales Prepayment Offer and the aggregate principal amount of
other Debt of the Company outstanding on the date of the Asset
Sales 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
Asset Sales Prepayment Offer.
Within five Business Days after the Company is obligated to make
an Asset Sales Prepayment Offer as described in the preceding paragraph, the
Company shall send a written notice, by first-class mail, to the Holders,
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 Asset Sales Prepayment Offer. Such
notice shall state, among other things, the purchase price and the purchase
date (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 an Asset
Sales Prepayment Offer is delivered to the Trustee as provided above, the
Company shall deliver to the Trustee an Officers' Certificate as to (a) the
amount of the Asset Sales Prepayment Offer (the "Offer Amount"), (b) the
allocation of the Net Available Cash from the Asset Sales pursuant to which
such Prepayment Offer is being made and (c) the compliance of such allocation
with the provisions of clause (b) of the second paragraph of this 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
68
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 4.06.
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 4.06.
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 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 4.06. 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 a
69
ny other securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 4.06. To the extent that the provisions of
any securities laws or regulations conflict with provisions of this Section
4.06, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.06 by virtue thereof.
SECTION 4.07. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall 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.
The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c), to
restrictions:
(A) in effect on the Issue Date;
(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 in any
material respect, as reasonably determined by the Board of
Directors
70
(as evidenced by a Board Resolution), than those
under the agreement evidencing the Debt so Refinanced;
(D) resulting from the Incurrence of any Debt permitted
pursuant to Section 4.03, provided that (i) the restriction
is no less favorable to the Holders in any material respect,
as reasonably determined by the Board of Directors (as
evidenced by a Board Resolution), than the restrictions of
the same type contained in this Indenture and (ii) the Board
of Directors determines (as evidenced by a Board Resolution)
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, are customary for
Qualified Receivables Transactions; and
(2) with respect to clause (c) only, to restrictions:
(A) relating to Debt that is permitted to be Incurred
and secured 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
71
(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 shall not, and shall 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;
(b) if such Affiliate Transaction involves aggregate payments or
value to the Affiliate in excess of $25.0 million in any 12-month period,
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 Section 4.08 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.
72
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)(3), (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 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 in connection with
73
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
in any material respect) or any transaction contemplated thereby.
SECTION 4.09. Guarantees by Subsidiaries. (a) The Company shall
cause each Subsidiary that becomes or is a Collateral Subsidiary Guarantor or
an obligor with respect to any of the Secured Obligations (except a Foreign
Subsidiary that becomes an obligor solely in respect of Debt or other
obligations of itself or another Foreign Subsidiary), in each case, to become
a Subsidiary Guarantor by becoming a party to this Indenture, the Second
Priority Subsidiary Guarantee Agreement and the Intercreditor Agreement, if
such Subsidiary is not already a Subsidiary Guarantor party thereto, and
delivering evidence thereof to the Trustee at the time such Person becomes a
Collateral Subsidiary Guarantor or such an obligor.
(b) The Company shall not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor to Guarantee the payment of any Debt or
Capital Stock of the Company (other than Guarantees permitted pursuant to
clauses (j) or (o) of Section 4.03), except that a Restricted Subsidiary
that is not a Subsidiary Guarantor may Guarantee Debt of the Company,
provided that:
(1) such Debt and the Debt represented by such Guarantee is
permitted by Section 4.03;
(2) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to this Indenture providing for
a Guarantee of payment of the Securities by such Restricted
Subsidiary and such Guarantee of Debt of the Company:
(A) unless such Debt is a Subordinated Obligation,
shall be pari passu (or subordinate) in right of payment to
and on substantially the
74
same terms as (or less favorable to such Debt than)
such Restricted Subsidiary's Guarantee with respect to
the Securities; and
(B) 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.
(c) Upon any Subsidiary becoming a Subsidiary Guarantor as
described above, such 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
75
(2) such Guarantee of the Securities constitutes a valid,
binding and enforceable obligation of such Subsidiary, except
insofar as enforcement thereof may be limited by bankruptcy,
insolvency or similar laws (including all laws relating to
fraudulent transfers) and except insofar as enforcement thereof is
subject to general principles of equity.
In addition, no Subsidiary Guarantor shall Guarantee, directly or
indirectly, (1) any Debt of the Company that is subordinate or junior in right
of payment to any other Debt of the Company unless such Guarantee is expressly
subordinate in right of payment to the Subsidiary Guarantee of such Subsidiary
Guarantor or (2) any Debt of the Company other than Senior Obligations unless
such Guarantee is expressly subordinate in right of payment to or ranks pari
passu with, the Subsidiary Guarantee of such Subsidiary Guarantor.
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 or the
applicable Subsidiary Guarantee pursuant to Section 4.05; and
(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 is not required to be a Subsidiary
Guarantor pursuant to this Indenture; 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
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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, 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. Additional Security Documents. From and after the
Issue Date, if the Company or any Subsidiary of the Company executes and
delivers in respect of any Property of such Person any mortgages, deeds of
trust, security agreements, pledge agreements or similar instruments to secure
Debt or other obligations that at the time constitute Secured Obligations
(except for a Foreign Subsidiary that does so solely in respect of Debt or
other obligations of itself or another Foreign Subsidiary), then the Company
shall, or shall cause such Subsidiary to, execute and deliver substantially
identical mortgages, deeds of trust, security agreements, pledge agreements or
similar instruments in order to vest in the Second Priority Collateral Trustee
a perfected second priority security interest, subject only to Permitted Liens
and the Intercreditor Agreement, in such Property for the benefit of the
Second Priority Collateral Trustee on behalf of the holders of the Securities,
among others, and thereupon all provisions of this Indenture relating to the
Collateral will be deemed to relate to
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such Property to the same extent and with the same force and effect.
SECTION 4.13. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require the Company to
repurchase all or any part of such Xxxxxx'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 (1) 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 (2) send, by first-class mail, with a copy to
the Trustee, to each Holder, at such Holder's address appearing in the
Security Register, a notice stating: (A) that a Change of Control Offer
is being made pursuant to this Section 4.13 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 must follow in order to
tender their Securities (or portions thereof) for payment and the
procedures that Holders 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
78
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
4.13. 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 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 4.13. To the extent that the
provisions of any securities laws or regulations conflict with the
provisions of this Section 4.13, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section 4.13 by virtue thereof.
SECTION 4.14. 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.
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ARTICLE V
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The
Company shall 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:
(1) 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;
(2) 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 premium, if any, and interest on, all the Securities,
according to their tenor, and the due and punctual performance and
observance of all the covenants and conditions of this Indenture
to be performed by the Company;
(3) 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;
(4) 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 (4) and clause (5) 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
80
or series of transactions), no Default or Event of Default shall
have occurred and be continuing;
(5) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, either (A) 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 the
first paragraph of Section 4.03 or (B) 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
(6) 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.
(b) The Company shall not permit any Subsidiary Guarantor to
merge, consolidate or amalgamate with or into any other Person (other
than a merger of a Wholly Owned Restricted Subsidiary into such
Subsidiary Guarantor, or a merger of a Subsidiary Guarantor into the
Company or another Subsidiary Guarantor) 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:
(1) such Subsidiary Guarantor will be the Surviving Person
or the Surviving Person (if other than such Subsidiary Guarantor)
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;
(2) the Surviving Person (if other than such Subsidiary
Guarantor) expressly assumes, by a Subsidiary Guarantee or a
supplement to the Second Priority Subsidiary Guarantee Agreement
or a supplemental indenture in form satisfactory to the Trustee,
executed and delivered to the Trustee by such Surviving Person,
the due and punctual performance and
81
observance of all the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee;
(3) 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 (3), any Debt that becomes,
or is anticipated to become, an obligation of the Surviving
Person, the Company or any Restricted Subsidiary as a result of
such transaction or series of transactions as having been Incurred
by the Surviving Person, the Company 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;
and
(4) 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 such Subsidiary Guarantee, 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 foregoing provisions (other than clause (3)) shall not
apply to (A) any transactions which do not constitute an Asset Sale if the
Subsidiary Guarantor is otherwise being released from its Subsidiary Guarantee
at the time of such transaction in accordance with this Indenture and the
Second Priority Collateral Documents or (B) any transactions which constitute
an Asset Sale if the Company has complied with Section 4.06 and the Subsidiary
Guarantor is released from its Subsidiary Guarantee at the time of such
transaction in accordance with this Indenture and the Second Priority
Collateral Documents.
The Surviving Person shall succeed to, and be substituted
for, and may exercise every right and power of the Company under this
Indenture (or of the Subsidiary Guarantor under the Subsidiary Guarantee, as
the case may be), 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
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(b) a lease,
shall not be released from any obligation to pay the principal of, premium, if
any, and interest on, the Securities.
ARTICLE VI
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. The following events shall be
"Events of Default":
(a) the Company fails to make the payment of any interest on any
of the Securities when the same becomes due and payable, and such failure
continues for a period of 30 days;
(b) the Company fails to make the payment of any principal of, or
premium, if any, on any of the Securities when the same becomes due and
payable at its Stated Maturity, upon acceleration, redemption, optional
redemption, required repurchase or otherwise;
(c) the Company fails to comply with Article V;
(d) 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 (a), (b) or (c)) and such failure
continues for 30 days after written notice is given to the Company as
provided below;
(e) a default under any Debt by the Company or any Restricted
Subsidiary that 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 (the "cross
acceleration provisions");
(f) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(1) commences a voluntary case;
(2) consents to the entry of an order for relief against it
in an involuntary case;
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(3) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(4) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(g) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(1) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(2) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(3) 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
(h) any judgment or judgments for the payment of money in an
aggregate amount in excess of $35,000,000 or its foreign currency
equivalent at the time is rendered 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;
(i) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guarantee and
this Indenture) and such default continues for 10 days after notice or
any Subsidiary Guarantor denies or disaffirms its obligations under its
Subsidiary Guarantee (the "guarantee provisions");
(j) the material impairment of the security interests under the
Second Priority Collateral Documents (other than in accordance with the
terms of the Second Priority Collateral Documents and this Indenture as
each may be amended from time to time) for any reason other than the
satisfaction in full of all obligations under this Indenture and
discharge of the Second Priority Collateral Documents and this Indenture
or any security interest
84
created thereunder shall be declared invalid or unenforceable or the
Company or any of its Subsidiaries asserting, in any pleading in any
court of competent jurisdiction, that any such security interest is
invalid or unenforceable (the "security default provisions"); and
(k) for so long as the 12.5% Notes remain outstanding, a default
under clause (9) or (10) of the definition of "Event of Default" under
the Indenture governing the 12.5% Notes that is not cured or waived in
accordance with the terms thereof.
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 (d), (i) or (j) is not an Event of Default
until the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities then outstanding notify the Company (and in the case
of such 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 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 with respect to
the Securities (other than an Event of Default specified in Section 6.01(f) or
6.01(g) with respect to the Company) shall have occurred and be continuing,
the Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Securities then outstanding by notice to the
Company and the Trustee, may declare to be
85
immediately due and payable the principal amount at maturity of all the
Securities then outstanding, plus accrued but 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(f) or 6.01(g) 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 and annul such 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, premium 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 Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
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, premium, if any, 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 Holder 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
86
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 Holders 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 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 such request, within 60 days after
such notice, request and offer.
The foregoing limitations on the pursuit of remedies by a Holder
shall not apply to a suit instituted by a Holder for the enforcement of
payment of the principal of and premium, if any, or interest on such Security
on or after the applicable due date specified in such Security. A Holder may
not use this Indenture to prejudice the rights of another Holder or to obtain
a preference or priority over another Holder.
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
87
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(a) or (b) 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 Holders 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.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, 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 Holders 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 Holders pursuant to this Section 6.10. At least 15 days before such record
date, the Company shall mail to each Holder and the Trustee a notice that
states the record date, the payment date and amount to be paid.
88
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 reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section 6.11 does not
apply to a suit by the Trustee, a suit by a Holder 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.
SECTION 6.13. Enforcement of Remedies. Notwithstanding any of the
foregoing, any enforcement of the Guarantees under the Second Priority
Guarantee Agreement or any remedies with respect to the Second Priority
Collateral under the Second Priority Collateral Documents is subject to the
provisions of the Intercreditor Agreement.
ARTICLE VII
Trustee
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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:
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(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 7.01;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; 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
7.01.
(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.
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(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.
(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 hereunder in good faith and in accordance with the advice
or opinion of such counsel.
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(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 Holder 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 Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
February 1 each year beginning with February 1, 2004, the Trustee shall mail
to each Holder a brief report dated as of such February 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 Holders shall
be filed with the Commission 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.
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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 7.07,
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.
The Company's payment obligations pursuant to this Section 7.07
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(f) or (g) 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
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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 Holders. 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 Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, 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 Holder 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 7.08, the Company's obligations under
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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 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.
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ARTICLE VIII
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability of 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, 4.13 and 4.14 and the operation of Sections 6.01(e), 6.01(f),
6.01(g), 6.01(h), 6.01(i), 6.01(j) and 6.01(k) (but, in the case of
Sections 6.01(f) and (g), with respect only to Significant Subsidiaries)
and the limitations contained in Section 5.01(a)(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 its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default specified in Sections
6.01(d) (with respect to the covenants of Article IV identified in the
immediately preceding paragraph), 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i),
6.01(j) or 6.01(k) (with respect only to Significant Subsidiaries in the case
of Sections 6.01(f) and 6.01(g)) or because of the failure of the Company to
comply with the limitations contained in Section 5.01(a)(5). If the Company
exercises its legal defeasance option or its covenant defeasance option, the
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Second Priority Lien and the Second Priority Mortgages, as they pertain to the
Securities, will be released and each Subsidiary Guarantor will be released
from all its obligations under its Subsidiary Guarantee, as it pertains to the
Securities.
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:
(a) 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;
(b) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent certified public 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;
(c) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(f) or 6.01(g) occurs with
respect to the Company or any other Person making such deposit which is
continuing at the end of the period;
(d) no Default or Event of Default has occurred and is continuing
on the date of such deposit and after giving effect thereto;
(e) such deposit does not constitute a default under any other
agreement or instrument binding on the Company;
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(f) 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;
(g) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that
(1) the Company has received from the Internal Revenue
Service a ruling; or
(2) since the date of this Indenture there has been a change
in the applicable Federal income tax law, to the effect, in either
case, that, and based thereon such Opinion of Counsel shall
confirm that, the Holders will not recognize income, gain or loss
for Federal income tax purposes as a result of such 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;
(h) 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 Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred; and
(i) 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 accordance with this
Indenture to the payment of principal of and interest on the Securities.
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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, Holders 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. Without the consent of
any Holders, the Company, when authorized by a Board Resolution, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the
Securities and, subject to any other consent required under the terms of the
applicable Second
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Priority Collateral Documents, the Second Priority Collateral Documents, in
each case without notice to:
(a) cure any ambiguity, omission, defect or inconsistency;
(b) provide for the assumption by a successor corporation of the
obligations of the Company or any Subsidiary Guarantor under this
Indenture or any Second Priority Collateral Documents;
(c) 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;
(d) add additional Guarantees with respect to the Securities or
release Subsidiary Guarantors from Subsidiary Guarantees as provided by
the terms of this Indenture or the Subsidiary Guarantees;
(e) further secure the Securities (and if such security interest
includes Liens on Property of the Company, provide for releases of such
Property on terms comparable to the terms on which Collateral
constituting Property of Subsidiary Guarantors may be released), release
all or any portion of the Collateral pursuant to the terms of the Second
Priority Collateral Documents, add to the covenants of the Company or the
Subsidiary Guarantors for the benefit of the Holders or surrender any
right or power herein conferred upon the Company;
(f) in the case of this Indenture, make any change that does not
adversely affect the rights of any Holder;
(g) make any change to the subordination provisions of a
Subsidiary Guarantee or any Second Priority Collateral Documents that
would limit or terminate the benefits available to any holder of Senior
Obligations under such provisions; or
(h) make any change to comply with any requirements of the
Commission in connection with the qualification of this Indenture under
the Trust Indenture Act.
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After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. (a) The Company, when
authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee
may amend this Indenture or the Securities and, subject to any other consent
required under the terms of the applicable Second Priority Collateral
Documents, the Second Priority Collateral Documents, and (subject as
aforesaid) waive any past default or compliance with any provisions (except,
in the case of this Indenture, as provided in Section 6.04), with the 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 Holder affected thereby, an amendment may not:
(1) amend this Indenture to reduce the amount of Securities
whose Holders are required to consent to an amendment or waiver;
(2) amend this Indenture to reduce the rate of or extend the
time for payment of interest on any Security;
(3) amend this Indenture to reduce the principal of or
extend the Stated Maturity of any Security;
(4) amend this Indenture to make any Security payable in
money other than that stated in the Security;
(5) amend this Indenture or any Subsidiary Guarantee to
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 Holder's Securities or any Subsidiary
Guarantee;
(6) amend this Indenture or any Subsidiary Guarantee to
subordinate the Securities or any Subsidiary Guarantee to any
other obligation of the Company or the applicable Subsidiary
Guarantor (except in the case of the Second Priority Subsidiary
Guarantee Agreement, as permitted by paragraph (b) below);
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(7) amend this Indenture to reduce the premium payable upon
the redemption of any Security or change the time at which any
Security may be redeemed in accordance with Article III;
(8) amend this Indenture to 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 relating thereto
must be made or at which the Securities must be repurchased
pursuant to such Change of Control Offer; or
(9) at any time after the Company is obligated to make a
Prepayment Offer with the Excess Proceeds from Asset Sales, amend
this Indenture to change the time at which such Prepayment Offer
must be made or at which the Securities must be repurchased
pursuant thereto.
(b) Without limiting the foregoing, the Holders will be deemed to
have consented for purposes of the Second Priority Collateral Documents
(including for purposes of determining actions of the Second Priority
Instructing Group) to (i) any amendment, waiver or other modification
(including any consent thereunder) of the Second Priority Collateral
Documents (including any annexes, exhibits or schedules thereto) that
would not be adverse to the Holders in any material respect, as
reasonably determined by the Board of Directors (as evidenced by a Board
Resolution), and (ii) to any of the following amendments, waivers and
other modifications to the Second Priority Collateral Documents (the
"Second Priority Collateral Documents Amendments"):
(1) an amendment to the Intercreditor Agreement to modify
the restriction on changes to Second Priority Collateral Documents
and Second Priority Debt Documents without the consent of holders
of Senior Obligations or their representatives (but without
modifying any provisions relating to consent of Holders or other
Second Priority Debt to various actions);
(2) to the extent such amendment, waiver or modification
relates to the amount (including amounts of Senior Obligations,
Senior Second Priority Debt and Second Priority Debt) or the terms
of Debt (including as reflected in related definitions such as
"Replacement Second Priority Debt" and "Replacement Senior Second
Priority Debt") that may be secured by Liens on the Collateral, as
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may be consented to by the Senior Collateral Agent or the Senior
Banks in accordance with the terms of the Intercreditor Agreement
or the applicable Second Priority Collateral Document (but without
limiting any of the restrictive covenants and related definitions
contained in this Indenture);
(3) an amendment to the Second Priority Subsidiary Guarantee
Agreement to subordinate, on comparable terms to those provided
therein with respect to Senior Bank Obligations, the obligations
of the Subsidiary Guarantors under the Second Priority Subsidiary
Guarantee Agreement to the prior payment when due of the
guarantees by such Subsidiary Guarantor of any Additional Senior
Debt, provided that such amendment applies equally with respect to
all Second Priority Debt;
(4) an amendment to the Second Priority Collateral Documents
to provide for a class of Secured Obligations having rights in
respect of the Collateral that are subordinated to the Second
Priority Debt Obligations to at least the same extent that the
Second Priority Debt Obligations are subordinated to the Senior
Obligations, as reasonably determined by the Board of Directors
(as evidenced by a Board Resolution), provided that (A) such Debt
is not secured by Liens on any assets other than Collateral and
(B) to the extent such Secured Obligations represent Debt of a
Subsidiary of the Company, such Subsidiary is a Subsidiary
Guarantor and such Debt is subordinated to the prior payment of
the Second Priority Debt Obligation to at least the same extent as
the Subsidiary Guarantees are subordinated to the Senior
Obligations (determined as aforesaid);
(5) an amendment to the Intercreditor Agreement to provide,
on comparable terms to those provided therein with respect to
Senior Bank Obligations, the lenders under any Senior Obligations
(including Additional Senior Debt Obligations) with rights and
remedies with respect to the Collateral, including the rights to
distributions of proceeds of Collateral and rights to control all
remedies or other activities related to the Collateral so long as
any Senior Obligations remain outstanding, comparable to those
provided therein with respect to the Senior Bank Obligations,
provided that (A) the holders of Senior Obligations and their
representatives have obligations to holders of Second Priority
Debt and their representatives comparable to the obligation of
holders of Senior Bank
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Obligations and their representatives provided therein and (B) such
amendment applies equally with respect to all Second Priority Debt;
(6) an amendment to the Intercreditor Agreement to change
the conditions that must be satisfied in order for a
representative of additional Debt to become a party to the
Intercreditor Agreement, provided that (A) such amendment is
consented to by the Senior Collateral Agent in accordance with the
terms of the Intercreditor Agreement, (B) the conditions continue
to require a representative of such holders on behalf of such
holders to become a party to the Intercreditor Agreement, (C) such
amendment applies equally with respect to all Second Priority
Debt, (D) the ability of the Second Priority Collateral Trustee
and the holders of Second Priority Debt and their representatives
to enforce their rights under the Intercreditor Agreement are not
adversely affected in any material respect by such amendment and
(E) the Lien on the Collateral securing the Subsidiary Guarantees
of the Securities will not be impaired (other than the addition of
new Secured Obligations that will be secured by the Collateral) as
a result of implementation of such amendment;
(7) an amendment, waiver or modification to the Second
Priority Collateral Documents to effectuate (A) (i) the release of
assets included in the Collateral from the Liens securing the
Securities (I) if all other Liens on those assets securing the
Senior Obligations (including all commitments thereunder) are
released, (II) if the Company or a Subsidiary of the Company
provides substitute Collateral for all or a portion of those
assets with at least an equivalent fair value, as determined in
good faith by the Board of Directors (as evidenced by a Board
Resolution) or (III) if those assets are owned by a Subsidiary
that is a Subsidiary Guarantor and that Subsidiary Guarantor is
released from its Subsidiary Guarantee, provided that in the case
of each of clauses (I)-(III) after giving effect to the release
there remains no Lien on such assets securing any Secured
Obligations, or (ii) the release of the Subsidiary Guarantee of a
Subsidiary Guarantor of the Securities upon such Subsidiary
Guarantor ceasing to Guarantee or be an obligor in respect of, or
to pledge any of its assets to
104
secure, any Senior Obligations, provided that after giving effect
to the release the Subsidiary Guarantor ceases to Guarantee or be
an obligor in respect of, or to pledge its assets to secure, any
Secured Obligations and provided, in the case of both (i) and
(ii), that after giving effect to the release, at least $300
million in aggregate principal amount of Senior Obligations under
Credit Facilities will remain outstanding or (B) a release of
Collateral or a Subsidiary Guarantee of a Subsidiary Guarantor
otherwise in accordance with the terms of this Indenture and the
Second Priority Collateral Documents;
(8) with respect to any amendment, waiver or modification
agreed to by the Senior Collateral Agent or the holders of the
Senior Obligations under any provision of any Senior Collateral
Documents, a comparable amendment, waiver or modification to the
comparable provision of the comparable Second Priority Collateral
Document, provided that such amendment, waiver or modification
applies equally with respect to all Second Priority Debt;
(9) upon request of the Company without consent of any
Holders unless, within 20 Business Days after written notice of
the proposed amendment, waiver or modification is mailed to the
Trustee and Holders, 25% in interest of the Holders delivers to
the Trustee written objection thereto;
(10) with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities then
outstanding pursuant to Section 9.02(a); or
(11) an amendment, waiver or modification permitted pursuant
to Section 9.01.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing such deemed
consent of the Holders. The Trustee, in its capacity as Second Priority
Representative to Holders, shall take such action under the Second Priority
Collateral Documents as may be requested by the Company to give effect to any
such amendment, waiver or modification. Notwithstanding the foregoing, no such
consent or deemed consent shall be deemed or construed to represent an
amendment or waiver, in whole or in part, of any provision of this Indenture
or the Securities.
The foregoing shall not limit the right of the Company to amend,
waive or otherwise modify the Second Priority Collateral Documents in
accordance with their terms.
(c) In addition and without limiting the foregoing, (x) Collateral
securing a Subsidiary Guarantee of the Securities
105
or (y) a Subsidiary Guarantee of the Securities provided by a
Subsidiary Guarantor may be released only in respect of the Securities:
(i) upon request of the Company without consent of any
Holder unless, within 20 Business Days after written notice of the
proposed release of such (1) Collateral from the Liens securing
Subsidiary Guarantees of the Securities or (2) Subsidiary
Guarantor, as the case may be, is mailed to the Trustee and the
Holders, Holders of 25% of the outstanding principal amount of
Securities deliver to the Company a written objection to such
release; or
(ii) with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities then
outstanding.
Under the circumstances described in clauses (i) and (ii) above,
Holders shall also be deemed to have consented to such release for purposes of
any consent required under the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group),
subject to any other consent required under the Second Priority Collateral
Documents.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing the consent of
the Holders to such release. The Trustee, in its capacity as Second Priority
Representative for Holders, shall take such action under the Second Priority
Collateral Documents or otherwise as may be requested by the Company to give
effect to any such release.
(d) 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 each Holder at such Xxxxxx's address appearing in the
Security Register a notice briefly describing such amendment. The failure to
give such notice to all Holders, 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.
106
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
Holder. 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 Holders 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 Holders 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.
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
107
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. Xxxx, Esq.
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
108
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 Holder shall be mailed to
the Holder at the Holder'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 Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders 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 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;
109
(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 Holders. The
Registrar and the Paying Agent or co-registrar may make reasonable rules for
their functions.
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. 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
110
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 Holder 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.
111
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
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE A HERETO,
By_________________________
Name:
Title
BNY MIDWEST TRUST COMPANY,
By_________________________
Name:
Title
112
SCHEDULE A
----------
SUBSIDIARY GUARANTORS
---------------------
Corporations
------------
Thrifty PayLess, Inc.
Rite Aid of Vermont, Inc.
Rite Aid of Ohio, Inc.
Rite Aid of Maine, Inc.
Rite Aid of West Virginia, Inc.
The Lane Drug Company
0000 Xxxxxxx Xxxx - Brooklyn Inc.
0000 Xxxxxx Xxxx Xxxx - Xxxxxxxxxx Corp.
0000 Xxxxxxxxxxxx Xxxxxx Xxxx - Xxxxxxxxxxxx Xxxx, Inc.
5277 Associates, Inc.
000 Xxx Xxxxxx Corp.
5600 Superior Properties, Inc.
000-000 Xxxxx Xx. Corp.
Apex Drug Stores, Inc.
Broadview and Wallings - Broadview Heights Ohio, Inc.
Dominion Action Four Corporation
Dominion Action One Corporation
Dominion Action Three Corporation
Dominion Action Two Corporation
Dominion Drug Stores Corp.
Drug Fair of PA, Inc.
Drug Fair, Inc.
Eagle Managed Care Corp.
England Street-Asheland Corporation
GDF, Inc.
Harco, Inc.
K&B Alabama Corporation
K&B Florida Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Incorporated
K&B Tennessee Corporation
K&B Texas Corporation
K&B, Incorporated
Keystone Centers, Inc.
Lakehurst and Broadway Corporation
Ocean Acquisition Corporation
P.L.D. Enterprises, Inc.
Xxxxxx Drive and Navy Boulevard Property Corporation
PDS-1 Michigan, Inc.
Perry Distributors, Inc.
Perry Drug Stores, Inc.
PL Xpress, Inc.
Portfolio Medical Services, Inc.
Rack Rite Distributors, Inc.
Ram-Utica, Inc.
RDS Detroit, Inc.
Read's Inc.
Rite Aid Drug Palace, Inc.
Rite Aid Hdqtrs. Corp
Rite Aid of Alabama, Inc.
Rite Aid of Connecticut, Inc.
Rite Aid of Delaware, Inc.
Rite Aid of Florida, Inc.
Rite Aid of Georgia, Inc.
Rite Aid of Illinois, Inc.
Rite Aid of Indiana, Inc.
Rite Aid of Kentucky, Inc.
Rite Aid of Maryland, Inc.
Rite Aid of Massachusetts, Inc.
Rite Aid of Michigan, Inc.
Rite Aid of New Hampshire, Inc.
Rite Aid of New Jersey, Inc.
Rite Aid of New York, Inc.
Rite Aid of North Carolina, Inc.
Rite Aid of Pennsylvania, Inc.
Rite Aid of South Carolina, Inc.
Rite Aid of Tennessee, Inc.
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid Realty Corp.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
Rite Aid Venturer #1, Inc.
Rite Fund, Inc.
Rite Investments Corp.
Rx Choice, Inc.
Sophie One Corp.
Super Ice Cream Suppliers, Inc.
Super Pharmacy Network, Inc.
Super Tobacco Distributors, Inc.
The Xxxx Company
Thrifty Corporation
Virginia Corporation
W.R.A.C., Inc.
Limited Liability Companies
---------------------------
000 Xxxxx Xxxxxxxx - Xxxxxx, Ohio, LLC
2
Eighth and Water Streets - Urichsville, Ohio, LLC
Gettysburg and Xxxxxx-Dayton, Ohio, LLC
Xxxxxxxx & Chillicothe Roads - Chesterland, LLC
Xxxxxx & Xxxxxxx, LLC
Silver Springs Road - Baltimore, Maryland/One, LLC
Silver Springs Road - Baltimore, Maryland/Two, LLC
State Street and Hill Road-Xxxxxx, Ohio, LLC
000 Xxxxxxxx Xxxxxx Norfolk, LLC
0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx, LLC
0000 Xxxxxxxxxx, X.X.X.
Xxx & Government Streets - Mobile, Alabama, LLC
Baltimore/Annapolis Boulevard and Governor Richie Highway
- Glen Burnie, Maryland, LLC
Central Avenue and Main Street - Petal, MS, LLC
Fairground, L.L.C.
Gratiot & Center - Saginaw Township, Michigan, LLC
Name Rite, L.L.C.
Northline & Xxx - Xxxxxx -
Southgate, LLC
Paw Paw Lake Road & Paw Paw Avenue - Coloma, Michigan, LLC
Seven Mile and Evergreen - Detroit, LLC
State & Fortification Streets - Jackson, Mississippi, LLC
Tyler and Xxxxxxx Roads, Birmingham - Alabama, LLC
Rite Aid Services, L.L.C.
3
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:
"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.
"Exchange Securities" means the 9 1/2% Senior Secured Notes due
2011 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to a Registration Agreement.
"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 LLC, X.X. Xxxxxx Securities Inc. and Fleet Securities,
Inc.
"Initial Securities" means the 9 1/2% Senior Secured Notes due
2011, 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 $300,000,000 issued on February 12, 2003.
"Private Exchange" means the offer by the Company, pursuant to
Section 1 of the Registration Agreement, or pursuant to any similar provision
of any
4
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 9 1/2% Senior Secured
Notes due 2011 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 February
5, 2003, among the Company, the Subsidiary Guarantors named therein 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 February 12, 2003, among the Company, the Subsidiary
Guarantors named therein 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.
"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
5
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
---- -------
Term
"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
6
Securities initially 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
7
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.
(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
$300,000,000, (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 a 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:
8
(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) 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 or in reliance upon
another exemption from the registration requirements of the
Securities Act, (i) a certification to that effect (in the
form set forth on the reverse of the Initial Security) and
(ii) if the Company so requests as provided in the form set
forth on the reverse of the Initial Security, 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
9
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 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
10
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 SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY 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" (WITHIN THE MEANING OF RULE 144 OF THE
SECURITIES ACT) 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 SECURITY 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 SECURITY), (3) IN
AN OFFSHORE TRANSACTION (AS DEFINED UNDER REGULATION S UNDER THE
SECURITIES ACT) 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 SECURITY),
(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 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
11
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 SECURITY AGREES
THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, 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 SECURITY 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."
(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
12
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
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
13
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, 4.13 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
14
co-registrar may deem and treat the person in whose name a
Security is 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
15
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 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(c), bear the restricted securities
legend set forth in Exhibit 1 hereto.
16
(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.
17
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 SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS
SECURITY 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" (WITHIN THE MEANING OF RULE 144
OF THE SECURITIES ACT) 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 SECURITY 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 SECURITY), (3) IN AN OFFSHORE
TRANSACTION (AS DEFINED UNDER REGULATION S UNDER THE SECURITIES ACT) 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 SECURITY), (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 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
SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, 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 SECURITY 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.
2
[FORM OF FACE OF INITIAL SECURITY]
No.:__________ [Up to]** $__________
9 1/2% Senior Secured Note due 2011
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 February 15, 2011.
Interest Payment Dates: February 15 and August 15, commencing
on August 15, 2003.
Record Dates: February 1 and August 1.
________________________
* 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".
3
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:
BNY MIDWEST TRUST COMPANY,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________
Authorized Signatory
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9 1/2% Senior Secured Note due 2011
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 February 15 and August 15 of each
year, commencing August 15, 2003. 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 February 12, 2003. 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
February 12, 2003, among the Company, the Subsidiary Guarantors named therein
and the Initial 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 and the Subsidiary
Guarantors are required to file the Shelf Registration Statement in accordance
with Section 2 of the Registration Agreement, the Company or any Subsidiary
Guarantor does not so file the Shelf Registration Statement on or prior to the
30th day after the Company's obligation
5
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 Registration Statement filed
and declared effective, provided that such 30-day period shall toll during a
Suspension Period, or (vi) any Suspension Periods exceed, in the aggregate, 75
days during any 365-day period (each such event referred to in clauses (i)
through (vi), a "Registration Default"), the Company shall be obligated to pay
Additional Interest 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.
2. Method of Payment
-----------------
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders at the close of business
on the February 1 or August 1 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. 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
6
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).
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
February 12, 2003 (the "Indenture"), among the Company, the Subsidiary
Guarantors named therein 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 Holders
are referred to the Indenture and the TIA for a statement of those terms.
The Securities are unsecured, unsubordinated obligations of the
Company. The Company's obligations under the Securities are Guaranteed,
subject to certain limitations, by the Subsidiary Guarantors pursuant to
Subsidiary Guarantees, subject to release of the Subsidiary Guarantees as
provided in the Indenture or such Subsidiary Guarantee. This Security is one
of the Original Securities referred to in the Indenture issued in an aggregate
principal amount of $300,000,000. 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
7
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 and each Subsidiary
Guarantor 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 or such Subsidiary Guarantor.
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 February 15, 2007, 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 Redemption Date).
Any notice to Holders of such a redemption shall include the appropriate
calculation of the Redemption Price, but need not 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 (i) 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 February 15, 2007 (such
Redemption Price being set forth in the table below) plus (2) all required
interest payments due on such Security through February 15, 2007 (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.
8
"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
February 15, 2007; provided, however, that if the period from the Redemption
Date to February 15, 2007 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 February 15, 2007, 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 interest due on the
relevant Interest Payment Date that is on or prior to the Redemption Date), if
redeemed during the 12-month period beginning on February 15 of the years set
forth below:
Redemption Period Price
----------------- -----
2007..............................................104.750%
2008..............................................102.375%
2009 and thereafter...............................100.000%
Notwithstanding the foregoing, at any time and from time to time
prior to February 15, 2006, the Company may redeem up to 35% of the original
aggregate principal amount of the Securities (including Securities issued after
February 12, 2003, if any) with the proceeds from one or more Equity Offerings
by the Company, at a Redemption Price equal to 109.5% 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 Redemption Date); 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 February 12, 2003, if any)
remains outstanding. Any such redemption shall be made within 75
9
days of such Equity Offering upon not less than 30 nor more than 60 days'
prior notice.
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 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 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
--------------------------------
10
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 "Asset Sales
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 permitted
by the Indenture and the amount of Excess Proceeds will be reset to zero.
9. Guarantees; Security
--------------------
The Indenture provides that, under certain circumstances, the
Securities will be guaranteed pursuant to Subsidiary Guarantees. Subsidiary
Guarantees may be released in various circumstances, including in certain
circumstances without the consent of Holders.
The Indenture provides that, under certain circumstances, the
Securities or Subsidiary Guarantees must be secured by Liens on certain
Property of the Company or Subsidiary Guarantors. Liens securing the
Securities or Subsidiary Guarantees may be released in various circumstances,
including in certain circumstances without the consent of Holders.
10. 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
11
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.
11. Persons Deemed Owners
--------------------
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
---------------
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee 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.
13. 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.
14. Amendment, Waiver, Deemed Consents, Releases
--------------------------------------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Second Priority Collateral Documents or the Securities may be
amended without prior notice to any Holder 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 Holders, the
Company, when authorized by a Board Resolution, the Subsidiary Guarantors and
the Trustee may amend the Indenture or the Securities and, subject to any
other consent required under the terms
12
of the applicable Second Priority Collateral Documents, the Second Priority
Collateral Documents to: (i) cure any ambiguity, omission, defect or
inconsistency; (ii) provide for the assumption by a successor corporation of
the obligations of the Company or any Subsidiary Guarantor under the Indenture
or any Second Priority Collateral Documents; (iii) 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;
(iv) add additional Guarantees with respect to the Securities or release
Subsidiary Guarantors from Subsidiary Guarantees as provided by the terms of
the Indenture or the Subsidiary Guarantees; (v) further secure the Securities
(and if such security interest includes Liens on Property of the Company,
provide for releases of such Property on terms comparable to the terms on
which Collateral constituting Property of Subsidiary Guarantors may be
released), release all or any portion of the Collateral pursuant to the terms
of the Second Priority Collateral Documents, add to the covenants of the
Company or the Subsidiary Guarantors for the benefit of the Holders or
surrender any right or power conferred upon the Company under the Indenture;
(vi) in the case of the Indenture, make any change that does not adversely
affect the rights of any Holder; (vii) make any change to the subordination
provisions of a Subsidiary Guarantee or any Second Priority Collateral
Documents that would limit or terminate the benefits available to any holder
of Senior Obligations under such provisions; or (viii) make any change to
comply with any requirements of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act.
Without limiting the foregoing, the Holders will be deemed to have
consented for purposes of the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group)
to (i) any amendment, waiver or other modification (including any consent
thereunder) of the Second Priority Collateral Documents (including any
annexes, exhibits or schedules thereto) that would not be adverse to the
Holders in any material respect, as reasonably determined by the Board of
Directors (as evidenced by a Board Resolution),
13
and (ii) to specified Second Priority Collateral Documents Amendments.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing such deemed
consent of the Holders. The Trustee, in its capacity as Second Priority
Representative to Holders, shall take such action under the Second Priority
Collateral Documents as may be requested by the Company to give effect to any
such amendment, waiver or modification.
In addition and without limiting the foregoing, (x) Collateral
securing a Subsidiary Guarantee of the Securities or (y) a Subsidiary
Guarantee of the Securities provided by a Subsidiary Guarantor may be released
only in respect of the Securities (i) upon request of the Company without
consent of any Holder unless, within 20 Business Days after written notice of
the proposed release of such (1) Collateral from the Liens securing Subsidiary
Guarantees of the Securities or (2) Subsidiary Guarantor, as the case may be,
is mailed to the Trustee and the Holders, Holders of 25% of the outstanding
principal amount of Securities deliver to the Company a written objection to
such release; or (ii) with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities then outstanding.
Under the circumstances described in clauses (i) and (ii) above,
Holders shall also be deemed to have consented to such release for purposes of
any consent required under the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group),
subject to any other consent required under the Second Priority Collateral
Documents.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing the consent of
the Holders to such release. The Trustee, in its capacity as Second Priority
Representative for Holders, shall take such action under the Second Priority
Collateral Documents or otherwise as may be requested by the Company to give
effect to any such release.
15. Defaults and Remedies
---------------------
14
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, premium or interest
that has become due solely because of the acceleration.
16. 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.
17. 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 consideration for the issue of the Securities.
15
18. Successors
----------
Subject to certain exceptions set forth in the Indenture, when a
successor assumes all the obligations of its predecessor under the Securities
and the Indenture in accordance with the terms of the Indenture, the
predecessor will be released from those obligations.
19. 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.
20. 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).
21. 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.
22. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the 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 upon written request and
without charge to the Holder a copy of the Indenture which has in it the text
of this Security.
16
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) 0 to the Company; or
(2) 0 pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) 0 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
17
buyer to whom notice is given that
such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance
with Rule 144A under the Securities Act of 1933; or
(4) 0 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) 0 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) 0 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 (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
18
medallion program or other
signature guarantor acceptable
to the Trustee
___________________________________________________________
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
19
[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 Exchange Amount of decrease Amount of increase Principal amount of Signature of
in Principal Amount in Principal this Global authorized
of this Global Amount of this Security following signatory of
Security Global Security such decrease or Trustee or
increase Securities
Custodian
20
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 4.13 (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 4.13 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.
21
[FORM OF FACE OF EXCHANGE SECURITY]
No.___________ [Up to]** $__________
9 1/2% Senior Secured Note due 2011
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 February 15, 2011.
Interest Payment Dates: February 15 and August 15, commencing
on August 15, 2003.
Record Dates: February 1 and August 1.
_________________________
* 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."
22
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:
BNY MIDWEST TRUST COMPANY,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By: _____________________________
Authorized Signatory
23
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
9 1/2% Senior Secured Note due 2011
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 February 15 and August 15 of each
year, commencing August 15, 2003. 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 February 12, 2003. 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 at the close of
business on the February 1 or August 1 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. 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).
24
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 February 12, 2003 (the "Indenture"), among the Company, the Subsidiary
Guarantors named therein 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 Holders
are referred to the Indenture and the TIA for a statement of those terms.
The Securities are unsecured, unsubordinated obligations of
the Company. The Company's obligations under the Securities are Guaranteed,
subject to certain limitations, by the Subsidiary Guarantors pursuant to
Subsidiary Guarantees, subject to release of the Subsidiary Guarantees as
provided in the Indenture or such Subsidiary Guarantee. This Security is one
of the Original Securities referred to in the Indenture issued in an aggregate
principal amount of $300,000,000. 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 and each Subsidiary
Guarantor to consolidate or merge with or into any other Person or sell,
25
transfer, assign, lease, convey or otherwise dispose of all or substantially
all of the Property of the Company or such Subsidiary Guarantor.
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 February 15, 2007, 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 Redemption Date).
Any notice to Holders of such a redemption shall include the appropriate
calculation of the Redemption Price, but need not 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 (i) 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 February 15, 2007 (such
Redemption Price being set forth in the table below) plus (2) all required
interest payments due on such Security through February 15, 2007 (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
February 15, 2007; provided, however, that if the period from the Redemption
Date to February 15, 2007 is less than one year, the weekly average yield on
actually traded United
26
States Treasury securities adjusted to a constant maturity of one year shall
be used.
On and after February 15, 2007, 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 interest due on the
relevant Interest Payment Date that is on or prior to the Redemption Date), if
redeemed during the 12-month period beginning on February 15 of the years set
forth below:
Redemption Period Price
----------------- -----
2007........................................ 104.750%
2008........................................ 102.375%
2009 and thereafter......................... 100.000%
Notwithstanding the foregoing, at any time and from time to
time prior to February 15, 2006, the Company may redeem up to 35% of the
original aggregate principal amount of the Securities (including Securities
issued after February 12, 2003, if any) with the proceeds from one or more
Equity Offerings by the Company, at a Redemption Price equal to 109.5% 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 Redemption Date); 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 February
12, 2003, if any) 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.
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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 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 account income earned on such Excess Proceeds, if any),
the Company will be required to make an offer to purchase (the "Asset Sale
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
28
such remaining amount for any purpose permitted by the Indenture and the
amount of Excess Proceeds will be reset to zero.
9. Guarantees; Security
--------------------
The Indenture provides that, under certain circumstances,
the Securities will be guaranteed pursuant to Subsidiary Guarantees.
Subsidiary Guarantees may be released in various circumstances, including in
certain circumstances without the consent of Holders.
The Indenture provides that, under certain circumstances,
the Securities or Subsidiary Guarantees must be secured by Liens on certain
Property of the Company or Subsidiary Guarantors. Liens securing the
Securities or Subsidiary Guarantees may be released in various circumstances,
including in certain circumstances without the consent of Holders.
10. 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.
11. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
---------------
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee 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.
29
13. 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.
14. Amendment, Waiver, Deemed Consents, Releases
--------------------------------------------
Subject to certain exceptions set forth in the Indenture,
(i) the Indenture, the Second Priority Collateral Documents or the Securities
may be amended without prior notice to any Holder 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 Holders, the
Company, when authorized by a Board Resolution, the Subsidiary Guarantors and
the Trustee may amend the Indenture or the Securities and, subject to any
other consent required under the terms of the applicable Second Priority
Collateral Documents, the Second Priority Collateral Documents to: (i) cure
any ambiguity, omission, defect or inconsistency; (ii) provide for the
assumption by a successor corporation of the obligations of the Company or any
Subsidiary Guarantor under the Indenture or any Second Priority Collateral
Documents; (iii) 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; (iv) add additional Guarantees with respect
to the Securities or release Subsidiary Guarantors from Subsidiary Guarantees
as provided by the terms of the Indenture or the Subsidiary Guarantees; (v)
further secure the Securities (and if such security interest includes Liens on
Property of the Company, provide for releases of such Property on terms
comparable to the terms on which Collateral constituting Property of
Subsidiary Guarantors may be released), release all or any portion of the
Collateral pursuant to the terms of the Second Priority Collateral Documents,
add to the covenants of the Company or the Subsidiary Guarantors for the
benefit of the Holders or surrender any right or power conferred upon the
Company under the Indenture; (vi) in the case of the Indenture, make any
30
change that does not adversely affect the rights of any Holder; (vii) make any
change to the subordination provisions of a Subsidiary Guarantee or any Second
Priority Collateral Documents that would limit or terminate the benefits
available to any holder of Senior Obligations under such provisions; or (viii)
make any change to comply with any requirements of the Commission in
connection with the qualification of the Indenture under the Trust Indenture
Act.
Without limiting the foregoing, the Holders will be deemed
to have consented for purposes of the Second Priority Collateral Documents
(including for purposes of determining actions of the Second Priority
Instructing Group) to (i) any amendment, waiver or other modification
(including any consent thereunder) of the Second Priority Collateral Documents
(including any annexes, exhibits or schedules thereto) that would not be
adverse to the Holders in any material respect, as reasonably determined by
the Board of Directors (as evidenced by a Board Resolution), and (ii) to
specified Second Priority Collateral Documents Amendments.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing such deemed
consent of the Holders. The Trustee, in its capacity as Second Priority
Representative to Holders, shall take such action under the Second Priority
Collateral Documents as may be requested by the Company to give effect to any
such amendment, waiver or modification.
In addition and without limiting the foregoing, (x)
Collateral securing a Subsidiary Guarantee of the Securities or (y) a
Subsidiary Guarantee of the Securities provided by a Subsidiary Guarantor may
be released only in respect of the Securities (i) upon request of the Company
without consent of any Holder unless, within 20 Business Days after written
notice of the proposed release of such (1) Collateral from the Liens securing
Subsidiary Guarantees of the Securities or (2) Subsidiary Guarantor, as the
case may be, is mailed to the Trustee and the Holders, Holders of 25% of the
outstanding principal amount of Securities deliver to the Company a written
objection to such release; or (ii) with the written consent of the Holders of
at least a majority of the aggregate principal amount of the Securities then
outstanding.
Under the circumstances described in clauses (i) and (ii)
above, Holders shall also be deemed to have consented to such release for
purposes of any consent required under the Second Priority Collateral
Documents (including for purposes of determining actions of the Second
Priority Instructing
31
Group), subject to any other consent required under the Second Priority
Collateral Documents.
At the request of the Company, the Trustee shall execute and
deliver any documents, instructions or instruments evidencing the consent of
the Holders to such release. The Trustee, in its capacity as Second Priority
Representative for Holders, shall take such action under the Second Priority
Collateral Documents or otherwise as may be requested by the Company to give
effect to any such release.
15. 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, premium or interest
that has become due solely because of the acceleration.
16. 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.
17. No Recourse Against Others
--------------------------
32
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 consideration for the issue of the Securities.
18. Successors
----------
Subject to certain exceptions set forth in the Indenture,
when a successor assumes all the obligations of its predecessor under the
Securities and the Indenture in accordance with the terms of the Indenture,
the predecessor will be released from those obligations.
19. 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.
20. 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).
21. 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.
22. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the 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.
33
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Security.
34
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.
-------------------------------------------------- -------------------------------------------
Signature Guarantee:
-------------------------------------------------- -------------------------------------------
Date: _______________________ __________________________________
Signature must be guaranteed by a participant Signature of Signature Guarantee
in a recognized signature guaranty medallion
program or other signature guarantor
acceptable to the Trustee
-------------------------------------------------- -------------------------------------------
35
[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 Exchange Amount of decrease Amount of increase Principal amount of Signature of
in Principal Amount in Principal this Global authorized
of this Global Amount of this Security following signatory of
Security Global Security such decrease or Trustee or
increase Securities
Custodian
36
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 4.13 (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 4.13 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.
37
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 9 1/2% Senior Secured Notes due 2011 (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 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
Securities pursuant to clause (e) or (f) above to require
2
the delivery of an opinion of counsel, certifications or other information
satisfactory to the Company and the Trustee.
TRANSFEREE:_________________,
by:_______________________
3
