EXHIBIT 4.1
================================================================================
LESLIE'S POOLMART, INC.,
as Issuer,
AND
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
INDENTURE
Dated as of June 11, 1997
up to $115,000,000
10 3/8% Senior Notes due 2004
================================================================================
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1)..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.08; 7.10
(b)........................................................ 7.08; 7.10; 10.02
(c)........................................................ N.A.
311(a)........................................................ 7.11
(b)........................................................ 7.11
(c)........................................................ N.A.
312(a)........................................................ 2.05
(b)........................................................ 10.03
(c)........................................................ 10.03
313(a)........................................................ 7.06
(b)(1)..................................................... 7.06
(b)(2)..................................................... 7.06
(c)........................................................ 7.06; 10.02
(d)........................................................ 7.06
314(a)........................................................ 4.08; 4.10; 10.02
(b)........................................................ N.A.
(c)(1)..................................................... 7.02; 10.04; 10.05
(c)(2)..................................................... 7.02; 10.04; 10.05
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ 10.05
(f)........................................................ N.A.
315(a)........................................................ 7.01(b); 7.02
(b)........................................................ 7.05; 10.02
(c)........................................................ 7.01
(d)........................................................ 6.05; 7.01(c); 7.02
(e)........................................................ 6.11
316(a)(last sentence)......................................... 2.09
(a)(1)(A).................................................. 6.05
(a)(1)(B).................................................. 6.04
(a)(2)..................................................... 9.02
(b)........................................................ 6.07
317(a)(1)..................................................... 6.08
(a)(2)..................................................... 6.09
(b)........................................................ 2.04
318(a)........................................................ 10.01
(c)........................................................ 10.01
--------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Incorporation by Reference of TIA............................. 23
SECTION 1.03. Rules of Construction......................................... 24
ARTICLE TWO THE SECURITIES
SECTION 2.01. Form and Dating............................................... 24
SECTION 2.02. Execution and Authentication.................................. 25
SECTION 2.03. Registrar and Paying Agent.................................... 27
SECTION 2.04. Paying Agent To Hold Assets in Trust.......................... 27
SECTION 2.05. Securityholder Lists.......................................... 28
SECTION 2.06. Transfer and Exchange......................................... 28
SECTION 2.07. Replacement Securities........................................ 29
SECTION 2.08. Outstanding Securities........................................ 29
SECTION 2.09. Treasury Securities........................................... 30
SECTION 2.10. Temporary Securities.......................................... 30
SECTION 2.11. Cancellation.................................................. 30
SECTION 2.12. Defaulted Interest............................................ 31
SECTION 2.13. CUSIP Number.................................................. 31
SECTION 2.14. Deposit of Moneys............................................. 32
SECTION 2.15. Book-Entry Provisions for Global Securities................... 32
SECTION 2.16. Registration of Transfers and Exchanges....................... 33
SECTION 2.17. Designation................................................... 39
SECTION 2.18. Additional Interest Under Registration Rights Agreement....... 39
ARTICLE THREE REDEMPTION
SECTION 3.01. Notices to Trustee............................................ 40
SECTION 3.02. Selection of Securities To Be Redeemed........................ 40
SECTION 3.03. Notice of Redemption.......................................... 41
SECTION 3.04. Effect of Notice of Redemption................................ 42
SECTION 3.05. Deposit of Redemption Price................................... 42
SECTION 3.06. Securities Redeemed in Part................................... 42
-i-
Page
----
ARTICLE FOUR COVENANTS
SECTION 4.01. Payment of Securities........................................ 42
SECTION 4.02. Maintenance of Office or Agency.............................. 43
SECTION 4.03. Limitation on Restricted Payments............................ 43
SECTION 4.04. Limitation on Incurrence of Additional Indebtedness.......... 46
SECTION 4.05. Corporate Existence.......................................... 46
SECTION 4.06. Payment of Taxes and Other Claims............................ 47
SECTION 4.07. Maintenance of Properties and Insurance...................... 47
SECTION 4.08. Compliance Certificate; Notice of Default.................... 48
SECTION 4.09. Compliance with Laws......................................... 49
SECTION 4.10. Commission Reports........................................... 49
SECTION 4.11. Waiver of Stay, Extension or Usury Laws...................... 50
SECTION 4.12. Limitation on Transactions with Affiliates................... 50
SECTION 4.13. Conduct of Business.......................................... 52
SECTION 4.14. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries......................... 52
SECTION 4.15. Limitation on Liens.......................................... 52
SECTION 4.16. Change of Control............................................ 53
SECTION 4.17. Limitation on Asset Sales.................................... 55
SECTION 4.18. Limitation on Preferred Stock of Subsidiaries................ 59
ARTICLE FIVE SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets..................... 59
SECTION 5.02. Successor Corporation Substituted............................ 61
ARTICLE SIX DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................ 61
SECTION 6.02. Acceleration................................................. 62
SECTION 6.03. Other Remedies............................................... 63
SECTION 6.04. Waiver of Past Defaults...................................... 64
SECTION 6.05. Control by Majority.......................................... 64
SECTION 6.06. Limitation on Suits.......................................... 64
SECTION 6.07. Rights of Holders To Receive Payment......................... 65
SECTION 6.08. Collection Suit by Trustee................................... 65
SECTION 6.09. Trustee May File Proofs of Claim............................. 66
SECTION 6.10. Priorities................................................... 66
-ii-
Page
----
SECTION 6.11. Undertaking for Costs........................................ 67
ARTICLE SEVEN TRUSTEE
SECTION 7.01. Duties of Trustee............................................ 67
SECTION 7.02. Rights of Trustee............................................ 69
SECTION 7.03. Individual Rights of Trustee................................. 70
SECTION 7.04. Trustee's Disclaimer......................................... 70
SECTION 7.05. Notice of Default............................................ 70
SECTION 7.06. Reports by Trustee to Holders................................ 71
SECTION 7.07. Compensation and Indemnity................................... 71
SECTION 7.08. Replacement of Trustee....................................... 72
SECTION 7.09. Successor Trustee by Merger, Etc............................. 73
SECTION 7.10. Eligibility; Disqualification................................ 74
SECTION 7.11. Preferential Collection of Claims Against Company............ 74
ARTICLE EIGHT SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance..................... 74
SECTION 8.02. Satisfaction and Discharge................................... 78
SECTION 8.03. Survival of Certain Obligations.............................. 79
SECTION 8.04. Acknowledgment of Discharge by Trustee....................... 79
SECTION 8.05. Application of Trust Assets.................................. 79
SECTION 8.06. Repayment to the Company; Unclaimed Money.................... 80
SECTION 8.07. Reinstatement................................................ 80
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders................................... 81
SECTION 9.02. With Consent of Holders...................................... 82
SECTION 9.03. Compliance with TIA.......................................... 83
SECTION 9.04. Revocation and Effect of Consents............................ 83
SECTION 9.05. Notation on or Exchange of Securities........................ 84
SECTION 9.06. Trustee To Sign Amendments, Etc.............................. 84
ARTICLE TEN MISCELLANEOUS
SECTION 10.01. TIA Controls................................................ 85
SECTION 10.02. Notices..................................................... 85
SECTION 10.03. Communications by Holders with Other Holders................ 86
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.......... 87
-iii-
Page
----
SECTION 10.05. Statements Required in Certificate or Opinion............... 87
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar................... 88
SECTION 10.07. Legal Holidays.............................................. 88
SECTION 10.08. Governing Law............................................... 88
SECTION 10.09. No Adverse Interpretation of Other Agreements............... 88
SECTION 10.10. No Recourse Against Others.................................. 88
SECTION 10.11. Successors.................................................. 88
SECTION 10.12. Duplicate Originals......................................... 89
SECTION 10.13. Severability................................................ 89
SIGNATURES................................................................. 1
Exhibit A - Form of Series A Security
Exhibit B - Form of Series B Security
Exhibit C - Form of Legend for Global Securities
Exhibit D - Transfer Certificate
Exhibit E - Form of Transferee Certificate for Institutional
Accredited Investors
Exhibit F - Form of Transferee Certificate for Regulation S Transfers
Note: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-iv-
INDENTURE dated as of June 11, 1997 between LESLIE'S POOLMART, INC., a
Delaware corporation (the "Company"), as Issuer and U.S. TRUST COMPANY OF
--------
CALIFORNIA, N.A., as Trustee (the "Trustee").
-------
The Company has duly authorized the creation of an issue of 10 3/8%
Senior Notes due 2004, Series A, and an issue of 10 3/8% Senior Notes due 2004,
Series B, to be issued in exchange for the 10 3/8% Senior Notes due 2004, Series
A, pursuant to the Registration Rights Agreement and, to provide therefor, the
Company has duly authorized the execution and delivery of this Indenture. All
things necessary to make the Securities, when duly issued and executed by the
Company and authenticated and delivered hereunder, the valid and binding
obligations of the Company and to make this Indenture a valid and binding
agreement of the Company have been done.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person and in each case not incurred in connection with, or in anticipation
or contemplation of, such acquisition, merger or consolidation.
"Additional Interest" has the meaning set forth in the Registration
-------------------
Rights Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
-2-
"Affiliate Transaction" has the meaning set forth in Section 4.12.
---------------------
"Agent" means any Registrar, Paying Agent or Co-Registrar.
-----
"Asset Acquisition" means (a) an Investment by the Company or any
-----------------
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company, or shall be merged with or into the
Company or any Subsidiary of the Company, or (b) the acquisition by the Company
or any Subsidiary of the Company of the assets of any Person (other than a
Subsidiary of the Company) which constitute all or substantially all of the
assets of such Person or comprises any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Subsidiary of the Company (including a Person that
is or will become a Subsidiary of the Company immediately after such sale,
issuance, conveyance, transfer, lease, assignment or other transfer for value)
of (a) any Capital Stock of any Subsidiary of the Company; or (b) any other
property or assets of the Company or any Subsidiary of the Company other than in
the ordinary course of business; provided, however, that Asset Sales shall not
-------- -------
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000 and (ii) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Company as permitted under Article
FIVE.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
--------------
state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and
-3-
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday or any
------------
other day on which banking institutions in the City of New York are required or
authorized by law or other governmental action to be closed.
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity or ownership interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250.0 million; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
-4-
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons (other than
to a Permitted Holder) for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of this Indenture); (ii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) any Person or Group
(other than the Permitted Holders) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; (iv) the replacement of a majority of the Board of
Directors of the Company (other than in accordance with the terms of the Series
A Preferred Stock so long as Occidental owns greater than 50% of the then
outstanding shares of the Series A Preferred Stock) over a two-year period from
the directors who constituted the Board of Directors of the Company at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Company then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved; or (v) the Company consolidates with, or merges with or
into, another Person, or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the shares representing the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock of
the Company is converted into or exchanged for cash, securities or other
property, other than (A) any such transaction where (1) the shares representing
the issued and outstanding ordinary voting Capital Stock of the Company are
converted into or exchanged for (I) ordinary voting Capital Stock (other than
Disqualified Capital Stock) of the surviving or transferee corporation and/or
(II) cash, securities and other property in an amount which could be paid by the
Company as a Restricted Payment under this Indenture and (2) the "beneficial
owners" of the shares representing the issued and outstanding ordinary
-5-
voting Capital Stock of the Company immediately prior to such transaction own,
directly or indirectly, shares of Capital Stock representing not less than a
majority of voting power of all issued and outstanding shares of Capital Stock
of the surviving or transferee corporation immediately after such transaction or
(B) any such transaction as a result of which the Permitted Holders own shares
of Capital Stock representing more than 50% of the voting power of all issued
and outstanding shares of Capital Stock of the surviving or transferee
corporation immediately after such transaction.
"Change of Control Offer" has the meaning set forth in Section 4.16.
-----------------------
"Change of Control Payment Date" has the meaning set forth in Section
------------------------------
4.16.
"Commission" means the Securities and Exchange Commission, or any
----------
successor agency thereto with respect to the regulation or registration of
securities.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
-------
successor replaces it pursuant to this Indenture.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period, (B) Consolidated Interest Expense and (C) Consolidated
Non-cash Charges less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Con-
-6-
solidated Fixed Charges of such Person for the Four Quarter Period. In addition
to and without limitation of the foregoing, for purposes of this definition,
"Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma basis for the period of such calculation to (i) the
incurrence or repayment of any Indebtedness of such Person or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of such
Person or one of its Subsidiaries (including any Person who becomes a Subsidiary
as a result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and including, without limitation, by giving
pro forma effect to any Consolidated EBITDA (provided that such pro forma
Consolidated EBITDA shall be calculated in a manner consistent with the
exclusions in the definition of "Consolidated Net Income") attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If such Person or any of its
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such Person had directly
incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the Transaction Date; (2)
if interest on any Indebtedness actually incurred on the Transaction Date may
optionally be deter-
-7-
mined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
--------------------------
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding any amortization or write off of deferred financing costs), plus (ii)
the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
-----------------------------
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount and any amortization or write off of deferred
financing costs, (b) the net costs under Interest Swap Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
-----------------------
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (a) after-tax gains from Asset
--------
Sales or abandonments or reserves relating thereto, (b) after-tax items
classified as extraordinary or nonrecurring gains or losses, (c) the net income
of any Person acquired in a "pooling of interests" transaction accrued prior to
the date it becomes a Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Subsidiary of the referent Person,
(d) the net income (but not loss) of any Sub-
-8-
sidiary of the referent Person to the extent that the declaration of dividends
or similar distributions by that Subsidiary of that income is restricted by
contract, operation of law or otherwise, (e) the net income of any Person, other
than a Subsidiary of the referent Person, except to the extent of cash dividends
or distributions paid to the referent Person or to a Wholly Owned Subsidiary of
the referent Person by such Person, (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time following the Issue
Date, (g) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued) and (h) in the case of a
successor to the referent Person by consolidation or merger or as a transferee
of the referent Person's assets, any earnings of the successor corporation prior
to such consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
----------------------
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for
-----------------------------
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Subsidiaries reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP (including, without limitation, any LIFO adjustments,
but excluding any such charges constituting an extraordinary item or loss or any
such charge which requires an accrual of or a reserve for cash charges for any
future period).
"Corporate Trust Office" means the principal office of the Trustee
----------------------
where it conducts its corporate trust administrative functions, which office is
currently located at 000 X. Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
-------------------
"Credit Agreement" means credit agreement(s) to be entered into by the
----------------
Company and one or more lenders, and all amendments thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
-9-
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring all or any
portion of the Indebtedness under such agreement(s) or any successor or
replacement agreement(s) and whether by the same or any other agent, lender or
group of lenders.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the form
----------
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in any case, on or prior to the final maturity date of the Securities.
"Event of Default" has the meaning set forth in Section 6.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Final Maturity Date" means July 15, 2004.
-------------------
-10-
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Security" means a security evidencing all or a portion of the
---------------
Securities issued to the Depository or its nominee in accordance with Section
2.01 and bearing the legend set forth in Exhibit C.
---------
"incur" has the meaning set forth in Section 4.04.
-----
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date
-11-
on which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Independent Financial Advisor" means an accounting firm, appraisal
-----------------------------
firm, investment banking firm or consultant to Persons engaged in a Related
Business, in each case, of nationally recognized standing that is, in the
judgment of the Company's Board of Directors, qualified to perform the task for
which it has been engaged.
"Initial Purchaser" means BT Securities Corporation.
-----------------
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated due date of an installment of
---------------------
interest on the Securities.
"Interest Swap Obligations" means the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
----------
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company or any Subsidiary on commercially reasonable terms in accordance with
normal trade practices of the Company or such
-12-
Subsidiary, as the case may be. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Common Stock of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, 100% of the
outstanding Common Stock of such Subsidiary, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Series A
----------
Securities under this Indenture.
"Legal Defeasance" has the meaning set forth in Section 8.01.
----------------
"Leslie's California" means Leslie's Poolmart, a California
-------------------
corporation.
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Management Services Agreement" means that certain Management Services
-----------------------------
Agreement dated as of the Issue Date by and between Xxxxxxx Xxxxx & Partners,
L.P., on the one hand, and the Company, on the other hand, providing for certain
fees, expenses and reimbursements to be paid to Xxxxxxx Xxxxx & Partners, L.P.,
as such Management Services Agreement may be amended from time to time so long
as such amendments are in compliance with Section 4.12.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
-------
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrange-
-13-
ments, (c) repayment of Indebtedness that is required to be repaid in connection
with such Asset Sale, (d) appropriate amounts to be provided by the Company or
any Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by the
Company or any Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, and (e) that
portion of the cash or Cash Equivalents attributable to the Capital Stock of a
Subsidiary which is not a Wholly Owned Subsidiary of the Company held, directly
or indirectly, by any Person which is not the Company or a Wholly Owned
Subsidiary of the Company.
"Net Proceeds Offer" has the meaning set forth in Section 4.17.
------------------
"Net Proceeds Offer Amount" has the meaning set forth in Section 4.17.
-------------------------
"Net Proceeds Offer Payment Date" has the meaning set forth in Section
-------------------------------
4.17.
"Net Proceeds Offer Trigger Date" has the meaning set forth in Section
-------------------------------
4.17.
"Obligations" means all obligations for principal, premium, Additional
-----------
Interest, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any
Indebtedness.
"Occidental" means Occidental Petroleum Corporation, a Delaware
----------
corporation.
"Occidental Supply Agreement" means the supply agreement between a
---------------------------
subsidiary of Occidental and the Company as in effect on the Issue Date.
"Offering Memorandum" means the Confidential Offering Memorandum of
-------------------
the Company dated June 6, 1997.
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Controller, the
Treasurer or the Secretary of such Person.
-14-
"Officers' Certificate" means a certificate signed by two Officers of
---------------------
the Company.
"Offshore Physical Securities" has the meaning set forth in Section
----------------------------
2.01.
"Opinion of Counsel" means a written opinion from legal counsel which
------------------
opinion is reasonably acceptable to the Trustee and which counsel may be counsel
to or an employee of the Company or counsel to the Trustee.
"Participants" has the meaning set forth in Section 2.15.
------------
"Paying Agent" has the meaning set forth in Section 2.03.
------------
"Permitted Holders" means Green Equity Investors II, L.P., senior
-----------------
management of the Company as in effect on the Issue Date and Occidental,
including in each case, their respective Affiliates.
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(i) the Series A Securities issued on the Issue Date in an
aggregate principal amount not to exceed $90.0 million and the Series B
Securities or Private Exchange Notes issued in exchange therefor pursuant
to the Registration Rights Agreement and any replacement Security therefor
issued pursuant to Section 2.07;
(ii) Indebtedness incurred pursuant to a Credit Agreement(s) in
an aggregate principal amount at any time outstanding not to exceed the
greater of (a) $35.0 million and (b) the sum of 80% of the total accounts
receivable and 60% of the total inventory of the Company and its
Subsidiaries, less in each case the amount of any prepayments made with the
proceeds of an Asset Sale or assumed in connection with an Asset Sale;
(iii) other Indebtedness of the Company and its Subsidiaries
outstanding on the Issue Date;
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Subsidiaries and Interest Swap
Obligations of any Subsidiary of the Company covering Indebtedness of such
Subsidiary; provided, however, that such Interest Swap Obligations are
-------- -------
-15-
entered into to protect the Company and its Subsidiaries from fluctuations
in interest rates on Indebtedness incurred in accordance with this
Indenture to the extent the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to
which such Interest Swap Obligation relates;
(v) Indebtedness of a Subsidiary of the Company to the Company
or to a Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Wholly Owned Subsidiary of the
Company, in each case subject to no Lien held by a Person other than the
Company or a Wholly Owned Subsidiary of the Company; provided that if as of
--------
any date any Person other than the Company or a Wholly Owned Subsidiary of
the Company owns or holds any such Indebtedness or holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(vi) Indebtedness of the Company to a Wholly Owned Subsidiary of
the Company for so long as such Indebtedness is held by a Wholly Owned
Subsidiary of the Company, in each case subject to no Lien held by a Person
other than a Wholly Owned Subsidiary of the Company; provided that if as of
--------
any date any Person other than a Wholly Owned Subsidiary of the Company
owns or holds any such Indebtedness or any Person other than a Wholly Owned
Subsidiary of the Company holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
-------- -------
Indebtedness is extinguished within two business days of incurrence;
(viii) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or similar requirements in the ordinary course of business;
(ix) Refinancing Indebtedness;
-16-
(x) Capitalized Lease Obligations and Purchase Money
Indebtedness of the Company or any of its Subsidiaries in an aggregate
principal amount not to exceed $5.0 million at any one time outstanding;
and
(xi) additional Indebtedness of the Company in an aggregate
principal amount not to exceed $10.0 million at any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
---------------------
Wholly Owned Subsidiary of the Company in any Person that is or will become, or
Investments by the Company or any Wholly Owned Subsidiary of the Company which
result in any Person becoming, in any case, immediately after such Investment, a
Wholly Owned Subsidiary of the Company or that will merge or consolidate into
the Company or a Wholly Owned Subsidiary of the Company; (ii) Investments by any
Wholly Owned Subsidiary of the Company in the Company; (iii) Investments in cash
and Cash Equivalents; (iv) loans and advances to employees and officers of the
Company and its Subsidiaries in the ordinary course of business for bona fide
business purposes not in excess of $500,000 at any one time outstanding; (v)
Investments in securities of trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; and (vi) Investments made by
the Company or its Subsidiaries as a result of consideration received in
connection with an Asset Sale made in compliance with Section 4.17.
"Permitted Liens" means the following types of Liens:
---------------
(i) Liens securing Indebtedness incurred under the Credit
Agreement or pursuant to clause (xi) of the definition of Permitted
Indebtedness;
(ii) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or its Subsidiaries
shall have set aside on their books such reserves as may be required
pursuant to GAAP;
(iii) statutory and contractual Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and
other Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserve
or other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
-17-
(iv) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(v) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired;
(vi) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(vii) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any property or
--------
assets which is not leased property subject to such Capitalized Lease
Obligation;
(viii) Liens securing Purchase Money Indebtedness of the Company
or any Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the Purchase Money Indebtedness shall
-------- -------
not exceed the cost of such property or assets and shall not be secured by
any property or assets of the Company or any Subsidiary of the Company
other than the property and assets so acquired and (B) the Lien securing
such Indebtedness shall be created within 90 days of such acquisition;
(ix) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(x) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber
-18-
documents and other property relating to such letters of credit and
products and proceeds thereof;
(xi) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements of
the Company or any of its Subsidiaries, including rights of offset and set-
off;
(xii) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is otherwise permitted under
this Indenture;
(xiii) Liens securing Acquired Indebtedness incurred in
accordance with Section 4.04; provided that (A) such Liens secured such
--------
Acquired Indebtedness at the time of and prior to the incurrence of such
Acquired Indebtedness by the Company or a Subsidiary of the Company and
were not granted in connection with, or in anticipation of, the incurrence
of such Acquired Indebtedness by the Company or a Subsidiary of the Company
and (B) such Liens do not extend to or cover any property or assets of the
Company or of any of its Subsidiaries other than the property or assets
that secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Subsidiary of the Company
and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Subsidiary of the Company; and
(xiv) Liens created under this Indenture.
"Person" means an individual, partnership, corporation, limited
------
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Securities" has the meaning set forth in Section 2.01.
-------------------
"Poolmart" means Poolmart USA Inc., a Delaware corporation.
--------
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights over any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
-19-
"Private Exchange Notes" has the meaning set forth in the Registration
----------------------
Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Securities in the form set forth on Exhibit A.
"pro forma" means, with respect to any calculation made or required to
---------
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's Board of Directors in consultation with its independent certified
public accountants.
"Public Equity Offering" means an underwritten public offering of
----------------------
Qualified Capital Stock of the Company pursuant to a registration statement
filed with the Commission in accordance with the Securities Act or any successor
statute.
"Purchase Agreement" means the purchase agreement dated as of June 6,
------------------
1997 by and between the Company and the Initial Purchaser.
"Purchase Money Indebtedness" means Indebtedness of the Company and
---------------------------
its Subsidiaries incurred in connection with the purchase of businesses
(including Capital Stock of businesses primarily engaged in a Related Business),
properties or assets for the business of the Company and its Subsidiaries and
any Refinancing thereof.
"Qualified Capital Stock" means the Series A Preferred Stock and any
-----------------------
other Capital Stock that is not Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" means a "qualified
----------------------------- ---
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.
"Recapitalization" means the merger consummated pursuant to the
----------------
Agreement and Plan of Merger among the Company, Leslie's California and Poolmart
and the related financing transactions described in the Offering Memorandum.
"Record Date" means the applicable Record Date specified in the
-----------
Securities; provided that if any such date is not a Business Day, the Record
--------
Date shall be the first day immediately preceding such specified day that is a
Business Day.
-20-
"Redemption Date," when used with respect to any Security to be
----------------
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Securities.
"Redemption Price," when used with respect to any Security to be
-----------------
redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Indenture and the Securities.
"Reference Date" has the meaning set forth in Section 4.03.
--------------
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Subsidiary of the Company of Indebtedness incurred in accordance with Section
4.04 (other than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (x) or
(xi) of the definition of Permitted Indebtedness), to the extent that such
Refinancing does not (1) result in an increase in the aggregate principal amount
of the Indebtedness of such Person as of the date of such proposed Refinancing
(plus the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing) or (2)
create Indebtedness with (A) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or (B) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced; provided that (x) if such Indebtedness being Refinanced is
--------
Indebtedness solely of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced
is subordinate or junior to the Securities, then such Refinancing Indebtedness
shall be subordinate to the Securities at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registered Exchange Offer" means the offer to exchange the Series B
-------------------------
Securities for all of the outstanding Series A Securities in accordance with the
Registration Rights Agreement.
-21-
"Registrar" has the meaning set forth in Section 2.03.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of the Issue Date between the Company and the Initial
Purchaser.
"Regulation S" means Regulation S under the Securities Act.
------------
"Related Business" means a business whose revenues are derived from
----------------
the general business conducted by the Company on the Issue Date or any business
or activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
"Replacement Assets" has the meaning set forth in Section 4.17.
------------------
"Responsible Officer" means, when used with respect to the Trustee,
-------------------
any officer in the Corporate Trust Office of the Trustee including any vice
president, assistant vice president, assistant secretary, treasurer, assistant
treasurer, or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning set forth in Section 4.03.
-------------------
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
-------------------
under the Securities Act; provided that the Trustee shall be entitled to request
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act.
---------
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person by whom funds have been or are to be advanced on
the security of such Property.
-21-
"S&P" means Standard & Poor's Corporation and its successors.
---
"Securities" means the Series A Securities, the Series B Securities,
----------
the Private Exchange Notes, if any, and any securities issued pursuant to
Section 2.02, treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
"Securityholder" or "Holder" means the Person in whose name a Security
-------------- ------
is registered on the Registrar's books.
"Series A Preferred Stock" means the Series A Preferred Stock of the
------------------------
Company issued pursuant to the Certificate of Designation, Preferences and
Rights of Series A Redeemable Preferred Stock, as in effect on the Issue Date.
"Series A Securities" means the 10 3/8% Senior Notes due 2004, Series
-------------------
A, of the Company issued pursuant to this Indenture and sold pursuant to the
Purchase Agreement.
"Series B Securities" means the 10 3/8% Senior Notes due 2004, Series
-------------------
B, of the Company to be issued in exchange for the Series A Securities pursuant
to the Registered Exchange Offer and the Registration Rights Agreement.
"Significant Subsidiary" shall have the meaning set forth in Rule
----------------------
1.02(w) of Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (i) any corporation of
-----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person; or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Surviving Entity" has the meaning set forth in Section 5.01.
----------------
"TIA" means the Trust Indenture act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb), as amended, as in effect on the date of the execution of this Indenture
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect
-23-
on the date on which this Indenture is qualified under the TIA, except as
otherwise provided in Section 9.03.
"Transaction Mergers" means, collectively, the merger of Leslie's
-------------------
California into Leslie's Poolmart, Inc., a Delaware corporation, and the
subsequent merger of Poolmart into Leslie's Poolmart, Inc., to occur on the
Issue Date.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S. Government Obligations" shall have the meaning set forth in
---------------------------
Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Securities" has the meaning set forth in Section 2.01.
------------------------
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
-----------------------
Person of which all the outstanding voting securities (other than in the case of
a foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
-24-
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the 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 Commission rule
and, in each case, not otherwise defined herein have the meanings assigned to
them therein.
SECTION 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words in the
plural include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
---------------
The Series A Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A hereto,
---------
which is hereby incorporated in and expressly made a part of this Indenture.
The Series B Securities and the
-25-
Trustee's certificate of authentication thereof shall be substantially in the
form of Exhibit B hereto, which is hereby incorporated in and expressly made a
---------
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company and the
Trustee shall approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its issuance and
shall show the date of its authentication.
The terms and provisions contained in the Securities, annexed hereto
as Exhibits A and B, shall constitute, and are hereby expressly made, a part of
----------------
this Indenture and, to the extent applicable, the Company, and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Securities offered and sold in reliance on Rule 144A and Securities
offered and sold to institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) shall be issued initially
in the form of one or more permanent Global Securities in registered form,
substantially in the form set forth in Exhibit A ("Global Securities"),
--------- -----------------
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth on Exhibit C. The aggregate principal amount of any Global
---------
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Securities in
registered form set forth in Exhibit A (the "Offshore Physical Securities").
--------- ----------------------------
Securities offered and sold in reliance on any other exemption from registration
under the Securities Act other than as described in the preceding paragraph
shall be issued, and Securities offered and sold in reliance on Rule 144A may be
issued, in the form of certificated Securities in registered form in
substantially the form set forth in Exhibit A (the "U.S. Physical Securities").
--------- ------------------------
The Offshore Physical Securities and the U.S. Physical Securities are sometimes
collectively herein referred to as the "Physical Securities."
-------- ----------
SECTION 2.02. Execution and Authentication
----------------------------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have
-26-
been duly authorized by all requisite corporate actions) shall attest to, the
Securities for the Company by manual or facsimile signature. The Company's seal
may also be reproduced on the Securities.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
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 shall authenticate (i) Series A Securities for original
issue on the Issue Date in the aggregate principal amount not to exceed
$90,000,000, (ii) Series B Securities from time to time only in exchange for a
like principal amount of Series A Securities, (iii) Private Exchange Notes from
time to time only in exchange for a like principal amount of Series A
Securities, and (iv) Securities issued in one or more series (such Securities to
be substantially in the form of Exhibit A or Exhibit B (and if in the form of
Exhibit A, a like principal amount of Securities in the form of Exhibit B in
exchange therefor)) in an aggregate principal amount of not more than
$25,000,000, in each case upon a written order of the Company in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
Securities to be authenticated, the series of Securities and the date on which
the Securities are to be authenticated. The aggregate principal amount of
Securities outstanding at any time may not exceed $115,000,000, except as
provided in Section 2.07. Upon receipt of a written order of the Company in the
form of an Officers' Certificate, the Trustee shall authenticate Securities in
substitution for Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
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 agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
-27-
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
---------
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
------------
notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the Trustee, may have one or
more Co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The term "Paying Agent" includes any additional
Paying Agent. Neither the Company nor any Affiliate of the Company may act as
Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Securities,
until such time as the Trustee has resigned or a successor has been appointed.
The Paying Agent or Registrar may resign upon 30 days notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets 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. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all as-
-28-
sets held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no further liability
for such assets.
SECTION 2.05. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a Co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or Co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
-------- -------
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or Co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or Co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.16,
4.17 or 9.05 in which event the Company shall be responsible for the payment of
such taxes or governmental charges). The Registrar or Co-Registrar shall not be
required to register the transfer of or exchange of any Security (i) during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of Securities and ending at the close of business on the
day of such mailing and (ii) selected for redemption in whole or in part
-29-
pursuant to Article Three, except the unredeemed portion of any Security being
redeemed in part.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Depository
(or its agent), and that ownership of a beneficial interest in a Global Security
shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Company, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Company and the Trustee, to protect the
Company, the Trustee and any Agent from any loss which any of them may suffer if
a Security is replaced. The Company may charge such Holder for its reasonable
out-of-pocket expenses in replacing a Security, including reasonable fees and
expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because the
Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
---------
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Final Maturity Date the Paying Agent
holds U.S. Legal Tender sufficient to pay all of the principal and interest due
on the Securities payable on
-30-
that date, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
SECTION 2.09. Treasury Securities.
-------------------
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 any of its Affiliates shall be disregarded, except that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities that the Trustee actually
knows are so owned shall be disregarded.
The Trustee may require an Officers' Certificate listing Securities
owned by the Company or its Affiliates.
SECTION 2.10. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated. 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 upon receipt of a written order
of the Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. 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 transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation, provided that the Trustee shall not be required to destroy
Securities. Subject to Section 2.07, the Company may not issue new Securities
to replace Securities that it has paid or delivered to the Trustee for
cancellation. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities
-31-
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of principal or interest on the
Securities, it shall pay, to the extent such payments are lawful, interest on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate of 2% per
---
annum in excess of the rate shown on the Security.
-----
SECTION 2.13. CUSIP Number.
------------
The Company in issuing the Securities will use one or more "CUSIP"
numbers and the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders. The Trustee and the Company shall not be
liable for any defect or inaccuracy in the CUSIP numbers that appear on any
Security or in any redemption notice. The Trustee, in its discretion, may
include in any notice a statement to the effect that the CUSIP numbers on the
Securities have been assigned by an independent service and are included in such
notice solely for the convenience of the holders and that neither the Trustee
nor the Company make any representation as to the correctness or accuracy of the
CUSIP numbers printed in the notice or on the Securities, and that reliance may
be placed only on the other identification numbers printed on the Securities.
The Company shall promptly notify the Trustee of any change in the CUSIP
numbers.
In the event that the Company shall issue and the Trustee shall
authenticate any Securities issued under this Indenture subsequent to the Issue
Date pursuant to clause (iv) of the first sentence of the fourth paragraph of
Section 2.02, the Company shall use its best efforts to obtain the same "CUSIP"
number for such Securities as is printed on the Securities outstanding at such
time; provided, however, that if any series of Securities issued under this
-------- -------
Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of
Counsel of the Company in a form reasonably satisfactory to the Trustee to be a
different class of security than the Securities outstanding at such time for
federal income tax purposes, the Company may obtain a "CUSIP" number for such
Securities that is different than the "CUSIP" number printed on the Securities
then outstanding.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all
matters as one class and no series of Securities will have the right to vote or
consent as a separate class on any matter.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 10:00 a.m. New York City time on each Interest Payment Date
and the Final Maturity Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or Final Maturity Date, as the case may
be, in a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date or Final Maturity Date, as the case may
be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit C.
----------
Members of, or participants in, the Depository ("Participants") shall
------------
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
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 the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and Participants, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor Depository is not
-33-
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
from the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in a Global Security to beneficial owners pursuant to
paragraph (b) of this Section 2.15, the Registrar shall (if one or more Physical
Securities are to be issued) reflect on its books and records the date and a
decrease in the principal amount of the beneficial interest in the Global
Security to be transferred, and the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Physical Securities of
like tenor and amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
the Global Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and make available for delivery, to
each beneficial owner identified by the Depository in exchange for its
beneficial interest in the Global Securities, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) of this Section 2.15 shall, except as otherwise provided by Section 2.16,
bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and
otherwise authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled to
take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
---------------------------------------
(a) Transfer and Exchange of Physical Securities. When Physical
--------------------------------------------
Securities are presented to the Registrar or Co-Registrar with a request:
(i) to register the transfer of the Physical Securities; or
-34-
(ii) to exchange such Physical Securities for an equal number
of Physical Securities of other authorized denominations,
the Registrar or Co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the Physical
-------- -------
Securities presented or surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or Co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical Securities
shall be accompanied, in the sole discretion of the Company, by the
following additional information and documents, as applicable:
(A) if such Physical Security is being delivered to the Registrar or
Co-Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to
that effect (substantially in the form of Exhibit D hereto); or
---------
(B) if such Physical Security is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A, a certification
to that effect (substantially in the form of Exhibit D hereto);
---------
or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and a
---------
Transferee Certificate for Institutional Accredited Investors
substantially in the form of Exhibit E hereto; or
---------
(D) if such Physical Security is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto), a Transferee
---------
Certificate for Regulation S Transfers substantially in the form
of Exhibit F hereto and an Opinion of
---------
-35-
Counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with Regulation S under the
Securities Act; or
(E) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and
---------
an Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with Rule 144
under the Securities Act; or
(F) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially in
the form of Exhibit D hereto) and an Opinion of Counsel
---------
reasonably acceptable to the Company to the effect that such
transfer is in compliance with the rules and regulations under
the Securities Act applicable to such exemption.
(b) Restrictions on Transfer of a Physical Security for a
-----------------------------------------------------
Beneficial Interest in a Global Security. A Physical Security may not be
----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
or Co-Registrar of a Physical Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Registrar or
Co-Registrar, together with:
(A) certification, substantially in the form of Exhibit D hereto,
---------
that such Physical Security is being transferred (I) to a
Qualified Institutional Buyer, (II) to an Institutional
Accredited Investor or (III) in an offshore transaction in
reliance on Regulation S; and
(B) written instructions directing the Registrar or Co-Registrar to
make, or to direct the Depository to make, an endorsement on the
applicable Global Security to reflect an increase in the
aggregate amount of the Securities represented by the Global
Security,
then the Registrar or Co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in ac-
-36-
cordance with the standing instructions and procedures existing between the
Depository and the Registrar or Co-Registrar, the principal amount of Securities
represented by the applicable Global Security to be increased accordingly. If no
Global Security representing Securities held by Qualified Institutional Buyers,
Institutional Accredited Investors or Persons acquiring Securities in offshore
transactions in reliance on Regulation S, as the case may be, is then
outstanding, the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate such
a Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
------------------------------------------
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or Co-Registrar of written
instructions, or such other instruction as is customary for the Depository, from
the Depository or its nominee, requesting the registration of transfer of an
interest in a QIB Global Security to another type of Global Security, together
with the applicable Global Securities (or, if the applicable type of Global
Security required to represent the interest as requested to be transferred is
not then outstanding, only the Global Security representing the interest being
transferred), the Registrar or Co-Registrar shall cancel such Global Securities
(or Global Security) and the Company shall issue and the Trustee shall, upon
written instructions from the Company in accordance with Section 2.02,
authenticate new Global Securities of the types so cancelled (or the type so
cancelled and applicable type required to represent the interest as requested to
be transferred) reflecting the applicable increase and decrease of the principal
amount of Securities represented by such types of Global Securities, giving
effect to such transfer. If the applicable type of Global Security required to
represent the interest as requested to be transferred is not outstanding at the
time of such request, the Company shall issue and the Trustee shall, upon
written instructions from the Company in accordance with Section 2.02,
authenticate a new Global Security of such type in principal amount equal to the
principal amount of the interest requested to be transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a
------------------------------------------------------------
Physical Security.
------------------
(i) Any Person having a beneficial interest in a Global Security
may exchange upon request such beneficial interest for a Physical Security.
Upon receipt by the
-37-
Registrar or Co-Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Trustee of a written order or such other
form of instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest
containing registration instructions and, in the case of any such transfer
or exchange of a beneficial interest in Securities the offer and sale of
which have not been registered under the Securities Act, the following
additional information and documents:
(A) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a
certification from such Person to that effect (substantially in
the form of Exhibit D hereto); or
---------
(B) if such beneficial interest is being transferred to a Qualified
Institutional Buyer in accordance with Rule l44A, a certification
to that effect (substantially in the form of Exhibit D hereto);
---------
or
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and a
---------
Transferee Certificate for Institutional Accredited Investors
substantially in the form of Exhibit E hereto; or
---------
(D) if such beneficial interest is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto), a Transferee
---------
Certificate for Regulation S Transfers substantially in the form
of Exhibit F hereto and an Opinion of Counsel reasonably
---------
satisfactory to the Company to the effect that such transfer is
in compliance with Regulation S under the Securities Act; or
(E) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto)
---------
-38-
and an Opinion of Counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with Rule 144
under the Securities Act; or
(F) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially in
the form of Exhibit D hereto) and an Opinion of Counsel
---------
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the rules and regulations under
the Securities Act applicable to such exemption,
then the Registrar or Co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository
and the Registrar or Co-Registrar, the aggregate principal amount of
the applicable Global Security to be reduced and, following such
reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate in
accordance with Section 2.02, the Trustee will authenticate and make
available for delivery to the transferee a Physical Security.
(ii) Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Registrar or Co-Registrar in writing. The Registrar or
Co-Registrar shall make available for delivery such Physical Securities to
the Persons in whose names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
----------------------------------------------------------
Notwithstanding any other provisions of this Indenture, 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.
(f) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Securities not bearing the Private Placement Legend, the
Registrar or Co-Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon
-39-
the transfer, exchange or replacement of Securities bearing the Private
Placement Legend, the Registrar or Co-Registrar shall deliver only Securities
that bear the Private Placement Legend unless, and the Trustee is hereby
authorized and directed to deliver Securities without the Private Placement
Legend if, (i) there is delivered to the Trustee an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act or (ii)
such Security has been sold pursuant to an effective registration statement
under the Securities Act.
(g) General. By its acceptance of any Security bearing the
-------
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.17. Designation.
------------
The Indebtedness evidenced by the Securities is hereby irrevocably
designated as "senior indebtedness" or such other term denoting seniority for
the purposes of any future Indebtedness of the Company which the Company makes
subordinate to any senior indebtedness or such other term denoting seniority.
SECTION 2.18. Additional Interest Under Registration Rights Agreement.
-------------------------------------------------------
Under certain circumstances, the Company shall be obligated to pay
Additional Interest to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.
-40-
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph 5 or
Paragraph 6 of the Securities, it shall notify the Trustee in writing of the
Redemption Date, the Redemption Price and the principal amount of Securities to
be redeemed. The Company shall give notice of redemption to the Paying Agent
and Trustee at least 30 days but not more than 60 days before the Redemption
Date (unless a shorter notice shall be agreed to by the Trustee in writing),
together with an Officers' Certificate stating that such redemption will comply
with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
--------------------------------------
In the event that less than all of the Securities are to be redeemed
at any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, if the Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
--------
or by such method as the Trustee shall deem fair and appropriate; provided,
--------
however, that no Securities of a principal amount of $1,000 or less shall be
-------
redeemed in part; and provided, further, that if a partial redemption is made
-------- -------
with the proceeds of a Public Equity Offering, selection of the Securities or
portions thereof for redemption shall be made by the Trustee only on a pro rata
--- ----
basis or on as nearly a pro rata basis as is practicable (subject to the
--- ----
procedures of the Depository), unless such method is otherwise prohibited.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 or less may be redeemed only in
whole. The Trustee may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
-41-
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed at its registered
address. At the Company's request made at least 45 days before the Redemption
Date, the Trustee shall give the notice of redemption in the Company's name and
at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed (including the CUSIP number(s), if any) and shall
state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(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 plus accrued interest,
if any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be outstanding
after such partial redemption; and
(8) the Paragraph of the Securities pursuant to which the
Securities are to be redeemed.
-42-
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Trustee or Paying Agent, such Securities called for redemption shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the close
of business on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before 11:00 a.m. New York Time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Securities to be
redeemed on that date.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment.
SECTION 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part only, the
Trustee shall upon written instruction from the Company authenticate for the
Holder a new Security or Securities in a principal amount equal to the
unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
---------------------
The Company will pay the principal of and interest on the Securities
in the manner provided in the Securities and in this Indenture. An installment
of principal of or interest on the Securities shall be considered paid on the
date it is due if the Trustee or Paying Agent (other than the Company or an
-43-
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company will pay, to the extent such payments are lawful, interest
on overdue principal and interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Securities plus 2% per annum. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.03. The Company shall give
prompt written notice (in any event no later than forty-eight hours after any
change in location) to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 10.02.
The Company hereby initially designates the office of the Trustee at 000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its office or agency in the
Borough of Manhattan, The City of New York.
SECTION 4.03. Limitation on Restricted Payments.
---------------------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of shares of the Company's
Capital Stock to holders of such Capital Stock, (b) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Securities or (d) make any Investment (other than Permitted
Investments) (each of the foregoing actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment"), if at
-44-
the time of such Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be continuing or
(ii) the Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.04 or (iii) the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company reported for any period subsequent to March 29, 1997
and on or prior to the date the Restricted Payment occurs (the "Reference Date")
(treating such period as a single accounting period); plus (x) 100% of the
aggregate net cash proceeds received by the Company from any Person (other than
a Subsidiary of the Company) from the issuance and sale subsequent to the Issue
Date and on or prior to the Reference Date of Qualified Capital Stock of the
Company; plus (y) without duplication of any amounts included in clause (iii)(x)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock; plus (z)
without duplication, the sum of (1) the aggregate amount returned in cash on or
with respect to Investments (other than Permitted Investments) made subsequent
to the Issue Date whether through interest payments, principal payments,
dividends or other distributions or payments and (2) the Net Cash Proceeds
received by the Company or any Subsidiary from the disposition of all or any
portion of such Investments (other than to a Subsidiary of the Company).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; (2) if no Default or Event
of Default shall have occurred and be continuing, the acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or (ii) through the
-45-
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company; (3) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities either (i) solely in
exchange for shares of Qualified Capital Stock of the Company or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of (A) shares of Qualified Capital
Stock of the Company or (B) Refinancing Indebtedness; (4) so long as no Default
or Event of Default shall have occurred and be continuing, repurchases by the
Company of Common Stock of the Company or options, warrants or other securities
exercisable or convertible into Common Stock of the Company from employees and
directors of the Company or any of its Subsidiaries or their authorized
representatives upon the death, disability or termination of employment or
directorship of such employees or directors, in an aggregate amount not to
exceed $500,000 in any calendar year and $2.0 million in the aggregate (in each
case plus the amount of net cash proceeds received by the Company from the sale
of Qualified Capital Stock to officers or directors of the Company and its
Subsidiaries, provided, that such amounts did not provide the basis for any
--------
other Restricted Payment); and (5) so long as no Default or Event of Default
shall have occurred and be continuing, the payment of dividends on the shares of
Series A Preferred Stock issued on the Issue Date and on any additional shares
of such stock issued in lieu of cash dividends thereon with (x) the net proceeds
of a sale for cash (other than to a Subsidiary of the Company) of shares of
Qualified Capital Stock of the Company or (y) the net cash proceeds of any
capital contribution to the Company to the extent such amounts in clauses (x)
and (y) did not provide the basis for any other Restricted Payment. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (2)(ii), 3(ii)(A), (4) and (5)
shall be included in such calculation.
Any Investment in a direct or indirect Wholly Owned Subsidiary of the
Company that becomes, directly or indirectly, a non-Wholly Owned Subsidiary of
the Company (unless the Company or a Subsidiary retains no equity interest in
such non-Wholly Owned Subsidiary) shall become a Restricted Payment on such date
in an amount equal to (A) 1.0 minus the Company's percentage interest in such
non-Wholly Owned Subsidiary times, (B) the amount of all Investments (net of any
returns previously paid on such Investment) made in such non-Wholly Owned
Subsidiary to such date, not to exceed the greater of (x) the book value of such
Subsidiary on such date and (y) the fair market value of such Subsidiary on such
date as determined (1) in good faith by the Board of Directors of the Company if
such fair market value is determined to be less than $5.0 million and (2) by an
investment banking firm of national standing if such fair market value is
determined to be in excess of $5.0 million.
-46-
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an officers' certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
SECTION 4.04. Limitation on Incurrence of Additional Indebtedness.
----------------------------------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
become liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, "incur"), any Indebtedness (including
Acquired Indebtedness but excluding Permitted Indebtedness); provided, however,
-------- --------
that if no Default or Event of Default shall have occurred and be continuing at
the time of or as a consequence of the incurrence of any such Indebtedness, the
Company may incur Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage
Ratio of the Company is greater than 2.0 to 1.0.
(b) Indebtedness of a Person which is secured by a Lien on an asset
acquired by the Company or a Subsidiary of the Company (whether or not such
Indebtedness is assumed by the acquiring Person) shall be deemed incurred at the
time of the Asset Acquisition.
(c) The Company shall not incur any Indebtedness which by its terms
(or by the terms of any agreement governing such Indebtedness) is subordinated
in right of payment to any other Indebtedness of the Company unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinate in right of payment to the
Securities, pursuant to subordination provisions that are substantively
identical to the subordination provisions of such Indebtedness (or such
agreement) that are most favorable to the holders of any other Indebtedness of
the Company.
SECTION 4.05. Corporate Existence.
--------------------
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force
-47-
and effect its corporate existence and the corporate, partnership or other
existence of each of the Subsidiaries in accordance with the respective
organizational documents of the Company or the Subsidiary, as the case may be,
and the rights (charter and statutory) and material franchises of the Company
and each of the Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to preserve any such right or franchise, or the corporate existence of
any Subsidiary, if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and each of the Subsidiaries, taken as a whole, and that the loss
thereof is not, and will not be, adverse in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any of the Subsidiaries or
upon the income, profits or property of it or any of the Subsidiaries and (b)
all lawful claims for labor, materials and supplies which, in each case, if
unpaid, might by law become a material liability or Lien upon the property of it
or any of the Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings properly instituted and
diligently conducted and for which appropriate provision has been made.
SECTION 4.07. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall cause all material properties owned by or
leased by it or any of the Subsidiaries used or useful to the conduct of its
business or the business of any of the Subsidiaries to be maintained and kept in
normal condition, repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals and
replacements thereof, all as in its judgment may be necessary, so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 4.07 shall prevent the
-------- -------
Company or any of the Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or any Subsidiary concerned, or of an officer (or other agent employed
by the Company or of any of the Subsidiaries) of the Company or any of
-48-
the Subsidiaries having managerial responsibility for any such property,
desirable in the conduct of the business of the Company or any Subsidiary, and
if such discontinuance or disposal is not adverse in any material respect to the
Holders.
(b) The Company shall maintain, and shall cause the Subsidiaries
to maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and co-
insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, workers' compensation and
interruption of business insurance.
SECTION 4.08. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The annual financial statements delivered pursuant to
Section 4.10 to the Trustee shall be accompanied by an Officers' Certificate
stating that a review of the activities of the Company has been made under the
supervision of the signing Officers with a view to determining whether it has
kept, observed, performed and fulfilled its obligations under this Indenture and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Company during such preceding fiscal year has kept,
observed, performed and fulfilled each and every such covenant and no Default or
Event of Default occurred during such year and at the date of such certificate
there is no Default or Event of Default that has occurred and is continuing or,
if such signers do know of such Default or Event of Default, the certificate
shall describe its status with particularity. The Officers' Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to
Section 4.10 to the Trustee shall be accompanied by a written report of the
Company's independent accountants (who shall be a firm of established national
reputation) that in conducting their audit of such financial statements nothing
has come to their attention that would lead them to believe that a Default or
Event of Default under this Indenture has occurred insofar as they relate to
accounting matters or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation that would not be disclosed in the course of an
audit examination conducted in accordance with GAAP.
-49-
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Securities, the Company
shall deliver to the Trustee, at its address set forth in Section 10.02 hereof,
by registered or certified mail or by facsimile transmission followed by hard
copy by registered or certified mail an Officers' Certificate specifying such
event, notice or other action and the status thereof within five Business Days
of its becoming aware of such occurrence.
SECTION 4.09. Compliance with Laws.
--------------------
The Company will comply, and will cause each of the Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States, all states and municipalities thereof, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as would not in the aggregate have a material adverse
effect on the financial condition or results of operations of the Company and
its Subsidiaries taken as a whole.
SECTION 4.10. Commission Reports.
------------------
(a) The Company will deliver to the Trustee within 15 days after
it files with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company (at its own expense) will file with the Commission all
information, documents and reports required to be filed with the Commission to
the extent permitted, and provide the Trustee and the Holders with such annual
reports and such information, documents and other reports specified in Sections
13 and 15(d) of the Exchange Act. Upon qualification of this Indenture under
the TIA, the Company shall also comply with the other provisions of TIA (S)
314(a).
(b) Regardless of whether the Company is required to furnish
such reports to its stockholders pursuant to the Exchange Act, the Company shall
cause its consolidated financial statements, comparable to that which would have
been required to appear in annual or quarterly reports, to be delivered to
-50-
the Trustee and the Holders. The Company will also make such reports available
to prospective purchasers of the Securities, securities analysts and broker-
dealers upon their request.
(c) For so long as any of the Securities remain outstanding, the
Company will make available to any prospective purchaser of the Securities or
beneficial owner of the Securities in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act during any
period when the Company is not subject to Section 13 or 15(d) under the Exchange
Act.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture, and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.12. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are no less favorable
than those that might
-51-
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or such
Subsidiary. All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1.0 million
shall be approved by the Board of Directors of the Company or such Subsidiary,
as the case may be, such approval to be evidenced by a Board Resolution stating
that such Board of Directors has determined that such transaction complies with
the foregoing provisions. If the Company or any Subsidiary of the Company enters
into an Affiliate Transaction (or a series of related Affiliate Transactions
related to a common plan) that involves an aggregate fair market value of more
than $5.0 million, the Company or such Subsidiary, as the case may be, shall,
prior to the consummation thereof, obtain a favorable opinion as to the fairness
of such transaction or series of related transactions to the Company or the
relevant Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to
(i) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Company or any
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Company and any of its Subsidiaries or exclusively between or among such
Subsidiaries; provided such transactions are not otherwise prohibited by this
--------
Indenture; (iii) payments to be made in connection with the consummation of the
Recapitalization or the financing thereof to be received by Xxxxxxx Xxxxx &
Partners, L.P. and its Affiliates; (iv) payments of annual fees and
reimbursement of reasonable expenses in accordance with the provisions of the
Management Services Agreement; (v) any employment agreement entered into in the
ordinary course of business, (vi) Restricted Payments permitted by this
Indenture and Permitted Investments, (vii) payments made in accordance with the
Occidental Supply Agreement or any other such agreement with Occidental entered
into on terms no less favorable to the Company than those that may have been
obtained in an arm's length transaction and (viii) loans or advances to officers
or employees of the Company in the ordinary course of business not to exceed
$500,000 in the aggregate at any one time outstanding.
-52-
SECTION 4.13. Conduct of Business.
-------------------
The Company and its Subsidiaries shall not engage in any businesses
other than a Related Business.
SECTION 4.14. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.
----------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other Subsidiary of
the Company; or (c) transfer any of its property or assets to the Company or any
other Subsidiary of the Company, except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) this Indenture; (3) any
Credit Agreement; (4) customary non-assignment provisions of any contract or any
lease governing a leasehold interest of any Subsidiary of the Company, or any
customary restriction on the ability of a Subsidiary of the Company to dividend,
distribute or otherwise transfer any asset which secures Purchase Money
Indebtedness of such Subsidiary; (5) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired; (6) agreements existing on the
Issue Date to the extent and in the manner such agreements are in effect on the
Issue Date; or (7) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (2), (3), (5) or (6) above; provided, however, that the provisions
-------- -------
relating to such encumbrance or restriction contained in any such Indebtedness
are no less favorable to the Company in any material respect as determined by
the Board of Directors of the Company in their reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (3), (5) or (6).
SECTION 4.15. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired
-53-
after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Securities, the Securities are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Liens and (ii)
in all other cases, the Securities are equally and ratably secured, except for
(A) Liens existing as of the Issue Date to the extent and in the manner such
Liens are in effect on the Issue Date; (B) Liens of the Company or a Wholly
Owned Subsidiary of the Company on assets of any Subsidiary of the Company; (C)
Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Indenture;
provided, however, that such Liens (X) are no less favorable to the Holders and
-------- -------
are not more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and (Y) do not extend to
or cover any property or assets of the Company or any of its Subsidiaries not
securing the Indebtedness so Refinanced; and (D) Permitted Liens.
SECTION 4.16. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer to purchase (the "Change of Control Offer") all of the then
-----------------------
outstanding Securities pursuant to the offer described in paragraph (b) below at
a purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date of purchase.
(b) Within 30 days following the date upon which a Change of
Control occurred, the Company shall send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer. The notice to the Holders shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.16 and that all Securities tendered and not withdrawn will
be accepted for payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date, which shall be no earlier than 30 days nor
later than 60 days from the date
-54-
such notice is mailed, other than as may be required by law (the "Change of
Control Payment Date");
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Change of Control Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second 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 Securities the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Security
purchased;
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Change
of Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, thereon and the Trustee shall promptly
authenticate and mail to such Holders
-55-
new Securities equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly mailed
by the Company to the Holder thereof. For purposes of this Section 4.16, the
Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer. To the extent
the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.16, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Asset Sales.
-------------------------
The Company shall not, and shall not permit any of its Subsidiaries
to, consummate an Asset Sale unless (i) the Company or the applicable
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of Directors),
(ii) at least 75% of the consideration received for the assets sold by the
Company or the Subsidiary, as the case may be, from such Asset Sale shall be in
the form of cash or Cash Equivalents and is received at the time of such
disposition; provided, however, that (A) notes received by the Company as
-------- -------
consideration for an Asset Sale that are converted into cash or Cash Equivalents
immediately following the consummation of such Asset Sale or (B) the assumption
by the purchaser of assets pursuant to an Asset Sale of liabilities of the
Company (other than liabilities that are by their terms subordinate to the
Securities) shall, in each case of the immediately preceding clauses (A) and
(B), be deemed to be cash or Cash Equivalents at the time of such Asset Sale in
an amount equal to, in the case of clause (A), the amount of cash or Cash
Equivalents realized on such conversion and, in the case of clause (B), the
amount of the liabilities so assumed, as reflected on the balance sheet of the
Company, and (iii) following the consummation of an Asset Sale, the Company
shall, or shall cause such Subsidiary, within 365 days of receipt thereof either
(A) to apply the Net Cash Proceeds related to such Asset Sale to prepay any
-56-
Indebtedness that by its terms is not subordinate to the Securities, (B) to make
a Permitted Investment or an investment in properties and assets that replace
the properties and assets that were the subject of such Asset Sale or in
properties and assets that will be used in a Related Business (collectively,
"Replacement Assets") or (C) a combination of prepayment and investment
permitted by the foregoing clauses (iii)(A) and (iii)(B). On the 365th day after
an Asset Sale, or such earlier date, if any, as the Board of Directors of the
Company or of such Subsidiary determines not to apply the Net Cash Proceeds
relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and
(iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger
Date"), such aggregate amount of Net Cash Proceeds which have not been applied
on or before the applicable Net Proceeds Offer Trigger Date as permitted in
clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (or, in
the case of a Net Proceeds Offer Trigger Date occurring prior to such 365th day,
the aggregate amount of Net Cash Proceeds that the Board of Directors has
determined not to so apply) (each a "Net Proceeds Offer Amount") shall be
applied by the Company or such Subsidiary to make an offer to purchase (the "Net
Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than
30 nor more than 45 days following the applicable Net Proceeds Offer Trigger
Date, from all Holders on a pro rata basis (and on a pro rata basis with the
holders of Indebtedness of the Company that is not by its terms subordinate to
the Securities), that amount of Securities equal to the Net Proceeds Offer
Amount at a price equal to 100% of the principal amount of the Securities to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
-------- -------
received by the Company or any Subsidiary of the Company, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this Section 4.17. The Company may defer the Net
Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount
equal to or in excess of $5.0 million resulting from one or more Asset Sales (at
which time, the entire unutilized Net Proceeds Offer Amount, and not just the
amount in excess of $5.0 million, shall be applied as required pursuant to this
paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Subsidiaries as an entirety to a
Person in a transaction per-
-57-
mitted under Section 5.01, the successor corporation shall be deemed to have
sold the properties and assets of the Company and its Subsidiaries not so
transferred for purposes of this Section 4.17, and shall comply with the
provisions of this Section 4.17 with respect to such deemed sale as if it were
an Asset Sale. In addition, the fair market value of such properties and assets
of the Company or its Subsidiaries deemed to be sold shall be deemed to be Net
Cash Proceeds for purposes of this Section 4.17.
Notwithstanding the two immediately preceding paragraphs, the Company
and its Subsidiaries will be permitted to consummate an Asset Sale without
complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Replacement Assets and (ii) such
Asset Sale is for fair market value; provided that any consideration not
--------
constituting Replacement Assets received by the Company or any of its
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the two preceding paragraphs.
Notice of each Net Proceeds Offer pursuant to this Section 4.17 shall
be mailed or caused to be mailed, by first class mail, by the Company within 25
days following the applicable Net Proceeds Offer Trigger Date to all Holders at
their last registered addresses, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Net Proceeds Offer and shall state the
following terms:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.17 and that all Securities tendered will be accepted for payment;
provided, however, that if the principal amount of Securities tendered in
-------- -------
the Net Proceeds Offer exceeds the Net Proceeds Offer Amount, the Company
shall select the Securities to be purchased on a pro rata basis;
(2) the Net Proceeds Offer price (including the amount of
accrued interest, if any) and the Net Proceeds Offer Payment Date;
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant
-58-
to the Net Proceeds Offer shall cease to accrue interest after the Net
Proceeds Offer Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to the Net Proceeds Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Net Proceeds
Offer Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day prior
to the Net Proceeds Offer Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount at maturity equal to
the unpurchased portion of the Securities surrendered.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Net Proceeds Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price, plus accrued interest, if any, of all
Securities to be purchased and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment in an amount
equal to the purchase price, plus accrued interest, if any, thereon and the
Trustee shall promptly authenticate and mail to such Holders new Securities
equal in principal amount to any unpurchased portion of the Securities
surrendered. Any Securities not so accepted shall be promptly mailed by the
Company to the Holder thereof. For purposes of this Section 4.17, the Trustee
shall act as the Paying Agent.
Any Net Proceeds Offer shall remain open for at least 20 Business Days
(or such longer period as may be required by law) and until the close of
business on the Net Proceeds Offer Payment Date.
-59-
The Company shall comply with all tender offer rules under state and
federal securities laws, including, but not limited to, Section 14(e) under the
Exchange Act and Rule l4e-1 thereunder, to the extent applicable to such offer.
To the extent that the provisions of any securities laws or regulations conflict
with the foregoing provisions of this Indenture, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the foregoing provisions of this Indenture by
virtue thereof.
Upon completion of a Net Proceeds Offer, the amount of Net Cash
Proceeds will be reset at zero. Accordingly, to the extent that the aggregate
amount of Securities tendered pursuant to a Net Proceeds Offer is less than the
Net Cash Proceeds, any remaining Net Cash Proceeds held by the Trustee shall be
returned by the Trustee to the Company and the Company may use any remaining Net
Cash Proceeds for general corporate purposes.
SECTION 4.18. Limitation on Preferred Stock of Subsidiaries.
---------------------------------------------
The Company shall not permit any of its Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the
Company.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) Except for the Transaction Mergers, the Company shall not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Subsidiary of the Company to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of the
Company's assets (determined on a consolidated basis for the Company and the
Company's Subsidiaries) whether as an entirety or substantially as an entirety
to any Person unless: (i) either (1) the Company shall be the surviving or
continuing corporation or (2) the Person (if other than
-60-
the Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia and (y) shall expressly assume,
by supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium and Additional Interest, if any, and interest on all
of the Securities and the performance of every covenant of the Securities and
this Indenture on the part of the Company to be performed or observed; (ii)
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction), the Company or such
Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction and (2) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.04; (iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (iv) the Company or the
Surviving Entity shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with the applicable provisions of this Indenture
and that all conditions precedent in this Indenture relating to such transaction
have been satisfied.
(b) For purposes of the foregoing paragraph (a), the transfer
(by lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
-61-
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any such consolidation, merger, conveyance, lease or transfer of
all or substantially all of the assets of the Company in accordance with the
foregoing provisions of this Article Five, in which the Company is not the
surviving Person, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, lease or transfer is
made will succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture and the Securities with the same
effect as if such successor had been named as the Company therein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company fails to pay interest on any Securities when the
same becomes due and payable and the default continues for a period of 30
days;
(b) the Company fails to pay the principal on any Securities,
when such principal becomes due and payable, at maturity, upon redemption
or otherwise (including the failure to make a payment to purchase
Securities tendered pursuant to a Change of Control Offer or a Net Proceeds
Offer);
(c) the Company or any Subsidiary of the Company defaults in the
observance or performance of any other covenant or agreement contained in
this Indenture, which default continues for a period of 30 days after the
Company receives written notice specifying the default (and demanding that
such default be remedied) from the Trustee or the Holders of at least 25%
of the outstanding principal amount of the Securities (except in the case
of a default with respect to Section 5.01, which will constitute an Event
of Default with such notice requirement but without such passage of time
requirement);
(d) the Company or any Subsidiary of the Company fails to pay at
final maturity (giving effect to any applicable grace periods and any
extensions thereof) the
-62-
principal amount of any Indebtedness of the Company or any Subsidiary of
the Company, or the acceleration of the final stated maturity of any such
Indebtedness, in any case if the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final maturity or
which has been accelerated, aggregates $5.0 million or more at any time;
(e) one or more judgments in an aggregate amount in excess of
$5.0 million shall have been rendered against the Company or any of its
Subsidiaries and such judgments remain undischarged, unpaid or unstayed for
a period of 60 days after such judgment or judgments become final and non-
appealable;
(f) the Company or any of its Significant Subsidiaries (i)
admits in writing its inability to pay its debts generally as they become
due, (ii) commences a voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (iii) consents to the entry of a judgment, decree
or order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (iv) consents to the appointment of a Custodian of it
or for substantially all of its property, (v) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(vi) makes a general assignment for the benefit of its creditors or (vii)
takes any partnership or corporate action, as the case may be, to authorize
or effect any of the foregoing; or
(g) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law,
which shall (i) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (ii) appoint a Custodian of
the Company or any of its Significant Subsidiaries or for substantially all
of any of their property or (iii) order the winding-up or liquidation of
its affairs; and such judgment, decree or order shall remain unstayed and
in effect for a period of 60 consecutive days
SECTION 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
clause (f) or (g) above) shall occur and be
-63-
continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Securities may declare the principal of, premium, if any, and
accrued and unpaid interest on all the Securities to be due and payable by
notice in writing to the Company and the Trustee specifying the respective Event
of Default and that it is a "notice of acceleration", and the same shall become
immediately due and payable. If an Event of Default specified in clause (f) or
(g) above occurs and is continuing, then all unpaid principal of, and premium
and Additional Interest, if any, and accrued and unpaid interest on all of the
outstanding Securities shall ipso facto become and be immediately due and
---- -----
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, the Holders of a majority in
principal amount of the Securities may rescind and cancel such declaration and
its consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its reasonable expenses, disbursements and advances
and (v) in the event of the cure or waiver of an Event of Default of the type
described in clause (f) or (g) of Section 6.01, the Trustee shall have received
an Officers' Certificate and an Opinion of Counsel that such Event of Default
has been cured or waived. 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 by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or the
Guarantees.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of De-
-64-
fault. No remedy is exclusive of any other remedy. All available remedies are
cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of not less than
a majority in principal amount of the outstanding Securities by written notice
to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on any
Security as specified in clauses (a) and (b) of Section 6.01. The Company shall
deliver to the Trustee an Officers' Certificate stating that the requisite
percentage of Holders have consented to such waiver and attaching copies of such
consents. When a Default or Event of Default is waived, it is cured and ceases
and the duties and obligations of the Trustee shall be those expressly set forth
in this Indenture (other than those duties and obligations that by their terms
arise upon the occurrence of a Default or an Event of Default).
SECTION 6.05. Control by Majority.
-------------------
The Holders of not less than a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. Subject to Section 7.01, however, the Trustee may refuse
to follow any direction that conflicts with any law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may, in the sole judgment of the Trustee, give rise to
or subject the Trustee to personal liability; provided that the Trustee may take
--------
any other action deemed proper by the Trustee.
In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against any loss or expense caused by
taking such action or following such direction.
SECTION 6.06. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
-65-
(2) the Holder or Holders of at least 25% in principal amount
of the outstanding Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee in its sole judgment
against any loss, liability or expense;
(4) the Trustee does not comply with the request within 30
days after receipt of the written request and the offer described in clause
(3) above and, if requested, the provision of indemnity; and
(5) during such 30-day period the Holder or Holders of a
majority in principal amount of the outstanding Securities do not give the
Trustee a written direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the written consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (a) or (b) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of principal
and accrued interest and fees remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per annum
--- -----
borne by the Securities and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the actual, documented
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
-66-
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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relating to the Company, the
Subsidiaries, their creditors or their property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Securityholder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Securityholders, to pay
to the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, 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, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
-67-
SECTION 6.11. Undertaking for Costs.
---------------------
Each party to this Indenture agrees and each Holder of any Security by
its acceptance thereof shall be deemed to have agreed that, 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 and expenses,
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 instituted by the Company, any suit instituted by the
Trustee, any suit instituted by a Holder pursuant to Section 6.07, or any suit
instituted by a Holder or Holders of more than 10% in principal amount of the
outstanding Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default
actually known to a Responsible Officer of the Trustee:
(1) The Trustee need perform only those duties as are
expressly and specifically set forth herein and no others and no implied
covenants, duties or obligations whatsoever shall be read into this
Indenture against the Trustee.
(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 and such
other documents delivered to it pursuant to Section 10.04 hereof furnished
to the Trustee and conforming to the require-
-68-
ments 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) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful 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 Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(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) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall reasonably believe that repayment of such funds is not assured to it
or it does not receive an indemnity that is, in its sole discretion, not
adequate against such risk, liability, loss, fee or expense which might be
incurred by it in compliance with such request or direction.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets of the Trustee except to the extent required by law.
(g) The Trustee shall not be accountable for the use of any of
the Securities delivered hereunder or the proceeds thereof.
(h) The permissive right of the Trustee to do things enumerated
in this Indenture shall not be construed as a duty
-69-
and the Trustee shall not be answerable for other than its negligence or willful
misconduct as provided herein.
(i) Except for Events of Default relating to the payment of the
principal or the interest with respect to the Securities, the Trustee shall not
be required to take notice, and shall not be deemed to have notice, of any
default unless the Trustee shall be notified specifically and expressly in
writing of the default; such notice being deemed "actual notice." In the
absence of delivery of a written notice satisfying these requirements, the
Trustee may assume conclusively that there is no default, except as noted above.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely conclusively 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.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and an Opinion of Counsel, which shall
conform to the provisions of Sections 10.04 and 10.05. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than an agent who is an employee of the Trustee) appointed in good
faith.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee may consult with counsel of its selection and
the advice or opinion of such counsel as to matters of law which shall be
full and complete authorization and protection from liability in respect of
any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this
-70-
Indenture at the request, order or direction of any of the Holders pursuant
to the provisions of this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity satisfactory to the Trustee
in its sole judgment against the costs, expenses and liabilities which may
be incurred therein or thereby.
(g) The Trustee shall not be deemed to have notice of any Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture.
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, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent 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 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
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such event, the Trustee shall mail to each
Securityholder, as their names and addresses appear on the Securityholder list
described in Section 2.05, notice of the uncured Default or Event of Default
within 60 days after the Trustee receives such notice. Except in the case of a
Default or an Event of Default in payment of principal of, or interest on, any
Security, including the failure to make payment on (i) the Change of Control
Payment Date pursuant to a Change of Control Offer or (ii) the Net Proceeds
Offer Payment Date pursuant to a Net Proceeds Offer, the Trustee shall not be
deemed to have actual knowledge or ac-
-71-
tual notice of a Default or an Event of Default unless a Responsible Officer of
the Trustee received written notice of such Default or Event of Default or the
Trustee may withhold the notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or Responsible
Officers, of the Trustee in good faith determines that withholding the notice is
in the interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Securityholder a brief report
dated as of such May 15 that complies with TIA (S) 313(a). The Trustee also
shall comply with TIA (S)(S) 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the Commission and each securities
exchange, if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed
on any securities exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation for its services hereunder (which shall be agreed to from time to
time by the Company and the Trustee). 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 disbursements, expenses
and advances (including reasonable fees and expenses of counsel) incurred or
made by it in addition to the compensation for its services, except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or willful misconduct. Such expenses shall include the compensation,
disbursements and expenses of the Trustee's agents, accountants, experts and
counsel and any taxes or other expenses incurred by a trust created pursuant to
Section 8.01.
The Company shall indemnify the Trustee and each predecessor trustee
for, and hold it harmless against, any loss, liability, claim, damage or
expense, including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee) incurred by the Trustee without negli-
-72-
gence or willful misconduct on its part arising out of or in connection with the
administration of this trust and its duties under this Indenture, including the
reasonable expenses and attorneys' fees of defending itself against any claim of
liability arising hereunder unless and to the extent such failure results in the
forfeiture by the Company of substantial rights and defenses. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. However, the failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder unless and to
the extent such failure results in the forfeiture by the Company of material
rights and defenses. The Company shall defend the claim and the Trustee shall
cooperate in the defense (and may employ its own counsel) at the Company's
expense. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee as a result of the violation of this
Indenture by the Trustee if such violation arose from the Trustee's negligence
or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a senior claim prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (f) or (g) of Section 6.01 occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute expenses
of administration under any Bankruptcy Law. The Company's obligations under
this Section 7.07 and any claim arising hereunder shall survive the resignation
or removal of any Trustee, the discharge of the Company's obligations pursuant
to Article Eight and any rejection or termination under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
-73-
(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 becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify in writing each
Holder of such event and shall appoint a successor Trustee within 60 days after
the effective date of such resignation, removal or vacancy. Within one year
after the successor Trustee takes office, the Holders of a majority in principal
amount of the Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.07, 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. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate
-74-
trust business to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the successor
Trustee; provided, however, that such corporation shall be otherwise qualified
-------- -------
and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1) and 310(a)(5). The Trustee shall be a
commercial bank with trust powers or a trust company, which shall have (or, in
the case of a financial institution, commercial bank with trust powers or a
trust company included in a bank holding company system, the related bank
holding company shall have) a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition, and subject to supervision or examination by federal or state
authorities, so long as any of the Securities are outstanding. The Trustee
shall comply with TIA (S) 310(b); provided, however, that there shall be
-------- -------
excluded from the operation of TIA (S) 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 (S) 310(b)(1) are met. The provisions of TIA (S) 310
shall apply to the Company, as obligors of the Securities.
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated. The
provisions of TIA (S) 311 shall apply to the Company, as obligor of the
Securities.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either paragraph (b) or
paragraph (c) below be applied to
-75-
the outstanding Securities upon compliance with the conditions set forth in
paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company shall be deemed to have
been released and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
----------------
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections and matters
under this Indenture referred to in (i) and (ii) below, and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned, except for the following which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders
of outstanding Securities to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due, and (ii) obligations listed in Section 8.03, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company shall be released and
discharged from its obligations under any covenant contained in Article Five and
in Sections 4.03 through 4.18 with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed to be not
-------------------
"outstanding" for the purpose of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Company and its Subsidiaries may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 6.01(c), nor shall any event
-76-
referred to in Section 6.01(d) or (e) thereafter constitute a Default or an
Event of Default thereunder but, except as specified above, the remainder of
this Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance satisfactory to the Trustee, U.S. Legal Tender or direct
non-callable obligations of, or non-callable obligations guaranteed by, the
United States of America for the payment of which obligation or guarantee
the full faith and credit of the United States of America is pledged ("U.S.
----
Government Obligations") maturing as to principal and interest in such
----------------------
amounts and at such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal, state and
local taxes or other charges or assessments in respect thereof payable by
the Trustee, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof (in form
and substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium and Additional Interest, if any,
and interest on all the outstanding Securities on the dates on which any
such payments are due and payable in accordance with the terms of this
Indenture and of the Securities;
(2) Such deposit shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the TIA;
(3) The Trustee shall have received an Officers' Certificate
stating that no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Securities shall have occurred and be continuing on the date
of such deposit or, insofar as Section 6.01(f) or (g) is concerned, at any
time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
(4) The Trustee shall have received an Officers' Certificate
stating that such deposit will not result in a
-77-
Default under this Indenture or a breach or violation of, or constitute a
default under, any other material instrument or agreement to which the
Company or any of its Subsidiaries is a party or by which it or its
property is bound;
(5) (i) In the event the Company elects paragraph (b) hereof,
the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the Trustee
to the effect that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall state that Holders of the Securities will not recognize income gain
or loss for Federal income tax purposes as a result of such deposit and the
defeasance contemplated hereby and will be subject to Federal income taxes
in the same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred or (ii) in the event the
Company elects paragraph (c) hereof, the Company shall deliver to the
Trustee an Opinion of Counsel in the United States, in form and substance
reasonably satisfactory to the Trustee, to the effect that Holders of the
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and the defeasance contemplated hereby
and will be subject to Federal income tax in the same amounts and in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(6) The Trustee shall have received an Opinion of Counsel
stating that the deposit shall not result in the Company, the Trustee or
the trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(7) The Company shall have delivered to the Trustee an
Officer's Certificate, in form and substance reasonably satisfactory to the
Trustee, stating that the deposit under clause (1) was not made by the
Company or any Subsidiary of the Company with the intent of preferring the
Holders over any other creditors of the Company defeating, hindering,
delaying or defrauding any other creditors of the Company or any Subsidiary
of the Company or others;
-78-
(8) The Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that (A) the trust funds will not be subject to the rights of
holders of Indebtedness of the Company other than the Securities and (B)
assuming no intervening bankruptcy of the Company between the date of
deposit and the 91st day following the deposit and that no Holder of
Securities is an insider of the Company, after the passage of 90 days
following the deposit, the trust funds will not be subject to any
applicable bankruptcy, insolvency, reorganization or similar law affecting
creditors' rights generally; and
(9) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with; provided, however, that no deposit
-------- -------
under clause (1) above shall be effective to terminate the obligations of
the Company under the Securities or this Indenture prior to 90 days
following any such deposit.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
SECTION 8.02. Satisfaction and Discharge.
--------------------------
The Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Securities, as expressly provided for in this Indenture) as to all
outstanding Securities when:
(1) either (a) all the Securities, theretofore authenticated
and delivered (except lost, stolen or destroyed Securities which have been
replaced or paid and Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or (b) all Securities not
theretofore delivered to the Trustee for cancellation have become due and
payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount
-79-
sufficient to pay and discharge the entire Indebtedness on the Securities
not theretofore delivered to the Trustee for cancellation, for principal
of, premium and Additional Interest, if any, and interest on the Securities
to the date of deposit together with irrevocable instructions from the
Company directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be;
(2) the Company has paid all other sums payable under this
Indenture by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 8.03. Survival of Certain Obligations.
-------------------------------
Notwithstanding the satisfaction and discharge of this Indenture and
of the Securities referred to in Section 8.01 or 8.02, the respective
obligations of the Company and the Trustee under Sections 2.02, 2.03, 2.04,
2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02, 6.07, Article Seven, Sections
8.05, 8.06 and 8.07 shall survive until the Securities are no longer
outstanding, and thereafter the obligations of the Company and the Trustee under
Sections 7.07, 8.05, 8.06 and 8.07 shall survive. Nothing contained in this
Article Eight shall abrogate any of the obligations or duties of the Trustee
under this Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
--------------------------------------
Subject to Section 8.07, after (i) the conditions of Section 8.01 or
8.02 have been satisfied, (ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company and (iii) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
---------------------------
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it pursuant to this Arti-
-80-
cle Eight in the irrevocable trust established pursuant to Section 8.01. The
Trustee shall apply the deposited U.S. Legal Tender or the U.S. Government
Obligations, together with earnings thereon, through the Paying Agent, in
accordance with this Indenture and the terms of the irrevocable trust agreement
established pursuant to Section 8.01, to the payment of principal of and
interest on the Securities. The U.S. Legal Tender or U.S. Government Obligations
so held in trust and deposited with the Trustee in compliance with Section 8.01
shall not be part of the trust estate under this Indenture, but shall constitute
a separate trust fund for the benefit of all Holders entitled thereto.
SECTION 8.06. Repayment to the Company; Unclaimed Money.
-----------------------------------------
Subject to Sections 7.07 and 8.01, the Trustee shall promptly pay to
the Company, upon receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Section 8.01, held by it at any time. The
Trustee and the Paying Agent shall pay to the Company upon receipt by the
Trustee or the Paying Agent, as the case may be, of an Officers' Certificate,
any money held by it for the payment of principal, premium, if any, or interest
that remains unclaimed for one year after payment to the Holders is required;
provided, however, that the Trustee and the Paying Agent before being required
-------- -------
to make any payment may, but are not required to, at the expense of the Company
and within 10 days of receipt of the Officers' Certificate described above,
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each Holder entitled to such money notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company. After
payment to the Company, Securityholders entitled to money must look solely to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee or
Paying Agent with respect to such money shall thereupon cease.
SECTION 8.07. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Indenture by
reason of any legal proceeding pending before or any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then and only then the Company's obligations under this
Indenture and the Securities shall be revived and rein-
-81-
stated as though no deposit had been made pursuant to this Indenture until such
time as the Trustee is permitted to apply all such U.S. Legal Tender or U.S.
Government Obligations in accordance with this Indenture; provided, however,
-------- -------
that if the Company has made any payment of principal of, premium, if any, or
interest on 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 U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company and the Trustee, together, may amend or supplement this
Indenture or the Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to evidence the succession in accordance with Article Five
hereof of another Person to the Company and the assumption by any such
successor of the covenants of the Company herein and in the Securities;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(4) to make any other change that does not, in the opinion of
the Trustee, adversely affect in any material respect the rights of any
Securityholders hereunder;
(5) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA; or
(6) to make any change that would provide any additional
benefit or rights to the Securityholders or that does not adversely affect
the rights of any Securityholder;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
--------
an Officers' Certificate, each stating that
-82-
such amendment or supplement complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
Subject to Section 6.07, the Company and the Trustee, together, with
the written consent of the Holder or Holders of at least a majority in aggregate
principal amount of the outstanding Securities, may amend or supplement this
Indenture or the Securities, without notice to any other Securityholders.
Subject to Section 6.07, the Holder or Holders of a majority in aggregate
principal amount of the outstanding Securities may waive compliance by the
Company with any provision of this Indenture or the Securities without notice
to any other Securityholder. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may:
(1) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted interest, on
any Securities;
(3) reduce the principal of or change or have the effect of
changing the fixed maturity of any Securities, or change the date on which
any Securities may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(4) make any Securities payable in money other than that
stated in the Securities;
(5) make any change in provisions of this Indenture protecting
the right of each Holder to receive payment of principal of and interest on
such Security on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
the Securities to waive Defaults or Events of Default;
(6) make any changes in Section 6.04, 6.07 or this Section
9.02;
(7) modify or change any provision of this Indenture or the
related definitions affecting the ranking of the Securities in a manner
which adversely affects the Holders; or
-83-
(8) amend, modify or change in any material respect the
obligation of the Company to make and consummate a Change of Control Offer
in the event of a Change of Control or make and consummate a Net Proceeds
Offer with respect to any Asset Sale that has been consummated or modify
any of the provisions or definitions with respect thereto.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement, waiver
or supplemental indenture.
SECTION 9.03. Compliance with TIA.
-------------------
From the date on which this Indenture is qualified under the TIA,
every amendment, waiver or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect, such compliance to be evidenced by an
Opinion of Counsel.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by notice to the Trustee
or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstand-
-84-
ing the last sentence of 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 revoke any consent previously given, whether
or not such Persons continue to be Holders after such record date. No such
consent shall be valid or effective for more than 90 days after such record
date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
--------
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Company may require the Holder of the Security to deliver it to the Trustee.
The Company may place an appropriate notation on the Security about the changed
terms and return it 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.
SECTION 9.06. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
--------
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and constitutes the legal, valid and binding obligations of the
Company enforceable in accordance with its terms. Such Opinion of Counsel shall
be at the expense of the Company and shall be rendered by legal counsel selected
by the Trustee.
-85-
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of Section 318(c) of the TIA, the imposed
duties shall control.
SECTION 10.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
Leslie's Poolmart, Inc.
00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx XxXxxxxxx
Facsimile: (000) 000-0000
with copies to:
Green Equity Investors II, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Annick
Facsimile: (000) 000-0000
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
-86-
if to the Trustee:
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company and the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that, notwithstanding the foregoing, a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA (S) 312(c).
-87-
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:
(1) an Officers' Certificate, in form and substance 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) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
----------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition and the definitions relating
thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, 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 each
such Person, such condition or covenant has 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.
-88-
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee, Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 10.07. Legal Holidays.
--------------
If a payment date is not a Business Day, payment may be made on the
next succeeding day that is a Business Day, and no interest shall accrue for the
intervening period.
SECTION 10.08. Governing Law.
-------------
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture.
SECTION 10.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, 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. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance 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 successor.
-89-
SECTION 10.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 10.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the date first written above.
THE COMPANY:
LESLIE'S POOLMART, INC.
By: /s/ Xxxxx X. XxXxxxxxx
-----------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Chief Executive Officer
Attest: ___________________
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
Chief Financial Officer,
Officer & Secretary
THE TRUSTEE:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ Xxxxxx Xxxxx
-----------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
EXHIBIT A
---------
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE ISSUER SUCH CERTIFICATES, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE 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. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
A-1
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
A-2
LESLIE'S POOLMART, INC.
10 3/8% Senior Note
due July 15, 2004, Series A
CUSIP No.:
No. [ ] $[ ]
LESLIE'S POOLMART, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
[ ] or registered assigns, the principal sum of $[ ] Dollars,
on July 15, 2004.
Interest Payment Dates: January 15 and July 15, commencing January
15, 1998
Record Dates: December 31 and June 30
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated: June __, 1997
LESLIE'S POOLMART, INC.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
A-3
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/8% Senior Notes due 2004, described in the
within-mentioned Indenture.
Dated: June __, 1997
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
--------------------------
Authorized Signatory
A-4
(REVERSE OF SECURITY)
LESLIE'S POOLMART, INC.
10 3/8% Senior Note
due July 15, 2004, Series A
1. Interest.
--------
LESLIE'S POOLMART, INC., a Delaware corporation (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 semi-annually on January
15 and July 15 of each year (the "Interest Payment Date"), commencing January
15, 1998. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from June 11,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal from time to time
on demand at the rate borne by the Securities plus 2% and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar.
--------------------------
Initially, U.S. Trust Company of California, N.A. (the "Trustee") will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-Registrar without notice to the Holders. The Company or any of
its Sub-
A-5
sidiaries may, subject to certain exceptions, act as Registrar or Co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
11, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. 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. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
obligations of the Company limited in aggregate principal amount to
$115,000,000.
5. Optional Redemption.
-------------------
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after July 15, 2001, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on July 15 of the year set forth below, plus,
in each case, accrued interest to the date of redemption:
YEAR PERCENTAGE
---- ----------
2001.................. 105.188%
2002.................. 102.594%
2003.................. 100.000%
6. Optional Redemption upon Public Equity Offering.
-----------------------------------------------
At any time, or from time to time, on or prior to July 15, 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined below) to redeem up to $25.0 million aggregate
principal amount of the Securities at a redemption price equal to 110.375% of
the principal amount thereof, plus accrued interest to the date of redemption;
provided that after giving effect to any such redemption at least $65.0 million
--------
aggregate principal amount of the Securities remains outstanding. In order to
effect the foregoing redemption with the proceeds of any Public Equity Offering,
the Company shall make such redemption not more than 60 days after the
consummation of any such Public Equity Offering.
A-6
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act, or any successor statute.
7. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations of $1,000 may
be redeemed only in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
9. Limitation on Disposition of Assets.
-----------------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
10. Denominations; Transfer; Exchange.
----------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection
A-7
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities or portions thereof selected for
redemption, except the unredeemed portion of any Security being redeemed in
part.
11. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
----------------------------------------
The Company may be discharged from its obligations under the Indenture
and the Securities except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the Commission in connection with
the qualification of the Indenture under the TIA, or make any other change that
does not materially adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Subsidiaries to make restricted
payments, to incur indebtedness, to
A-8
create liens, to issue preferred or other capital stock of Subsidiaries to third
parties, to sell assets, to permit restrictions on dividends and other payments
by Subsidiaries to the Company, to consolidate, merge or sell all or
substantially all of its assets, to engage in transactions with affiliates or to
engage in certain businesses. The limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
16. 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 Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such,
of the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
A-9
20. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused a CUSIP number to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
-------------------
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Series A Security for the Company's 10 3/8% Senior Notes due 2004, Series
B, which will have been registered under the Securities Act, in like principal
amount and having terms identical in all material respects as the Series A
Securities. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture and the Registration Rights
Agreement. Requests may be made to: Leslie's Poolmart, Inc., 00000 Xxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000, Attn: Chief Financial Officer.
23. Governing Laws.
--------------
This Security and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York, without regard to principles of
conflict of laws. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Note.
A-10
ASSIGNMENT FORM
I or we assign and transfer this Security to:
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_____________________________________, agent to transfer
this Security on the books of the Company. The agent may substitute another to
act for him.
Dated: Signed:
------------------------------------------
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
---------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.16 [ ] Section 4.17 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the
amount: $_____________
Date: Your Signature:
----------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
---------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-12
EXHIBIT B
---------
[FORM OF SERIES B SECURITY]
LESLIE'S POOLMART, INC.
10 3/8% Senior Note
due July 15, 2004, Series B
CUSIP No.:
No. [ ] $[ ]
LESLIE'S POOLMART, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
[ ] or registered assigns, the principal sum of $[ ] Dollars, on
July 15, 2004.
Interest Payment Dates: January 15 and July 15, commencing January
15, 1998
Record Dates: December 31 and June 30
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
LESLIE'S POOLMART, INC.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
B-1
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/8% Senior Notes due 2004, Series B, described
in the within-mentioned Indenture.
Dated:
U.S TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
-----------------------------------
Authorized Signatory
B-2
(REVERSE OF SECURITY)
LESLIE'S POOLMART, INC.
10 3/8% Senior Note
due July 15, 2004, Series B
1. Interest.
--------
LESLIE'S POOLMART, INC., a Delaware corporation (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 semi-annually on January
15 and July 15 of each year (the "Interest Payment Date"), commencing January
15, 1998. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from June 11,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal from time to time
on demand at the rate borne by the Securities plus 2% and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful.
2. Method of Payment.
------------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar.
---------------------------
Initially, U.S. Trust Company of California, N.A. (the "Trustee") will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-Registrar without notice to the Holders. The Company or any of
its Sub-
B-3
sidiaries may, subject to certain exceptions, act as Registrar or Co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of June
11, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. 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. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
obligations of the Company limited in aggregate principal amount to
$115,000,000.
5. Optional Redemption.
-------------------
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after July 15, 2001, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on July 15 of the year set forth below, plus,
in each case, accrued interest to the date of redemption:
YEAR PERCENTAGE
---- ----------
2001................... 105.188%
2002................... 102.594%
2003................... 100.000%
6. Optional Redemption upon Public Equity Offering.
-----------------------------------------------
At any time, or from time to time, on or prior to July 15, 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined below) to redeem up to $25.0 million aggregate
principal amount of the Securities at a redemption price equal to 110.375% of
the principal amount thereof, plus accrued interest to the date of redemption;
provided that after giving effect to any such redemption at least $65.0 million
--------
aggregate principal amount of the Securities remains outstanding. In order to
effect the foregoing redemption with the proceeds of any Public Equity Of-
B-4
fering, the Company shall make such redemption not more than 60 days after the
consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act, or any successor statute.
7. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations of $1,000 may
be redeemed only in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase.
9. Limitation on Disposition of Assets.
-----------------------------------
The Company is, subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.
10. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may
B-5
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
Security being redeemed in part.
11. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
----------------------------------------
The Company may be discharged from their obligations under the
Indenture and the Securities except for certain provisions thereof, and may be
discharged from their obligations to comply with certain covenants contained in
the Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
14. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the Commission in connection with
the qualification of the Indenture under the TIA, or make any other change that
does not materially adversely affect the rights of any Holder of a Security.
B-6
15. Restrictive Covenants.
---------------------
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of Subsidiaries to third parties, to sell assets, to permit
restrictions on dividends and other payments by Subsidiaries to the Company, to
consolidate, merge or sell all or substantially all of its assets, to engage in
transactions with affiliates or to engage in certain businesses. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
16. 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 Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such,
of the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
B-7
19. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
21. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused a CUSIP number to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to
Leslie's Poolmart, Inc., 00000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000,
Attn: Chief Financial Officer.
22. Governing Law.
-------------
This Security and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York, without regard to principles of
conflict of laws. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Note.
B-8
ASSIGNMENT FORM
I or we assign and transfer this Security to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
--------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
-------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------- -----------------------------------------
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:---------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
B-9
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.16 [ ] Section 4.17 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the
amount: $_____________
Date: Your Signature:
--------------- ----------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
B-10
EXHIBIT C
---------
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE 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) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
C-1
EXHIBIT D
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 10 3/8% Senior Notes due 2004, (the "Securities"), of Leslie's
Poolmart, Inc.
--------------------------------------------------------------
This Certificate relates to $_______ principal amount of Securities
held in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "Transferor").
The Transferor:*
has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
has requested that the Registrar by written order to exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of this Securities does not require registration under the Securities
Act of 1933, as amended (the "Act") because*:
Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16(a)(II)(A) or Section
2.16(d)(i)(A) of the Indenture).
Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
D-1
Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
Such Security is being transferred in reliance on Regulation S under
the Act.
Such Security is being transferred in reliance on Rule 144 under
the Act.
Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
----------------------------
[Authorized Signatory]
Date:
------------------
*Check applicable box.
D-2
EXHIBIT E
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
-----------------------------------------------
_______________, ____
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Department
Re: Leslie's Poolmart, Inc. (the "Company") Indenture (the "Indenture")
relating to 10 3/8% Senior Notes due 2004
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 10 3/8% Senior Notes due
2004 (the "Securities"), of Leslie's Poolmart, Inc. (the "Company"), we confirm
that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated June 6, 1997 relating to the Securities. We acknowledge
that we have read and agreed to the matters stated on pages i-ii of the Offering
Memorandum and in the section entitled "Transfer Restrictions" of the Offering
Memorandum, including the restrictions on duplication and circulation of the
Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United States in
accor-
E-1
dance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the
Trustee a signed letter substantially in the form hereof, (D) outside the United
States in accordance with Regulations S under the Securities Act, (E) pursuant
to the exemption from registration provided by Rule 144 under the Securities Act
(if available), or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will
not transfer the Securities to, any Benefit Plan (as defined in the section
entitled, "Transfer Restrictions" in the Offering Memorandum), except as
permitted in the section entitled "Transfer Restrictions" in the Offering
Memorandum.
5. We understand that, on any proposed resale of Securities, we will
be required to furnish to the Trustee and the Company, such certification, legal
opinions and other information as the Trustee and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
E-2
Very truly yours,
[Name of Transferor]
By:
--------------------------------
[Authorized Signatory]
E-3
EXHIBIT F
---------
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
---------------------------
_______________, ____
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Administration
Re: Leslie's Poolmart, Inc. (the "Company")
10 3/8% Senior Notes due 2004 (the "Securities")
------------------------------------------------
Dear Sirs:
In connection with our proposed sale of $____________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
F-1
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------
[Authorized Signature]
F-2
