EXHIBIT 4.1
EXECUTION VERSION
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Rexnord Corporation
Issuer
10 1/8% Senior Subordinated Notes Due 2012
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INDENTURE
Dated as of November 25, 2002
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Xxxxx Fargo Bank Minnesota, National Association
Trustee
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.08;7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 13.03
(c) 13.03
313 (a) 7.06
(b)(1) 7.06
(b)(2) 7.06; 7.07
(c) 13.02
(d) 7.06
314 (a) 4.02; 4.12; 13.02
(b) N.A.
(c)(1) 13.04
(c)(2) 13.04
(c)(3) N.A.
(d) N.A.
(e) 13.05
(f) N.A.
315 (a) 7.01
(b) 7.05; 13.02
(c) 7.01
(d) 7.01
(e) 6.11
316 (a)(last sentence) 13.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.11
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) 13.01
(b) N.A.
(c) 13.01
N.A. means Not Applicable
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Note: This Cross-Reference Table shall not, for any purpose,
be deemed to be part of this
indenture.
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01 Definitions.........................................................................................6
SECTION 1.02 Other Definitions..................................................................................37
SECTION 1.03 Incorporation by Reference of Trust Indenture Act..................................................38
SECTION 1.04 Rules of Construction..............................................................................38
ARTICLE 2
The Securities
SECTION 2.01 Form and Dating....................................................................................39
SECTION 2.02 Execution and Authentication.......................................................................39
SECTION 2.03 Registrar and Paying Agent.........................................................................40
SECTION 2.04 Paying Agent To Hold Money in Trust................................................................41
SECTION 2.05 Securityholder Lists...............................................................................41
SECTION 2.06 Transfer and Exchange..............................................................................41
SECTION 2.07 Replacement Securities.............................................................................41
SECTION 2.08 Outstanding Securities.............................................................................42
SECTION 2.09 Temporary Securities...............................................................................42
SECTION 2.10 Cancelation........................................................................................42
SECTION 2.11 Defaulted Interest.................................................................................43
SECTION 2.12 CUSIP Numbers......................................................................................43
SECTION 2.13 Additional Securities..............................................................................43
ARTICLE 3
Redemption
SECTION 3.01 Notices to Trustee.................................................................................44
SECTION 3.02 Selection of Securities To Be Redeemed.............................................................44
SECTION 3.03 Notice of Redemption...............................................................................45
SECTION 3.04 Effect of Notice of Redemption.....................................................................45
SECTION 3.05 Deposit of Redemption Price........................................................................46
SECTION 3.06 Securities Redeemed in Part........................................................................46
2
ARTICLE 4
Covenants
SECTION 4.01 Payment of Securities..............................................................................46
SECTION 4.02 SEC Reports........................................................................................47
SECTION 4.03 Limitation on Indebtedness.........................................................................47
SECTION 4.04 Limitation on Restricted Payments..................................................................51
SECTION 4.05 Limitation on Restrictions on Distributions from Restricted Subsidiaries...........................55
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock.................................................57
SECTION 4.07 Limitation on Affiliate Transactions...............................................................62
SECTION 4.08 Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries.....................63
SECTION 4.09 Change of Control..................................................................................64
SECTION 4.10 Limitation on Line of Business.....................................................................66
SECTION 4.11 Future Guarantors..................................................................................66
SECTION 4.12 Compliance Certificate.............................................................................66
SECTION 4.13 Further Instruments and Acts.......................................................................66
ARTICLE 5
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets..........................................................66
ARTICLE 6
Defaults and Remedies
SECTION 6.01 Events of Default..................................................................................69
SECTION 6.02 Acceleration.......................................................................................72
SECTION 6.03 Other Remedies.....................................................................................72
SECTION 6.04 Waiver of Past Defaults............................................................................73
SECTION 6.05 Control by Majority................................................................................73
SECTION 6.06 Limitation on Suits................................................................................73
SECTION 6.07 Rights of Holders to Receive Payment...............................................................74
SECTION 6.08 Collection Suit by Trustee.........................................................................74
SECTION 6.09 Trustee May File Proofs of Claim...................................................................74
SECTION 6.10 Priorities.........................................................................................74
SECTION 6.11 Undertaking for Costs..............................................................................75
SECTION 6.12 Waiver of Stay or Extension Laws...................................................................75
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ARTICLE 7
Trustee
SECTION 7.01 Duties of Trustee..................................................................................76
SECTION 7.02 Rights of Trustee..................................................................................77
SECTION 7.03 Individual Rights of Trustee.......................................................................78
SECTION 7.04 Trustee's Disclaimer...............................................................................78
SECTION 7.05 Notice of Defaults.................................................................................78
SECTION 7.06 Reports by Trustee to Holders......................................................................78
SECTION 7.07 Compensation and Indemnity.........................................................................79
SECTION 7.08 Replacement of Trustee.............................................................................79
SECTION 7.09 Successor Trustee by Merger........................................................................81
SECTION 7.10 Eligibility; Disqualification......................................................................81
SECTION 7.11 Preferential Collection of Claims Against Company..................................................81
ARTICLE 8
Discharge of
Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance...................................................81
SECTION 8.02 Conditions to Defeasance...........................................................................83
SECTION 8.03 Application of Trust Money.........................................................................84
SECTION 8.04 Repayment to Company...............................................................................84
SECTION 8.05 Indemnity for Government Obligations...............................................................84
SECTION 8.06 Reinstatement......................................................................................85
ARTICLE 9
Amendments
SECTION 9.01 Without Consent of Holders.........................................................................85
SECTION 9.02 With Consent of Holders............................................................................86
SECTION 9.03 Compliance with Trust
Indenture Act................................................................87
SECTION 9.04 Revocation and Effect of Consents and Waivers......................................................87
SECTION 9.05 Notation on or Exchange of Securities..............................................................88
SECTION 9.06 Trustee To Sign Amendments.........................................................................88
SECTION 9.07 Payment for Consent................................................................................88
ARTICLE 10
Subordination
SECTION 10.01 Agreement To Subordinate..........................................................................89
4
SECTION 10.02 Liquidation, Dissolution, Bankruptcy..............................................................89
SECTION 10.03 Default on Senior Indebtedness of the Company.....................................................90
SECTION 10.04 Acceleration of Payment of Securities.............................................................92
SECTION 10.05 When Distribution Must Be Paid Over...............................................................92
SECTION 10.06 Subrogation.......................................................................................92
SECTION 10.07 Relative Rights...................................................................................93
SECTION 10.08 Subordination May Not Be Impaired by Company or Holders of Senior Indebtedness....................93
SECTION 10.09 Rights of Trustee and Paying Agent................................................................93
SECTION 10.10 Distribution or Notice to Representative..........................................................94
SECTION 10.11 Article 10 Not To Prevent Events of Default or Limit Right To Accelerate..........................94
SECTION 10.12 Trust Moneys Not Subordinated.....................................................................94
SECTION 10.13 Trustee Entitled To Rely..........................................................................95
SECTION 10.14 Trustee To Effectuate Subordination...............................................................95
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness of the Company...........................96
SECTION 10.16 Reliance by Holders of Senior Indebtedness of the Company on Subordination Provisions.............96
ARTICLE 11
Guaranties
SECTION 11.01 Guaranties........................................................................................97
SECTION 11.02 Limitation on Liability...........................................................................99
SECTION 11.03 Successors and Assigns...........................................................................100
SECTION 11.04 No Waiver........................................................................................100
SECTION 11.05 Modification.....................................................................................100
SECTION 11.06 Release of Guarantor.............................................................................100
ARTICLE 12
Subordination of Guaranties
SECTION 12.01 Agreement to Subordinate.........................................................................101
SECTION 12.02 Liquidation, Dissolution, Bankruptcy.............................................................102
SECTION 12.03 Default on Senior Indebtedness of Guarantor......................................................103
SECTION 12.04 Demand for Payment...............................................................................104
SECTION 12.05 When Distribution Must Be Paid Over..............................................................105
SECTION 12.06 Subrogation......................................................................................105
SECTION 12.07 Relative Rights..................................................................................105
SECTION 12.08 Subordination May Not Be Impaired by Company or Holders of Senior Indebtedness...................105
SECTION 12.09 Rights of Trustee and Paying Agent...............................................................106
SECTION 12.10 Distribution or Notice to Representative.........................................................107
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SECTION 12.11 Article 12 Not To Prevent Events of Default or Limit Right To Demand Payment.....................107
SECTION 12.12 Trustee Entitled To Rely.........................................................................107
SECTION 12.13 Trustee To Effectuate Subordination..............................................................108
SECTION 12.14 Trustee Not Fiduciary for Holders of Senior Indebtedness of Guarantor............................108
SECTION 12.15 Reliance by Holders of Senior Indebtedness of Guarantors on Subordination Provisions.............108
ARTICLE 13
Miscellaneous
SECTION 13.01 Trust
Indenture Act Controls.....................................................................109
SECTION 13.02 Notices..........................................................................................109
SECTION 13.03 Communication by Holders with Other Holders......................................................110
SECTION 13.04 Certificate and Opinion as to Conditions Precedent...............................................110
SECTION 13.05 Statements Required in Certificate or Opinion....................................................110
SECTION 13.06 When Securities Disregarded......................................................................111
SECTION 13.07 Rules by Trustee, Paying Agent and Registrar.....................................................111
SECTION 13.08 Legal Holidays...................................................................................111
SECTION 13.09 Governing Law....................................................................................111
SECTION 13.10 No Recourse Against Others.......................................................................111
SECTION 13.11 Successors.......................................................................................112
SECTION 13.12 Multiple Originals...............................................................................112
SECTION 13.13 Table of Contents; Headings......................................................................112
Rule 144A/Regulation S/IAI Appendix
Exhibit 1 - Form of Security
RULE 144A/REGULATION S/IAI APPENDIX
INDENTURE dated as of November 25, 2002, among REXNORD
CORPORATION, formerly known as RBS HOLDINGS, INC., a Delaware
corporation (the "Company"), the GUARANTORS listed on the
signature pages hereto and XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's 10 1/8% Senior
Subordinated Notes Due 2012 (the "Initial Securities") and, if and when issued
pursuant to a registered exchange for Initial Securities, the Company's 10 1/8%
Senior Subordinated Notes Due 2012 (the "Exchange Securities") and if and when
issued pursuant to a private exchange for Initial Securities, the Company's 10
1/8% Senior Subordinated Notes Due 2012 (the "Private Exchange Securities" and,
together with the Exchange Securities and the Initial Securities, the
"Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Additional Assets" means (1) any property, plant or equipment used in
a Related Business; (2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; or (3) Capital Stock constituting a minority
interest in any Person that at such time is a Restricted Subsidiary; PROVIDED,
HOWEVER, that any such Restricted Subsidiary described in clause (2) or (3)
above is primarily engaged in a Related Business.
"Additional Securities" means, subject to the Company's compliance
with Section 4.03, 10 1/8% Senior Subordinated Notes Due 2012 issued from time
to time after the Issue Date under the terms of this
Indenture (other than
pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this
Indenture and other than
Exchange Securities or Private Exchange Securities issued pursuant to an
exchange offer for other Securities outstanding under this Indenture).
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and
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policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of
Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any beneficial
owner of Capital Stock representing 10% or more of the total voting power of the
Voting Stock (on a fully diluted basis) of the Company or of rights or warrants
to purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary
(other than dispositions of obsolete inventory or worn out assets permitted
pursuant to this Indenture) outside of the ordinary course of business of
the Company or such Restricted Subsidiary
(other than, in the case of clauses (1), (2) and (3) above, (A) a disposition by
a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (B) for purposes of Section 4.06 only,
(x) a disposition that constitutes a Restricted Payment permitted by Section
4.04 or a Permitted Investment and (y) a disposition of all or substantially all
the assets of the Company in accordance with Section 5.01, (C) sales or grants
of licenses or sublicenses to use the patents, trade secrets, know-how and other
intellectual property of the Company or its Restricted Subsidiaries to the
extent such license does not interfere with the business of the Company or any
Restricted Subsidiary; (D) the disposition of cash or Temporary Cash
Investments; (E) Investments and Restricted Payments permitted by this
Indenture; and (F) a disposition of assets with a fair market value of less than
$1,000,000).
8
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Securities, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended); PROVIDED, HOWEVER, that if such Sale/Leaseback Transaction
results in a Capital Lease Obligation, the amount of Indebtedness represented
thereby shall be determined in accordance with the definition of "Capital Lease
Obligation".
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (1) the sum of the products
of the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of or redemption or similar payment with
respect to such Indebtedness multiplied by the amount of such payment by (2) the
sum of all such payments.
"Bank Indebtedness" means all Obligations pursuant to the Credit
Agreement.
"Board of Directors" with respect to a Person means the Board of
Directors of such Person or any committee thereof duly authorized to act on
behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following
events:
9
(1) prior to the earlier to occur of (A) the first public offering
of common stock of Parent or (B) the first public offering of common stock
of the Company, the Permitted Holders cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of Parent or the Company, whether as a result of issuance of
securities of Parent or the Company, any merger, consolidation, liquidation
or dissolution of Parent or the Company, or any direct or indirect transfer
of securities by Parent or otherwise (for purposes of this clause (1) and
clause (2) below, the Permitted Holders shall be deemed to beneficially own
any Voting Stock of a Person (the "specified Person") held by any other
Person (the "parent entity") so long as the Permitted Holders beneficially
own (as so defined), directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent entity);
(2) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (1) above, except that
for purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company; PROVIDED, HOWEVER, that
the Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company than such other person and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of the
Company (for the purposes of this clause (2), such other person shall be
deemed to beneficially own any Voting Stock of a specified Person held by a
parent entity, if such other person is the beneficial owner (as defined in
this clause (2)), directly or indirectly, of more than 35% of the voting
power of the Voting Stock of such parent entity and the Permitted Holders
beneficially own (as defined in clause (1) above), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent entity);
10
(3) individuals who on the Issue Date constituted the Board of
Directors of the Company or the Parent Board (together with any new
directors whose election by such Board of Directors of the Company or the
Parent Board or whose nomination for election by the shareholders of the
Company or Parent, as the case may be, was approved by a vote of a majority
of the directors of the Company or Parent, as the case may be, then still
in office who were either directors on the Issue Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company or the
Parent Board then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(5) the merger or consolidation of Parent or the Company with or
into another Person or the merger of another Person with or into Parent or
the Company, or the sale of all or substantially all the assets of Parent
or the Company (determined on a consolidated basis) to another Person other
than (i) a transaction in which the surviving or transferee Person is
controlled by the Permitted Holders or (ii) a transaction following which
(A) in the case of a merger or consolidation transaction, holders of
securities that represented 100% of the Voting Stock of Parent or the
Company immediately prior to such transaction (or other securities into
which such securities are converted as part of such merger or consolidation
transaction) own directly or indirectly at least a majority of the voting
power of the Voting Stock of the surviving Person in such merger or
consolidation transaction immediately after such transaction and (B) in the
case of a sale of assets transaction, each transferee becomes an obligor in
respect of the Securities and a Subsidiary of the transferor of such
assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means with respect to any Person any agreement
for the protection against fluctuations in commodity prices or similar
agreements or arrangements to which such Person is a party or of which it is a
beneficiary.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
11
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of:
(x) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such
determination for which internal financial statements are then available to
(Y) Consolidated Interest Expense for such four fiscal quarters;
PROVIDED, HOWEVER, that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period (except
that, in making such computation, the amount of Indebtedness under any
revolving credit facility outstanding on the date of such calculation shall
be computed based on (A) the average daily balance of such Indebtedness
during such four fiscal quarters or such shorter period when such facility
was outstanding or (B) if such facility was created after the end of such
four fiscal quarters, the average balance of such Indebtedness during the
period from the date of creation of such facility to the date of the
computation),
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used to
repay, repurchase, defease or otherwise discharge such Indebtedness,
12
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA (if
negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of
the Company or any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale),
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring
a calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period, and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense
13
associated with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
PLUS, to the extent not included in such interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, without duplication,
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction,
(2) amortization of debt discount and debt issuance cost,
(3) capitalized interest,
(4) non-cash interest expense,
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing,
(6) net payments pursuant to Hedging Obligations,
(7) dividends accrued in respect of all Preferred Stock held by
Persons other than the Company or a Wholly Owned Subsidiary (other than
dividends payable solely in Capital Stock (other than Disqualified Stock)
of the Company); PROVIDED, HOWEVER, that such dividends shall be multiplied
by a fraction the numerator of which is one and the denominator of which is
one minus the effective combined income tax rate of the issuer of such
Preferred Stock (expressed as a decimal) for such period (as estimated by
the chief financial officer of the Company in good faith),
(8) interest incurred in connection with Investments in
discontinued operations,
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(9) interest accruing on any Indebtedness of any other Person to
the extent such Indebtedness is Guaranteed by (or secured by the assets of)
the Company or any Restricted Subsidiary, and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust,
LESS, to the extent included in such total interest expense, the amortization
during such period of capitalized financing costs associated with the
acquisition by the Company of the Rexnord Group from Invensys plc.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Person for such period shall
be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (3) below), and
(B) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company
or a Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or
15
indirectly, to the Company (but, in the case of any Foreign Subsidiary,
only to the extent cash equal to such net income (or a portion thereof) for
such period is not readily procurable by the Company from such Foreign
Subsidiary (with the amount of cash readily procurable from such Foreign
Subsidiary being set forth in a certificate of the Company's chief
financial officer) pursuant to intercompany loans, repurchases of Capital
Stock or otherwise), except that
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(4) any gain or loss realized upon the sale or other disposition
of any assets of the Company, its consolidated Subsidiaries or any other
Person (including pursuant to any sale-and-leaseback arrangement) which is
not sold or otherwise disposed of in the ordinary course of business and
any gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under such section pursuant to Section
4.04(a)(3)(D).
"Credit Agreement" means the Credit Agreement dated as of the Issue
Date by and among Parent, the Company, the lenders referred to therein, Deutsche
Bank Trust Company Americas, as
16
Administrative Agent, and Deutsche Bank Securities Inc. and Credit Suisse First
Boston, acting through its Cayman Islands Branch, as Joint Lead Arrangers and
Joint Book Runners, together with all related documents thereto (including the
term loans and revolving loans thereunder, any guarantees and security
documents), in each case as such documents may be amended, extended, renewed,
restated, supplemented or otherwise modified (in whole or in part, and without
limitation as to amount, maturity, terms, conditions, covenants and other
provisions) from time to time, and any agreement (and related document)
governing Indebtedness incurred to Refinance or restructure (including by adding
Subsidiaries as additional borrowers or guarantors thereunder), in whole or in
part, the borrowings and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or a successor Credit Agreement, whether
by the same or any other agent, lender or group of lenders or investors.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement with respect to currency values.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" means, with respect to a Person, (1)
the Bank Indebtedness and (2) any other Senior Indebtedness of such Person
which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $75.0 million and is specifically
designated by such Person in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, 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 at the option of the holder) or upon
the happening of any event:
(1) matures or is mandatorily redeemable (other than if redeemable
only for Capital Stock of such Person which is not itself Disqualified
Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
17
(3) is mandatorily redeemable or must be purchased upon the
occurrence of certain events or otherwise, in whole or in part,
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; PROVIDED, HOWEVER, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if (1) the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms applicable to the Securities in Sections 4.06 and
4.09 of this Indenture and (2) any such requirement only becomes operative after
compliance with such terms applicable to the Securities, including the purchase
of any Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed
redemption, repayment or repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
redeemed, repaid or repurchased on any date on which the amount of such
Disqualified Stock is to be determined pursuant to this Indenture; PROVIDED,
HOWEVER, that if such Disqualified Stock could not be required to be redeemed,
repaid or repurchased at the time of such determination, the redemption,
repayment or repurchase price shall be the book value of such Disqualified Stock
as reflected in the most recent financial statements of such Person.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
the following to the extent deducted in calculating such Consolidated Net
Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries,
(2) Consolidated Interest Expense,
(3) depreciation and amortization expense of the Company and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in
a prior period),
(4) any non-recurring fees, charges or other expenses (including
bonus and retention payments and severance expenses, restructuring costs
and acquisition integration
18
costs and fees) made or incurred in connection with the acquisition by the
Company of the Rexnord Group from Invensys plc,
(5) amortization charges resulting from purchase accounting
adjustments with respect to the acquisition by the Company of the Rexnord
Group from Invensys plc and other transactions occurring prior to the Issue
Date, and
(6) all other non-cash charges of the Company and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent
that it represents an accrual of or reserve for cash expenditures in any
future period),
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion,
including by reason of minority interests) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income and
(x) only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders or (y) in the case of any Foreign Subsidiary,
only if a corresponding amount of cash is readily procurable by the Company from
such Foreign Subsidiary (with the amount of cash readily procurable from such
Foreign Subsidiary being set forth in a certificate of the Company's chief
financial officer) pursuant to intercompany loans, repurchases of Capital Stock
or otherwise, PROVIDED that to the extent cash of such Foreign Subsidiary
provided the basis for including the net income of such Foreign Subsidiary in
Consolidated Net Income pursuant to clause (3) of the definition of
"Consolidated Net Income," such cash shall not be taken into account for the
purposes of determining readily procurable cash under this clause (y).
"Equity Offering" means (i) an underwritten primary public offering of
common stock of the Company or Parent pursuant to an effective registration
statement under the Securities Act or (ii) any private placement of common stock
of the Company or Parent to any Person who is not a Permitted Holder or any
Affiliate thereof.
19
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the debt securities of the Company issued
pursuant to this Indenture in exchange for, and in an aggregate principal amount
equal to, the Initial Securities, in compliance with the terms of the
Registration Rights Agreement.
"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 in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the Board of
Directors; PROVIDED, HOWEVER, that for purposes of Section 4.04(a)(3)(B), if the
Fair Market Value of the property or assets in question is so determined to be
in excess of $15.0 million, such determination must be confirmed by an
Independent Qualified Party. For purposes of determining Fair Market Value of
Capital Stock, the value of the Capital Stock of a Person shall be based upon
such Person's property and assets, exclusive of goodwill or any similar
intangible asset.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
that is not organized under the laws of the United States or any State thereof
or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in:
(1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants,
(2) statements and pronouncements of the Financial Accounting
Standards Board,
(3) such other statements by such other entity as approved by a
significant segment of the accounting profession, and
(4) the rules and regulations of the SEC governing the inclusion
of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar
20
written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise) or
(2) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means any Person who has provided a Guaranty.
"Guaranty" means any Subsidiary Guaranty or the Parent Guaranty.
"Guaranty Agreement" means a supplemental indenture, in a form
reasonably satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor
or Parent guarantees the Company's obligations with respect to the Securities on
the terms provided for in this Indenture.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger,
21
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Restricted Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. Solely for purposes of
determining compliance with Section 4.03:
(1) amortization of debt discount or the accretion of principal
with respect to a non-interest bearing or other discount security,
(2) the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of regularly
scheduled dividends on Capital Stock in the form of additional Capital
Stock of the same class and with the same terms, and
(3) the obligation to pay a premium in respect of Indebtedness
arising in connection with the issuance of a notice of redemption or the
making of a mandatory offer to purchase such Indebtedness
shall not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into by
such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above)
22
entered into in the ordinary course of business of such Person to the
extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the tenth Business Day
following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Capital Stock of such
Person or any Subsidiary of such Person or that are determined by the value
of such Capital Stock, the principal amount of such Capital Stock to be
determined in accordance with this Indenture (but excluding, in each case,
any accrued dividends);
(6) all obligations of the type referred to in clauses (1) through
(5) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the type referred to in clauses (1) through
(6) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase by the Company or
any Restricted Subsidiary of any business, the term "Indebtedness" shall exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; PROVIDED,
HOWEVER, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 60 days thereafter.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; PROVIDED,
HOWEVER, that in the case of Indebtedness sold at a discount, the amount of such
23
Indebtedness at any time shall be the accreted value thereof at such time.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent Qualified Party" means an investment banking firm,
accounting firm or appraisal firm of national standing; PROVIDED, HOWEVER, that
such firm is not an Affiliate of the Company.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement with
respect to exposure to interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) 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 for value of Capital Stock, Indebtedness
or other similar instruments issued by such Person. Except as otherwise provided
for herein, the amount of an Investment shall be its fair market value at the
time the Investment is made and without giving effect to subsequent changes in
value.
For purposes of the definition of "Unrestricted Subsidiary", the
definition of "Restricted Payment" and Section 4.04:
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in
an Unrestricted Subsidiary equal to an amount (if positive) equal to (x)
the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
24
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors of the
Company.
"Issue Date" means November 25, 2002.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of
New York.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be accrued as a liability under GAAP,
as a consequence of such Asset Disposition,
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition,
(3) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such
Asset Disposition, and
(4) the deduction of appropriate amounts provided by the seller as
a reserve, in accordance with GAAP, against any liabilities associated with
the property or other assets
25
disposed in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock or Indebtedness, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Obligations" means, with respect to any Indebtedness, all obligations
for principal, premium, interest, penalties, fees, indemnifications, expenses,
reimbursements, damages and other amounts payable pursuant to the documentation
governing or relating to such Indebtedness.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Parent" means RBS Global, Inc., a Delaware corporation.
"Parent Board" means the Board of Directors of Parent or any committee
thereof duly authorized to act on behalf of such Board.
"Parent Guaranty" means the Guarantee by Parent of the Company's
obligations with respect to the Securities, including any Guarantee entered into
after the Issue Date.
"Permitted Acquisition Payments" means, without duplication, the
following payments and distributions: (i) payments to Invensys plc and certain
of its Subsidiaries on the Issue Date in connection with the acquisition of the
Rexnord Group from Invensys, (ii) payments to Invensys plc and certain of its
Subsidiaries relating to any purchase price adjustment in connection with such
acquisition, PROVIDED such payments are on the terms and conditions set forth in
the definitive documentation for such acquisition as in effect on the Issue Date
and (iii) the payment of transaction fees and expenses relating to such
acquisition not in excess of $40.0 million.
26
"Permitted Holders" means (i) TC Group L.L.C. (which operates under
the trade name "The Carlyle Group"), a Delaware limited liability company, and
its Related Parties as of the Issue Date, (ii) Carlyle Partners III, L.P. and
its Related Parties as of the Issue Date, and (iii) Mr. Xxxxxx Xxxxxxx and his
Related Parties.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary;
PROVIDED, HOWEVER, that the primary business of such Restricted Subsidiary
is a Related Business;
(2) another Person if, as a result of such Investment, such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary;
PROVIDED, HOWEVER, that such Person's primary business is a Related
Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business of the Company or such Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 4.06;
27
(9) any Person where such Investment was acquired by the Company
or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (b) as a result of a foreclosure by
the Company or any of its Restricted Subsidiaries with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default;
(10) any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits made in the
ordinary course of business by the Company or any Restricted Subsidiary;
(11) any Person to the extent such Investments consist of Hedging
Obligations or Guarantees thereof otherwise permitted under Section 4.03;
(12) any Person to the extent that such Investments consist of
non-cash consideration received in the form of securities, notes or similar
obligations in connection with dispositions of obsolete or worn out assets
permitted pursuant to this Indenture;
(13) any Person to the extent such Investment in such Person
existed on the Issue Date and any Investment that replaces, refinances or
refunds such an Investment, PROVIDED that the new Investment is in an
amount that does not exceed that amount replaced, refinanced or refunded
and is made in the same person as the Investment replaced, refinanced or
refunded; and
(14) Persons to the extent such Investments, when taken together
with all other Investments made pursuant to this clause (14) outstanding on
the date such Investment is made, do not exceed the greater of $25.0
million and 2.0% of the total consolidated assets of the Company and its
Restricted Subsidiaries, as set forth on the Company's consolidated balance
sheet for the most recently ended fiscal quarter for which internal
financial statements are available.
"Permitted Junior Securities" means, so long as the effect of any
exclusion employing this definition is not to cause the Securities (or the
Guaranties thereof) to be treated in any case or proceeding or similar event
described in Section 6.01(7) or
28
(8) as part of the same class of claims as the Senior Indebtedness of the
Company or a Guarantor, or any class of claims PARI PASSU with, or senior to,
the Senior Indebtedness of the Company or a Guarantor, for any payment or
distribution,
(a) debt securities of the Company (or any successor in interest
thereto) provided for by a plan of reorganization or readjustment in any
such case, proceeding or similar event referred to in Section 6.01(7) or
(8), so long as such debt securities:
(i) are subordinated at least to the same extent that the
Securities are subordinated (pursuant to Article 10 and the related
defined terms contained therein) to the payment of all Senior
Indebtedness,
(ii) are unsecured,
(iii) have no maturity, amortization, sinking fund, repayment
or similar payment earlier than one year after the final maturity of
all Senior Indebtedness of the Company then outstanding (as such
Senior Indebtedness may be modified pursuant to any such
reorganization or readjustment),
(iv) shall not be entitled to the benefits of covenants or
defaults materially more beneficial to the holders of such debt
securities than those in effect with respect to the Securities on the
Issue Date (or the Senior Indebtedness of the Company, after giving
effect to such reorganization or readjustment), and
(v) to the extent that same are to be guaranteed, shall only
be guaranteed by Subsidiaries of the Company that have guaranteed
Senior Indebtedness of the Company (as such Senior Indebtedness may be
modified pursuant to any such reorganization or readjustment) and such
guarantees shall be subordinated at least to the same extent as the
Guarantees of the Guarantors are subordinated (pursuant to Article 12
and the related defined terms contained therein) to the payment of all
Senior Indebtedness of the Guarantors and
(b) shares of common stock of the Parent (or any successor in
interest thereto) provided for by a plan of reorganization of readjustment
in any such case, proceeding or similar event referred by in Section
6.01(7) or (8);
29
PROVIDED that, in each case, (x) if a new corporation results from any such
reorganization or readjustment, such corporation assumes all Senior Indebtedness
of the Company that will be outstanding after giving effect thereto and (y) the
rights of the holders of Senior Indebtedness of the Company are not, without the
consent of such holders, altered by any such reorganization or readjustment,
including, without limitation, such rights being impaired on the right to
receive interest accruing during the pendency of a bankruptcy or insolvency
proceeding, including proceedings under any Bankruptcy Law.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Rating Agency" means Standard & Poor's Ratings Group, Inc. and
Xxxxx'x Investors Service, Inc. or if Standard & Poor's Ratings Group, Inc. or
Xxxxx'x Investors Service, Inc. or both shall not make a rating on the
Securities publicly available, a nationally recognized statistical rating agency
or agencies, as the case may be, selected by the Company (as certified by a
resolution of the Board of Directors of the Company) which shall be substituted
for Standard & Poor's Ratings Group, Inc. or Xxxxx'x Investors Service, Inc. or
both, as the case may be.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that:
30
(1) such Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being Refinanced;
(3) such Refinancing Indebtedness has an aggregate principal
amount (or, if Incurred with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or, if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right
of payment to the Securities, such Refinancing Indebtedness is subordinated
in right of payment to the Securities at least to the same extent as the
Indebtedness being Refinanced;
PROVIDED FURTHER, HOWEVER, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company, (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated November 25, 2002, among the Company, the Guarantors and Credit
Suisse First Boston Corporation on behalf of the initial purchasers.
"Related Business" means any business in which the Company or its
Restricted Subsidiaries was engaged on the Issue Date and any business related,
ancillary or complementary to any such business.
"Related Parties" means, with respect to any specified Person at any
specified time,
(1) if a natural person, (A) any spouse, parent or lineal
descendant (including by adoption) of such Person or (B) the estate of such
Person during any period in which such estate holds Capital Stock of Parent
or of the Company for the benefit of any Person referred to in clause
(1)(A) above and
31
(2) if a trust, corporation, partnership, limited liability
company or other entity, any other Person that controls such Person at such
time. For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Representative" means, with respect to a Person, any trustee, agent
or representative (if any) for an issue of Senior Indebtedness of such Person;
PROVIDED, HOWEVER, that if, and for so long as, any Senior Indebtedness lacks
such a representative, the Representative for such Senior Indebtedness shall be
the holders of a majority of the outstanding principal amount of such Senior
Indebtedness.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and dividends or distributions
payable solely to the Company or a Restricted Subsidiary, and other than
pro rata dividends or other distributions made by a Subsidiary that is not
a Wholly Owned Subsidiary to minority stockholders (or owners of an
equivalent interest in the case of a Subsidiary that is an entity other
than a corporation)),
(2) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company held by any Person or of any
Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including in connection with
any merger or consolidation and including the exercise of any option to
exchange any Capital Stock (other than into Capital Stock of the Company
that is not Disqualified Stock),
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
of such Person (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking
fund obligation, principal installment or
32
final maturity, in each case due within one year of the date of such
purchase, repurchase or other acquisition), or
(4) the making of any Investment (other than a Permitted
Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"Rexnord Operating Company" means Rexnord North America Holdings,
Inc., known as Rexnord Corporation prior to the Issue Date, a Delaware
corporation.
"Sale/Leaseback Transaction" means an arrangement relating to property
owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter
acquired by the Company or a Restricted Subsidiary whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Senior Indebtedness" means, with respect to any Person:
(1) all Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred, and
(2) all other Obligations of such Person (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person at the rate provided for in the
documentation with respect thereto, whether or not post-filing interest is
allowed in such proceeding) in respect of Indebtedness described in clause
(1) above,
unless, in the case of clauses (1) and (2) above, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that such Indebtedness or other Obligations are subordinate
or PARI PASSU in right of payment
33
to the Securities or the Guaranty of such Person, as the case may be; PROVIDED,
HOWEVER, that Senior Indebtedness shall not include:
(1) any obligation of such Person to the Company or any
Subsidiary;
(2) any liability for Federal, state, local or other taxes owed or
owing by such Person;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities, but not including letters of
credit issued in the ordinary course by a financial institution in respect
thereof or reimbursement or other obligations with respect to such letters
of credit);
(4) any Indebtedness or other Obligation of such Person which, by
its express terms, is subordinate in right of payment to any other
Indebtedness or other Obligation of such Person;
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture; PROVIDED, HOWEVER,
that such Indebtedness shall be deemed not to have been Incurred in
violation of this Indenture for purposes of this clause (5) if (x) the
Holders of such Indebtedness or their Representative or the Company shall
have furnished to the Trustee an opinion of nationally recognized
independent legal counsel addressed to the Trustee (which legal counsel
may, as to matters of fact, rely upon an Officers' Certificate) to the
effect that the Incurrence of such Indebtedness does not violate the
provisions of this Indenture or (y) such Indebtedness consists of
Indebtedness under the Credit Agreement and Holders of such Indebtedness or
their Representative (A) had no actual knowledge at the time of the
Incurrence that the Incurrence of such Indebtedness violated this Indenture
and (B) shall have received an Officers' Certificate to the effect that the
Incurrence of such Indebtedness does not violate provisions of this
Indenture; or
(6) any obligations of such Person with respect to Capital Stock.
"Senior Subordinated Indebtedness" means, with respect to a Person,
the Securities (in the case of the Company), the Parent Guaranty (in the case of
the Parent), the Subsidiary Guaranty (in
34
the case of a Subsidiary Guarantor) and any other Indebtedness of such Person
that specifically provides that such Indebtedness is to rank PARI PASSU with the
Securities or such Guaranty, as the case may be, in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of such Person which is not Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC; PROVIDED, HOWEVER, that all references to
10% in Rule 1-02 shall instead be deemed to be 5%.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities,
the Parent Guaranty or a Subsidiary Guaranty of such Person, as the case may be,
pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means the Rexnord Operating Company and each
other Subsidiary of the Company that executes this Indenture as a guarantor on
the Issue Date and each other Subsidiary of the Company that thereafter
guarantees the Securities pursuant to the terms of this Indenture.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following:
35
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof,
(2) any currency that is exchangeable into U.S. dollars without
legal restriction and that is utilized by the Company or any of its
Restricted Subsidiaries in the ordinary course of business,
(3) investments in demand and time deposit accounts, certificates
of deposit and money market deposits maturing within 270 days of the date
of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any State thereof or any
foreign country recognized by the United States of America, and which bank
or trust company has, at the time of making of such investment, capital,
surplus and undivided profits aggregating in excess of $50.0 million (or
the foreign currency equivalent thereof) and has outstanding debt which is
rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor,
(4) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in clause (3)
above,
(5) investments in commercial paper, maturing not more than 180
days after the date of acquisition, issued by a corporation organized and
in existence under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Xxxxx'x Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, and
(6) investments in securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group or "A" by Xxxxx'x Investors Service,
Inc. at the time of the making of such investment.
36
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the Issue Date.
"Trustee" means Xxxxx Fargo Bank Minnesota, National Association,
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the
New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board
of Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of
the Company (other than the Rexnord Operating Company or any successor in
interest thereto) (including any newly acquired or newly formed Subsidiary) to
be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; PROVIDED, HOWEVER, that either
(A) the Subsidiary to be so designated has total assets of $1,000 or less or (B)
if such Subsidiary has assets greater than $1,000, such designation would be
permitted under Section 4.04.
The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately
after giving effect to such designation (A) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (B) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Board of Directors of the Company giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
37
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares or other nominal
shares required, as a matter of applicable law, to be held by Persons other than
the Company or another Wholly Owned Subsidiary) is owned by the Company or one
or more Wholly Owned Subsidiaries.
SECTION 1.02 OTHER DEFINITIONS.
Defined in
Term Section
---- ----------
Affiliate Transaction"..............................................................................4.07(a)
"Appendix"..........................................................................................2.01
"Bankruptcy Law"....................................................................................6.01
"Blockage Notice" ..................................................................................10.03; 12.03
"Change of Control Offer"...........................................................................4.09(b)
"covenant defeasance option"........................................................................8.01(b)
"CUSIP".............................................................................................2.12
"Custodian".........................................................................................6.01
"Event of Default"..................................................................................6.01
"ISIN"..............................................................................................2.12
"legal defeasance option"...........................................................................8.01(b)
"Legal Holiday".....................................................................................13.08
"Non-Payment Default"...............................................................................10.03;12.03
"Offer".............................................................................................4.06(b)
"Offer Amount"......................................................................................4.06(c)(2)
"Offer Period"......................................................................................4.06(c)(2)
"pay its Guaranty"..................................................................................12.03
"pay the Securities"................................................................................10.03
"Paying Agent"......................................................................................2.03
"Payment Blockage Period"...........................................................................10.03; 12.03
"Payment Default" ..................................................................................10.03;12.03
"Purchase Date".....................................................................................4.06(c)(1)
"Registrar".........................................................................................2.03
38
Defined in
Term Section
---- ----------
"Securities Obligations"............................................................................11.01
"Successor Company".................................................................................5.01(a)(1)
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
39
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(7) Secured Indebtedness shall not be deemed to be subordinate or
junior to any other Secured Indebtedness merely because it has a junior
priority with respect to the same collateral;
(8) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(9) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(10) all references to the date the Securities were originally
issued shall refer to the Issue Date.
ARTICLE 2
THE SECURITIES
SECTION 2.01 FORM AND DATING. Provisions relating to the Securities
are set forth in the Rule 144A/Regulation S/IAI Appendix attached hereto (the
"Appendix"), which is hereby incorporated in and expressly made part of this
Indenture. The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit 1 to the Appendix, 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,
agreements to which the Company is subject, if any, or usage (PROVIDED that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in the Appendix are part of the terms of this Indenture.
SECTION 2.02 EXECUTION AND AUTHENTICATION. One Officer shall sign the
Securities for the Company by manual or facsimile signature.
40
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
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 and deliver Securities as set forth in
the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03 REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent. The
Company may change any Paying Agent or Registrar or co-registrar without notice
to any Holder.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within the
United States of America may act as Paying Agent, Registrar, co-registrar or
transfer agent.
41
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST. On or prior to each
due date of the principal of and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section 2.04, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
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 all Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall
furnish to the Trustee, in writing at least five Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.06 TRANSFER AND EXCHANGE. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of this Indenture and Section
8-401(1) of the Uniform Commercial Code are met. When Securities are presented
to the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met.
SECTION 2.07 REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Registrar 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
42
authenticate a replacement Security if the requirements of Section 8-405 of the
Uniform Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08 OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.08 as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.09 TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10 CANCELATION. 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
43
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel and destroy (subject to the record
retention requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company. The Company may not issue
new Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11 DEFAULTED INTEREST. If the Company defaults in a payment
of interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12 CUSIP NUMBERS. The Company in issuing the Securities may
use numbers assigned by the Committee on Uniform Securities Identification
Procedures ("CUSIP") and corresponding International Securities Identification
Numbers ("ISIN") (if then generally in use) and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to Holders; PROVIDED,
HOWEVER, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the CUSIP or ISIN numbers.
SECTION 2.13 ADDITIONAL SECURITIES. The Company shall be entitled,
subject to its compliance with Section 4.03, to issue Additional Securities
under this Indenture which shall have identical terms as the Initial Securities
issued on the Issue Date, other than with respect to the date of issuance and
issue price. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor shall be treated as a single class for all purposes under this
Indenture.
44
With respect to any Additional Securities, the Company shall set forth
in a resolution of the Board of Directors and an Officers' Certificate, a copy
of each which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities
to be authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number of such
Additional Securities; PROVIDED, HOWEVER, that no Additional Securities may
be issued at a price that would cause such Additional Securities to have
"original issue discount" within the meaning of Section 1273 of the Code;
and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Securities as set forth in
the Appendix to this Indenture or shall be issued in the form of Exchange
Securities as set forth in Exhibit A.
ARTICLE 3
REDEMPTION
SECTION 3.01 NOTICES TO TRUSTEE. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section 3.01 at least 30 days but not more than 60 days before the redemption
date unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02 SELECTION OF SECURITIES TO BE REDEEMED. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee in its
sole discretion shall deem to be fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities
45
and portions of them the Trustee selects shall be in principal amounts of $1,000
or a whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03 NOTICE OF REDEMPTION. At least 30 days but not more than
60 days before a date for redemption of Securities, the Company shall mail or
cause to be mailed a notice of redemption by first-class mail to each Holder of
Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption
46
become due and payable on the redemption date and at the redemption price stated
in the notice. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price stated in the notice, plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date).
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE. On or prior to the
redemption date, the Company shall deposit with the Trustee or the Paying Agent
(or, if the Company or a Subsidiary is the Trustee or the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which have been
delivered by the Company to the Trustee for cancellation. The Trustee or the
Paying Agent will promptly return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the redemption price of and accrued interest on all Securities to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest will cease to accrue on
the Securities or the portions of the Securities called for redemption. If a
Security is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Security was registered at the close of
business on such record date.
SECTION 3.06 SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF SECURITIES. The Company shall promptly pay or
cause to be paid the principal of and interest on the Securities on the dates
and in the manner provided in the Securities and in this Indenture. Principal
and interest shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Indenture money
sufficient to pay all principal and interest then due and the
47
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02 SEC REPORTS.
(a) Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall file (following consummation of the registered exchange offer
contemplated by the Registration Rights Agreement) with the SEC (to the
extent the SEC will accept such filings) and provide the Trustee and
Securityholders with such annual reports and such information, documents
and other reports as are specified in Sections 13 and 15(d) of the Exchange
Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports
under such Sections.
(b) At any time that any of the Company's Subsidiaries are
Unrestricted Subsidiaries, then the quarterly and annual financial
information required by Section 4.02(a) shall include a reasonably detailed
presentation, either on the face of the financial statements or in the
footnotes thereto, and in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", of the financial condition
and results of operations of the Company and its Restricted Subsidiaries
separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of the Company.
(c) The Company shall furnish to the Holder of the Securities and
to prospective investors, upon the requests of such Holders, any
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act so long any Securities are not freely transferable under the
Securities Act.
(d) The Company shall comply with the other provisions of TIA
Section 314(a).
SECTION 4.03 LIMITATION ON INDEBTEDNESS.
48
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Indebtedness; PROVIDED,
HOWEVER, that the Company and its Restricted Subsidiaries shall be entitled
to Incur Indebtedness if, on the date of such Incurrence and after giving
effect thereto on a PRO FORMA basis, no Default has occurred and is
continuing and the Consolidated Coverage Ratio exceeds (i) 2.00 to 1.00, if
such Incurrence occurs on or prior to December 31, 2004, or (ii) 2.25 to
1.00, if such Incurrence occurs after such date.
(b) Notwithstanding the foregoing paragraph (a), the Company and
the Restricted Subsidiaries shall be entitled to Incur any or all of the
following Indebtedness:
(1) Indebtedness Incurred by the Company and the Restricted
Subsidiaries pursuant to any Credit Agreement; PROVIDED, HOWEVER, that,
immediately after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness Incurred under this Section 4.03(b)(1)
and then outstanding does not exceed $485.0 million less the sum of all
permanent principal payments with respect to such Indebtedness pursuant to
Section 4.06(a)(3)(A);
(2) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; PROVIDED, HOWEVER, that (A) any subsequent issuance or transfer
of any Capital Stock that results in any such Restricted Subsidiary ceasing
to be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or a Restricted Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such Indebtedness
by the obligor thereon, (B) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the Securities
and (C) if a Subsidiary Guarantor is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in cash
of all obligations of such obligor with respect to its Subsidiary Guaranty;
(3) the Securities (other than any Additional Securities);
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section 4.03(b));
49
(5) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was acquired
by the Company or another Restricted Subsidiary (other than Indebtedness
Incurred in connection with, or to provide all or any portion of the funds
or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a Subsidiary
or was acquired by the Company); PROVIDED, HOWEVER, that on the date of
such acquisition and after giving effect thereto on a pro forma basis, no
Default has occurred and is continuing and the Consolidated Coverage Ratio
exceeds 2.00 to 1.00;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (3), (4) or (5) of this
Section 4.03(b) or this clause (6); PROVIDED, HOWEVER, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Subsidiary Incurred pursuant to clause (5), such
Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(7) Hedging Obligations consisting of (A) Interest Rate Agreements
related to Indebtedness permitted to be Incurred by the Company and its
Restricted Subsidiaries pursuant to this Indenture, (B) Currency Agreements
entered into in the ordinary course of business and not for the purpose of
speculation and (C) Commodity Agreements entered into in the ordinary
course of business and not for the purpose of speculation;
(8) obligations in respect of performance, bid and surety bonds
and completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business;
(9) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; PROVIDED, HOWEVER,
that such Indebtedness is extinguished within five Business Days of its
Incurrence;
(10) Guarantees by the Company or any Restricted Subsidiary of
Indebtedness of the Company or any Subsidiary of the Company that was
permitted to be Incurred by paragraph (a) or any other clause in this
paragraph (b) (other than clause (b)(5));
50
(11) Indebtedness (including Capital Lease Obligations) Incurred by
the Company or any of its Restricted Subsidiaries to finance the purchase,
lease, construction or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital
Stock of any Person owning such assets) at the time of, or within 180 days
after, such purchase, lease or improvement in an aggregate principal amount
which, when added together with the amount of Indebtedness previously
incurred pursuant to this clause (11) and then outstanding (including any
Refinancing Indebtedness with respect thereto) does not exceed $10.0
million;
(12) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary; PROVIDED, HOWEVER, that the maximum
aggregate liability in respect of all such Indebtedness shall at no time
exceed the gross proceeds actually received by the Company or the
Restricted Subsidiary in connection with such disposition; and
(13) Indebtedness of the Company or of any of its Restricted
Subsidiaries in an aggregate principal amount which, when taken together
with all other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (12) above or Section 4.03(a)) does not
exceed $25.0 million.
(c) Notwithstanding the foregoing, neither the Company nor any
Subsidiary Guarantor shall Incur any Indebtedness pursuant to Section
4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations of the Company or any Subsidiary
Guarantor unless such Indebtedness shall be subordinated to the Securities
or the applicable Subsidiary Guaranty to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03:
(1) any Bank Indebtedness Incurred on the Issue Date shall be
deemed to have been Incurred under Section 4.03(b)(1);
51
(2) in the event that an item of Indebtedness (or any portion
thereof) meets the criteria of more than one of the types of Indebtedness
described herein, the Company, in its sole discretion, shall classify such
item of Indebtedness (or any portion thereof) at the time of Incurrence and
shall only be required to include the amount and type of such Indebtedness
in one of the above clauses;
(3) the Company shall be entitled to divide and classify an item
of Indebtedness in more than one of the types of Indebtedness described
herein; and
(4) other than Indebtedness classified pursuant to Section
4.03(d)(1), following the date of its Incurrence, any Indebtedness
originally classified as Incurred pursuant to one of the clauses in Section
4.03(b) may later be reclassified by the Company such that it will be
deemed as having been Incurred pursuant to Section 4.03(a) or another
clause in Section 4.03(b) above, as applicable, to the extent that such
reclassified Indebtedness could be Incurred pursuant to such new paragraph
or clause at the time of such reclassification.
(e) Notwithstanding clauses (a) and (b) of this Section 4.03,
neither the Company nor any Subsidiary Guarantor shall Incur (1) any
Indebtedness if such Indebtedness is subordinate in right of payment to any
Senior Indebtedness of the Company or such Subsidiary Guarantor, as
applicable, unless such Indebtedness is Senior Subordinated Indebtedness or
is expressly subordinated in right of payment to Senior Subordinated
Indebtedness of the Company or such Subsidiary Guarantor, as applicable, or
(2) any Secured Indebtedness that is not Senior Indebtedness of such Person
unless contemporaneously therewith such Person makes effective provision to
secure the Securities or the relevant Subsidiary Guaranty, as applicable,
equally and ratably with such Secured Indebtedness for so long as such
Secured Indebtedness is secured by a Lien.
SECTION 4.04 LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to make a Restricted Payment if at the
time the Company or such Restricted Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
52
(2) the Company is not entitled to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (without
duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the Issue Date occurs
to the end of the most recent fiscal quarter prior to the date of such
Restricted Payment for which internal financial statements are then
available (or, in case such Consolidated Net Income shall be a deficit,
minus 100% of such deficit); PLUS
(B) 100% of the aggregate Net Cash Proceeds and Fair Market Value of
other property or assets (other than Indebtedness) received by the Company
from the issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Company and other than an issuance or sale to an employee
stock ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) and 100% of any cash
capital contribution received by the Company from its shareholders
subsequent to the Issue Date; PLUS
(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange subsequent to the
Issue Date of any Indebtedness of the Company convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash, or the fair value of any other property, distributed by
the Company upon such conversion or exchange); PROVIDED, HOWEVER, that the
foregoing amount shall not exceed the Net Cash Proceeds received by the
Company or any Restricted Subsidiary from the sale of such Indebtedness
(excluding Net Cash Proceeds from sales to a Subsidiary of the Company or
to an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their employees);
PLUS
(D) an amount equal to the sum of (x) the net reduction in the
Investments (other than Permitted Investments) made by the Company or any
Restricted Subsidiary in any Person resulting from repurchases, repayments
or redemptions of such Investments by such Person, proceeds realized on the
sale of
53
such Investment and proceeds representing the return of capital (excluding
dividends and distributions), in each case received by the Company or any
Restricted Subsidiary, and (y) to the extent such Person is an Unrestricted
Subsidiary, the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of such
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the foregoing
sum shall not exceed, in the case of any such Person or Unrestricted
Subsidiary, the amount of Investments (excluding Permitted Investments)
previously made (and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of
the substantially concurrent sale of, or made by exchange for, Capital
Stock of the Company (other than Disqualified Stock and other than Capital
Stock issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) or a substantially
concurrent cash capital contribution received by the Company from its
shareholders; PROVIDED, HOWEVER, that (A) such Restricted Payment shall be
excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale or such cash capital contribution (to
the extent so used for such Restricted Payment) shall be excluded from the
calculation of amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company or any Subsidiary Guarantor made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Indebtedness
of such Person which is permitted to be Incurred pursuant to Section 4.03;
PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this Section 4.04; PROVIDED,
54
HOWEVER, that at the time of payment of such dividend, no other Default
shall have occurred and be continuing (or result therefrom); PROVIDED
FURTHER, HOWEVER, that such dividend shall be included in the calculation
of the amount of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the Company
or any of its Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of
Directors of the Company under which such individuals purchase or sell or
are granted the option to purchase or sell, shares of such Capital Stock;
PROVIDED, HOWEVER, that the aggregate amount of such repurchases and other
acquisitions (A) in calendar year 2002 shall not exceed $500,000 and (B) in
any calendar year thereafter shall not exceed the lesser of (A) the sum of
(x) $2.0 million and (y) the aggregate amount of Restricted Payments
permitted (but not made) pursuant to this Section 4.04(b)(4) in prior
calendar years and (B) $7.5 million; PROVIDED FURTHER, HOWEVER, that such
repurchases and other acquisitions shall be excluded in the calculation of
the amount of Restricted Payments;
(5) dividends to Parent to be used by Parent solely to pay its
fees required to maintain its corporate existence and to pay for general
corporate and overhead expenses (including salaries and other compensation
of employees) incurred by Parent in the ordinary course of its business;
PROVIDED, HOWEVER, that such dividends shall not exceed $1,000,000 in any
calendar year; PROVIDED FURTHER, HOWEVER, that such dividends shall be
excluded in the calculation of the amount of Restricted Payments;
(6) dividends, distributions or advances to Parent to be used by
Parent to pay Federal, state and local taxes payable by Parent and directly
attributable to (or arising as a result of) the operations of the Company
and the Restricted Subsidiaries; PROVIDED, HOWEVER, that (A) the amount of
such dividends shall not exceed the amount that the Company and its
Restricted Subsidiaries would be required to pay in respect of such
Federal, state or local taxes were the Company to pay such taxes as a
stand-alone taxpayer and (B) such dividends pursuant to this Section
4.04(b)(6) are used by Parent for
55
such purposes within 10 days of the receipt of such dividends; PROVIDED
FURTHER, HOWEVER, that such dividends shall be excluded in the calculation
of the amount of Restricted Payments;
(7) payments of dividends on Disqualified Stock issued in
accordance with Section 4.03; PROVIDED, HOWEVER, that such dividends shall
be excluded in the calculation of the amount of Restricted Payments;
(8) repurchases of Capital Stock deemed to occur upon exercise of
stock options or warrants if such Capital Stock represents a portion of the
exercise price of such options or warrants; PROVIDED, HOWEVER, that such
Restricted Payments shall be excluded in the calculation of the amount of
Restricted Payments;
(9) Permitted Acquisition Payments; PROVIDED, HOWEVER, that such
payments shall be excluded in the calculation of the amount of Restricted
Payments; and
(10) Restricted Payments in an amount which, when taken together
with all Restricted Payments made pursuant to this Section 4.04(b)(10),
does not exceed $20.0 million; PROVIDED, HOWEVER, that at the time of each
such Restricted Payment, no Default shall have occurred and be continuing
(or result therefrom) and such Restricted Payments shall be excluded in the
calculation of the amount of Restricted Payments.
SECTION 4.05 LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c),
(A) any encumbrance or restriction pursuant to, or as required by, an
agreement in effect at or entered into on the Issue Date;
(B) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was
56
acquired by the Company (other than Indebtedness Incurred as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary
or was acquired by the Company) and outstanding on such date;
(C) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Indebtedness Incurred pursuant to an agreement referred to
in Section 4.05(1)(A) or 4.05(1)(B) or this Section 4.05(1)(C) or contained
in any amendment to an agreement referred to in Section 4.05(1)(A) or
4.05(1)(B) or this Section 4.05(1)(C); PROVIDED, HOWEVER, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such refinancing agreement or amendment are no less
favorable to the Securityholders than encumbrances and restrictions, taken
as a whole, with respect to such Restricted Subsidiary contained in such
predecessor agreements;
(D) any encumbrance or restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition;
(E) any restriction arising under applicable law, regulation or order;
(F) any encumbrance or restriction contained in the terms of any
Indebtedness of the Company or any Subsidiary Guarantor; PROVIDED, HOWEVER,
that such encumbrances or restrictions, taken as a whole, are no more
restrictive in the aggregate than those contained in this Indenture, as
determined in good faith by the Company's Board of Directors, whose
determination shall be conclusive;
(G) any encumbrance or restriction contained in any agreement or
instrument governing Senior Indebtedness (including the Credit Agreement)
not Incurred in violation of this Indenture; PROVIDED, HOWEVER, that such
encumbrances or restrictions, taken as a whole, are no more restrictive in
the aggregate than those contained in the Credit Agreement, as determined
in good faith by the Company's Board of Directors, whose determination
shall be conclusive;
57
(H) with respect to any Restricted Subsidiary, any encumbrance or
restriction contained in the terms of any Indebtedness, or any agreement
pursuant to which such Indebtedness was issued, if:
(x) the encumbrance or restriction applies only in the event
of a payment default or a default with respect to a financial
covenant contained in such Indebtedness or agreement,
(y) the encumbrance or restriction is not materially more
disadvantageous to the Secuityholders than is customary in
comparable financings, as determined in good faith by the
Company's Board of Directors, whose determination shall be
conclusive, and
(z) such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest
payments on the Securities, as determined in good faith by the
Company's Board of Directors, whose determination shall be
conclusive; and
(I) imposed by customary provisions in joint venture agreements and
similar agreements that restrict the transfer of the interest in the joint
venture; and
(2) with respect to clause (c) only,
(A) any encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests or
contracts to the extent such provisions restrict the transfer of the lease
or the property leased thereunder or the contract; and
(B) any encumbrance or restriction contained in security agreements or
mortgages securing Indebtedness of a Restricted Subsidiary to the extent
such encumbrance or restriction restricts the transfer of the property
subject to such security agreements or mortgages.
SECTION 4.06 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition
unless:
58
(1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the
fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of Directors of
the Company, of the shares and assets subject to such Asset Disposition;
(2) at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash or cash
equivalents; and
(3) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be)
(A) FIRST, to the extent the Company elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness
(other than any Disqualified Stock) of a Wholly Owned Subsidiary (in each
case other than Indebtedness owed to the Company or an Affiliate (other
than any Affiliate of the Company that is a lender under the Credit
Agreement) of the Company) within one year from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash;
(B) SECOND, to the extent of the balance of such Net Available Cash
after application in accordance with Section 4.06(a)(3)(A), to the extent
the Company elects, to acquire (or enter into a binding agreement to
acquire, PROVIDED that such commitment shall be subject only to customary
conditions (other than financing) and such acquisition shall be consummated
within 90 days after the end of the one-year period referred to below)
Additional Assets within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; and
(C) THIRD, to the extent of the balance of such Net Available Cash
after application in accordance with Section 4.06(a)(3)(A) and Section
4.06(a)(3)(B), to make an Offer to the holders of the Securities (and to
holders of other Senior Subordinated Indebtedness of the Company or a
Subsidiary Guarantor designated by the Company) to purchase Securities (and
such other Senior Subordinated Indebtedness of the Company or a Subsidiary
Guarantor) pursuant to and subject to the conditions of Section 4.06(b);
59
PROVIDED, HOWEVER, that in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to Section 4.06(a)(3)(A) or
Section 4.06(a)(3)(C) above, the Company or such Restricted Subsidiary
shall permanently retire such Indebtedness and shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal
to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.06, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06(a) except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which is not
applied in accordance with this Section 4.06(a) exceeds $10.0 million. Pending
application of Net Available Cash pursuant to this Section 4.06(a), such Net
Available Cash shall be invested in Temporary Cash Investments or applied to
temporarily reduce revolving credit indebtedness.
For the purposes of this Section 4.06(a), the following are deemed to
be cash or cash equivalents:
(1) the assumption of Indebtedness of the Company (other than
obligations in respect of Disqualified Stock of the Company) or any
Restricted Subsidiary (other than obligations in respect of Disqualified
Stock or Preferred Stock of a Subsidiary Guarantor) and the release of the
Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition; and
(2) securities received by the Company or any Restricted
Subsidiary from the transferee that are converted by the Company or such
Restricted Subsidiary within 90 days into cash, to the extent of cash
received in that conversion.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Subordinated Indebtedness) pursuant to
Section 4.06(a)(3)(C), the Company shall purchase Securities tendered pursuant
to an offer by the Company for the Securities (and such other Senior
Subordinated Indebtedness) (the "Offer") at a purchase price of 100% of their
principal amount (or, if other than the Securities, 100% of their principal
amount or, in the event such other Senior Subordinated Indebtedness was issued
with significant original issue discount, 100% of the accreted value thereof),
without premium, plus accrued but unpaid interest (or, in respect of such other
Senior Subordinated Indebtedness, such lesser price, if any, as may be
60
provided for by the terms of such Senior Subordinated Indebtedness) in
accordance with the procedures (including prorationing in the event of
oversubscription) set forth in Section 4.06(c). If the aggregate purchase price
of Securities (and any other Senior Indebtedness Senior Subordinated
Indebtedness) tendered pursuant to the Offer exceeds the Net Available Cash
allotted to their purchase, the Company shall select the Securities and other
Senior Indebtedness Senior Subordinated Indebtedness to be purchased on a pro
rata basis but in round denominations, which in the case of the Securities will
be denominations of $1,000 principal amount or multiples thereof. The Company
shall not be required to make an Offer to purchase Securities (and other Senior
Subordinated Indebtedness) pursuant to this Section 4.06 if the Net Available
Cash available therefor is less than $10.0 million (which lesser amount shall be
carried forward for purposes of determining whether such an Offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
Upon completion of an offer to purchase pursuant to Section 4.06, Net Available
Cash will be deemed to be reduced by the aggregate amount of such offer.
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as described in
Section 4.06(b) in the event the Offer is oversubscribed) in integral
multiples of $1,000 of principal amount, at the applicable purchase price.
The notice shall specify a purchase date not less than 30 days nor more
than 60 days after the date of such notice (the "Purchase Date") and shall
contain such information concerning the business of the Company which the
Company in good faith believes will enable such Holders to make an informed
decision and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the information contained in Section
4.06(c)(3).
(2) Not later than the date upon which written notice of an Offer
is delivered to the Trustee as provided below, the Company shall deliver to
the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), including information as to any other Senior Subordinated
Indebtedness included in the Offer, (B) the allocation of the Net Available
Cash from the Asset Dispositions pursuant to which such Offer is being made
and (C) the compliance of such allocation with the provisions of Section
4.06(a) and (b). On
61
such date, the Company shall also irrevocably deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust) in Temporary Cash Investments, maturing on the
last day prior to the Purchase Date or on the Purchase Date if funds are
immediately available by open of business, an amount equal to the Offer
Amount to be held for payment in accordance with the provisions of this
Section 4.06. If the Offer includes other Senior Subordinated Indebtedness,
the deposit described in the preceding sentence may be made with any other
paying agent pursuant to arrangements reasonably satisfactory to the
Trustee. Upon the expiration of the period for which the Offer remains open
(the "Offer Period"), the Company shall deliver to the Trustee for
cancellation the Securities or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Trustee shall, on
the Purchase Date, mail or deliver payment (or cause the delivery of
payment) to each tendering Holder in the amount of the purchase price. In
the event that the aggregate purchase price of the Securities delivered by
the Company to the Trustee is less than the Offer Amount applicable to the
Securities, the Trustee shall deliver the excess to the Company immediately
after the expiration of the Offer Period for application in accordance with
this Section 4.06.
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least
three Business Days prior to the Purchase Date. Holders shall be entitled
to withdraw their election if the Trustee or the Company receives not later
than one Business Day prior to the Purchase Date, a telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such
Security purchased. Holders whose Securities are purchased only in part
shall be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
4.06. A Security shall be deemed to have been accepted for purchase at the
time
62
the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.06. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section
4.06, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section 4.06 by virtue of its compliance with such securities laws or
regulations.
SECTION 4.07 LIMITATION ON AFFILIATE TRANSACTIONS.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with, or for the benefit of,
any Affiliate of the Company (an "Affiliate Transaction") unless:
(1) the terms of the Affiliate Transaction are no less favorable
to the Company or such Restricted Subsidiary than those that could be
obtained at the time of the Affiliate Transaction in arm's-length dealings
with a Person who is not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of
$5.0 million, the terms of the Affiliate Transaction are set forth in
writing and a majority of the non-employee directors of the Company
disinterested with respect to such Affiliate Transaction have determined in
good faith that the criteria set forth in Section 4.07(a)(1) are satisfied
and have approved the relevant Affiliate Transaction as evidenced by a
resolution of such Board of Directors; and
(3) if such Affiliate Transaction involves an amount in excess of
$25.0 million, the Board of Directors of the Company shall also have
received a written opinion from an Independent Qualified Party to the
effect that such Affiliate Transaction is fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries or is not less
favorable to the Company and its Restricted Subsidiaries than could
reasonably be expected to be obtained at the time in an arm's-length
transaction with a Person who was not an Affiliate.
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(b) The provisions of Section 4.07(a) shall not prohibit
(1) any Investment or other Restricted Payment, in each case
permitted to be made pursuant to Section 4.04;
(2) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved
by the Board of Directors of the Company;
(3) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its
Restricted Subsidiaries, but in any event not to exceed $2.5 million in the
aggregate outstanding at any one time;
(4) the payment of reasonable fees to directors of the Company and
its Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries;
(5) any transaction with a Restricted Subsidiary or joint venture
or similar entity which would constitute an Affiliate Transaction solely
because the Company or a Restricted Subsidiary owns an equity interest in
or otherwise controls such Restricted Subsidiary, joint venture or similar
entity;
(6) transactions between or among the Company and its Restricted
Subsidiaries;
(7) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company; and
(8) to the extent not restricted by other provisions of this
Indenture, the pledge of Capital Stock of any Unrestricted Subsidiary to
support Indebtedness of such Unrestricted Subsidiary.
SECTION 4.08 LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company (a) shall not, and shall not permit any
Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of any
Capital Stock of any Restricted Subsidiary that is a Subsidiary as of the Issue
Date (or any successor in interest thereto) to any Person (other than the
Company or a Wholly Owned Subsidiary) and (b) shall not permit any Restricted
Subsidiary that is a Subsidiary as of the Issue Date (or any successor in
interest thereto) to issue any of its Capital
64
Stock (other than, if necessary, shares of its Capital Stock constituting
directors' or other legally required qualifying shares) to any Person (other
than to the Company or a Wholly Owned Subsidiary), unless (i) immediately after
giving effect to such issuance, sale or other disposition, neither the Company
nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary
or (ii) immediately after giving effect to such issuance, sale or other
disposition, such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment in such Person remaining after giving effect
thereto is treated as a new Investment by the Company and such Investment would
be permitted to be made under Section 4.04 if made on the date of such issuance,
sale or other disposition.
SECTION 4.09 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require that the Company repurchase such Holder's Securities
at a purchase price in cash equal to 101% of the principal amount thereof on the
date of purchase plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on the relevant record date
to receive interest due on the relevant interest payment date), in accordance
with the terms contemplated in Section 4.09(b). In the event that at the time of
such Change of Control the terms of any Senior Indebtedness of the Company
restrict or prohibit the purchase of Securities pursuant to this Section 4.09,
then prior to the mailing of the notice to Holders provided for in Section
4.09(b) below but in any event within 90 days following any Change of Control,
the Company shall (1) repay in full all such Senior Indebtedness or (2) obtain
the requisite consents under the agreements governing all such Senior
Indebtedness to permit the repurchase of the Securities as provided for in
Section 4.09(b).
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof on the
date of purchase, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record
date to receive interest on the relevant interest payment date);
65
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
cash flow and capitalization, in each case after giving effect to such
Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with
this Section 4.09, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section 4.09 shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.09,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in Section 4.09(b) and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this
66
Section 4.09 by virtue of its compliance with such securities laws or
regulations.
SECTION 4.10 LIMITATION ON LINE OF BUSINESS. The Company shall not,
and shall not permit any Restricted Subsidiary, to engage in any business other
than a Related Business.
SECTION 4.11 FUTURE GUARANTORS. The Company shall cause each domestic
Restricted Subsidiary that Incurs any Indebtedness to, and each Foreign
Subsidiary that enters into a Guarantee of any Senior Indebtedness (other than a
Foreign Subsidiary that Guarantees Senior Indebtedness Incurred by another
Foreign Subsidiary) to, in each case, at the same time, execute and deliver to
the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary
shall Guarantee payment of the Securities on the same terms and conditions as
those set forth in this Indenture.
SECTION 4.12 COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.13 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01 WHEN COMPANY MAY MERGE OR TRANSFER ASSETS.
(a) The Company shall not consolidate with or merge with or into,
or convey, transfer or lease, in one transaction or a series of transactions,
directly or indirectly, all or substantially all its assets to, any Person,
unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State
67
thereof or the District of Columbia and the Successor Company (if not the
Company) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Securities and this Indenture;
(2) immediately after giving pro forma effect to such transaction
(and treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having been
Incurred by such Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction,
the Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
PROVIDED, HOWEVER, that clause (3) shall not be applicable to (A) a Restricted
Subsidiary consolidating with, merging into or transferring all or part of its
properties and assets to the Company or (B) the Company merging with an
Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.
For purposes of this Section 5.01(a), the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company (other than to
the Company or any Restricted Subsidiary), which properties and assets, if held
by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, and the predecessor Company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
68
(b) The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or series of transactions, all or substantially all of its assets to
any Person unless:
(1) except in the case of a Subsidiary Guarantor (other than the
Rexnord Operating Company and its successors in interest) that has been
disposed of in its entirety to another Person (other than to the Company or
a Subsidiary of the Company), whether through a merger, consolidation or
sale of Capital Stock or assets, if in connection therewith the Company
provides an Officers' Certificate to the Trustee to the effect that the
Company will comply with its obligations under Section 4.06 in respect of
such disposition, the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of
the jurisdiction under which such Subsidiary was organized or under the
laws of the United States of America, or any State thereof or the District
of Columbia, and such Person shall expressly assume, by a Guaranty
Agreement, in a form satisfactory to the Trustee, all the obligations of
such Subsidiary, if any, under its Subsidiary Guaranty;
(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with this Indenture;
PROVIDED, HOWEVER, that Section 5.01(b) shall not be applicable to any
Subsidiary Guarantor that consolidates with, merges with or into or conveys,
transfers or leases all or substantially all of its assets to the Company or
another Subsidiary Guarantor.
(c) Pursuant to this Indenture, so long as the Parent Guaranty is
in effect, Parent agrees not to merge with or into, or convey, transfer or
lease, in one transaction or a series of transactions, all or substantially all
of its assets to any Person unless:
69
(1) the resulting, surviving or transferee Person (if not Parent)
shall be a Person organized and existing under the laws of the jurisdiction
under which Parent was organized or under the laws of the United States of
America, or any State thereof or the District of Columbia, and such Person
shall expressly assume all the obligations of Parent, if any, under the
Parent Guaranty;
(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with this Indenture.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such payment
shall be prohibited by Article 10, and such default continues for a period
of 30 days;
(2) the Company (i) defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon declaration of acceleration or otherwise,
whether or not such payment shall be prohibited by Article 10, or (ii)
fails to purchase Securities when required pursuant to this Indenture or
the Securities, whether or not such purchase shall be prohibited by Article
10;
(3) the Company or Parent fails to comply with its obligations
pursuant to Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to
purchase Securities validly tendered when required
70
under Section 4.06 or 4.09) and such failure continues for 30 days after
the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply with
any of its agreements in the Securities or this Indenture (other than those
referred to in clause (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of Parent (so long as the Parent Guaranty is in
effect), the Company, any Subsidiary Guarantor or any Significant
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $20.0
million;
(7) Parent (so long as the Parent Guaranty is in effect), the
Company or any Significant Subsidiary pursuant to or within the meaning of
any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against Parent (so long as the Parent
Guaranty is in effect), the Company or any Significant Subsidiary in
an involuntary case;
(B) appoints a Custodian of Parent (so long as the Parent
Guaranty is in effect), the Company or any Significant Subsidiary or
for any substantial part of its property; or
71
(C) orders the winding up or liquidation of Parent (so long as
the Parent Guaranty is in effect), the Company or any Significant
Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money (other than
judgments that are covered by enforceable insurance policies issued by
solvent carriers) in excess of $20.0 million is entered against Parent (so
long as the Parent Guaranty is in effect), the Company or any Significant
Subsidiary, remains outstanding for a period of 60 consecutive days
following the entry of such judgment or decree and is not discharged,
waived or the execution thereof stayed; or
(10) the Parent Guaranty or any Subsidiary Guaranty ceases to be in
full force and effect (other than in accordance with the terms of the
Parent Guaranty or such Subsidiary Guaranty or, in the case of a Subsidiary
Guarantor that is not a Significant Subsidiary, other than as a result of
bankruptcy) or Parent or any Subsidiary Guarantor denies or disaffirms its
obligations under the Parent Guaranty or its Subsidiary Guaranty, as the
case may be.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Xxxxx 00, XXXXXX XXXXXX CODE, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default until the
Trustee or the holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
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The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4) or (5) its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 6.02 ACCELERATION. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately, PROVIDED that
if any Designated Senior Indebtedness is outstanding at such time, neither the
Company nor any Guarantor shall make any payment with respect to the Securities
until five Business Days after the Representatives of all the issues of
Designated Senior Indebtedness receive written notice of such acceleration and,
thereafter, any such payment shall be made only if the provisions of Article 10
and 12 do not restrict payment at such time. If an Event of Default specified in
Section 6.01(7) or (8) with respect to the Company occurs, the principal of and
interest on all the 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 Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03 OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
73
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 WAIVER OF PAST DEFAULTS. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security, (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to this Indenture or
(iii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05 CONTROL BY MAJORITY. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
from such Holders satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06 LIMITATION ON SUITS. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the 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 to the Trustee reasonable
security or indemnity against any loss, liability or expense;
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(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a direction inconsistent
with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10 PRIORITIES. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
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FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company and the
Guarantors, to the extent required by Articles 10 and 12;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Company shall mail to each Securityholder and the Trustee a
notice that states the record date, the payment date and amount to be paid.
SECTION 6.11 UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12 WAIVER OF STAY OR EXTENSION LAWS. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
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ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of Section 7.01(b);
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02 RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that, without limiting the effect of
Section 7.01(b), the Trustee's conduct does not constitute wilful misconduct or
negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any
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action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying 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, warranty or certification as to the
validity or adequacy of this Indenture or the Securities except as contained in
the Trustee's certificate of authentication. The Trustee shall not be
accountable for the Company's use of the proceeds from the issuance and sale of
the Securities and shall not be responsible for any statement of the Company,
any initial purchaser or placement agent or any other Person made in connection
with the issuance and sale of the Securities, whether oral or written and
whether contained in this Indenture, any offering document or any other
document, certificate or instrument.
SECTION 7.05 NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each November 25 beginning with the November following the
date of this Indenture, and in any event prior to December 25 in each year for
so long as the Securities are outstanding, the Trustee shall mail to each
Securityholder a brief report dated as of November 25 that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b). The
Trustee will also transmit by mail all reports required by TIA Section 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed in accordance with TIA Section 313(d). The Company agrees
to notify promptly the Trustee whenever the Securities become listed on any
stock exchange and of any delisting thereof.
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SECTION 7.07 COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time such reasonable compensation as agreed to between the
Company and the Trustee for its acceptance of the responsibilities under this
Indenture. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, advancements and expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company shall indemnify the Trustee
against any and all loss, liability or expense (including reasonable attorneys'
fees) incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld or delayed, nor reimburse any
expense nor indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. Such lien shall survive the
satisfaction and discharge of this Indenture.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the resignation and removal of the Trustee and the discharge of this
Indenture. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
The Trustee will comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08 REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the
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Trustee by so notifying the Trustee and may appoint a successor Trustee. The
Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to any Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the 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 the 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.
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA Section 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 Section 310(b)(1) are met.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.
(a) When (1) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (2) all outstanding Securities
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have become due and payable, whether at maturity or on a redemption date as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (1) all its obligations under the Securities and this Indenture
("legal defeasance option") or (2) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 4.11 and the operation of Sections
6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections
6.01(7) and (8), with respect only to Parent and Significant Subsidiaries) and
the limitations contain ed in Sections 5.01(a)(3) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01 (7) and (8), with respect only to Parent and Significant
Subsidiaries) or because of the failure of the Company to comply with Section
5.01(a)(3). If the Company exercises its legal defeasance option or its covenant
defeasance option, each Guarantor, if any, shall be released from all its
obligations with respect to its Guaranty.
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the
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Securities have been paid in full. Thereafter, the Company's obligations in
Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02 CONDITIONS TO DEFEASANCE. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) (A) the Company delivers to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over our other creditors with the intent
of defeating, hindering, delaying or defrauding our other creditors and (B)
in the case of legal defeasance only, 123 days pass after the deposit is
made and during the 123-day period no Default specified in Sections 6.01(7)
or (8) with respect to the Company occurs which is continuing at the end of
the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10 or 12;
(5) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the
84
same times as would have been the case if such defeasance had not occurred;
(6) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and
(7) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities as contemplated by this
Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03 APPLICATION OF TRUST MONEY. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to (and in
accordance with the provisions of) this Article 8. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal of and
interest on the Securities. Money and securities so held in trust are not
subject to Article 10.
SECTION 8.04 REPAYMENT TO COMPANY. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05 INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
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SECTION 8.06 REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF HOLDERS. The Company, the Guarantors
and the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; PROVIDED, HOWEVER, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities, including
any Subsidiary Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company, Parent or a Subsidiary Guarantor;
(6) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA; or
86
(7) to make any change that does not adversely affect the rights
of any Securityholder.
An amendment under this Section 9.01 may not make any change that
adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness of the Company, Parent or a Subsidiary Guarantor then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02 WITH CONSENT OF HOLDERS. The Company, the Guarantors and
the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities) and, to the extent provided for in Section 6.04 and subject to
Section 6.07, waive any existing Default or Event of Default. However, without
the consent of each Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest
on any Security;
(3) reduce the principal amount of or extend the Stated Maturity
of any Security;
(4) reduce the amount payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance with
Article 3;
(5) make any Security payable in money other than that stated in
the Security;
(6) impair the right of any Securityholder to receive payment of
principal of and interest on such Holder's Securities on or after the due
dates therefor or to institute suit for the enforcement of any payment on
or with respect to such Holder's Securities;
87
(7) make any changes in the ranking or priority of any Security
that would adversely affect the Securityholders;
(8) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02; or
(9) make any change in, or release other than in accordance with
Section 11.06 or 8.01(b), any Guaranty that would adversely affect the
Securityholders.
The obligation of the Company to make an offer to repurchase
Securities under Section 4.06 or 4.09 may be waived or modified with the written
consent of at least a majority in principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Securities), PROVIDED that any such waiver or modification will
apply only to a Change of Control or Asset Disposition occurring after the
effective date of such waiver or modification.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change that
adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness of the Company or of a Guarantor then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such
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Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05 NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment
or waiver changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding 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. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07 PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
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offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
SUBORDINATION
SECTION 10.01 AGREEMENT TO SUBORDINATE. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness and other
Obligations evidenced by the Securities is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
of all Obligations with respect to Senior Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) and that the subordination
is for the benefit of and enforceable by the holders of such Senior
Indebtedness. The Securities shall in all respects rank PARI PASSU with all
other Senior Subordinated Indebtedness of the Company and only Indebtedness of
the Company which is Senior Indebtedness of the Company shall rank senior to the
Securities in accordance with the provisions set forth herein. All provisions of
this Article 10 shall be subject to Section 10.12.
SECTION 10.02 LIQUIDATION, DISSOLUTION, BANKRUPTCY. (a) Upon any
payment or distribution of the assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any total or partial
liquidation or any total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership, winding-up, assignment for
the benefit of creditors, marshalling of assets or similar proceeding relating
to the Company or its property, whether voluntary or involuntary:
(1) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of all Obligations with respect
to all such Senior Indebtedness (including all interest accruing subsequent
to the filing of a petition in bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) before Securityholders shall be
entitled to receive any payment or distribution of any kind or character
with respect to the Securities or for the acquisition of any Securities for
cash, property or otherwise, except that Securityholders may receive
Permitted Junior Securities and any Guarantee thereof permitted by the
definition thereof; and
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(2) until all such Senior Indebtedness is paid in full in cash,
any payment or distribution to which Securityholders would be entitled but
for this Article 10 shall be made to holders of such Senior Indebtedness as
their interests may appear, except that Securityholders may receive
Permitted Junior Securities and any Guarantee thereof permitted by the
definition thereof.
(b) To the extent any payment of Senior Indebtedness of the
Company (whether by or on behalf of the Company, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be
fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid
over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding
as if such payment had not occurred.
SECTION 10.03 DEFAULT ON SENIOR INDEBTEDNESS OF THE COMPANY. The
Company shall not pay, nor shall it permit any Guarantor or other Subsidiary to
pay (in either case, in cash, property, securities or other assets), the
principal of, interest on or other Obligations owing with respect to the
Securities or make any deposit pursuant to Section 8.01 or 8.02 and may not
purchase, redeem or otherwise retire or acquire any Securities (collectively,
"pay the Securities") if either of the following (a "Payment Default") occurs
(1) any Obligations with respect to Senior Indebtedness of the Company are not
paid in full in cash when due or (2) any other default on Senior Indebtedness of
the Company occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms, unless, in either case, the Payment Default has
been cured or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that the Company
shall be entitled to pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representatives of all Senior Indebtedness with respect to which the Payment
Default has occurred and is continuing.
During the continuance of any default (other than a Payment Default)
with respect to any Designated Senior Indebtedness of the Company pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice
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as may be required to effect such acceleration) or the expiration of any
applicable grace periods (a "Non-Payment Default"), the Company shall not pay,
nor shall it permit any Guarantor or other Subsidiary to pay, the Securities for
a period (a "Payment Blockage Period") commencing upon the receipt by the
Trustee of written notice (a "Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter. The Payment
Blockage Period shall end earlier if such Payment Blockage Period is terminated
(1) by written notice to the Trustee and the Company from the
Person or Persons who gave such Blockage Notice;
(2) because the default giving rise to such Blockage Notice is
cured, waived or otherwise no longer continuing and no other Non-Payment
Default then exists with respect to such Designated Senior Indebtedness; or
(3) because such Designated Senior Indebtedness has been repaid in
full in cash or otherwise has been satisfied in full to the satisfaction
of, and with the consent of, the holders of such Designated Senior
Indebtedness.
Notwithstanding the provisions described in the immediately preceding two
sentences (but subject to the provisions contained in the first sentence of this
Section 10.03), unless a Payment Default exists, the Company shall be entitled
to resume payments on the Securities after termination of such Payment Blockage
Period. The Securities shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of the Company during such
period; PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day
period is given by or on behalf of any holders of Designated Senior Indebtedness
of the Company (other than the Bank Indebtedness), the Representative of the
Bank Indebtedness shall be entitled to give another Blockage Notice within such
period; PROVIDED FURTHER, HOWEVER, that in no event shall the total number of
days during which any Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period.
For purposes of this Section 10.03, no default or event of default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness of the
Company initiating such Payment Blockage Period shall be, or be made, the basis
of the commencement of a subsequent Payment Blockage Period by the
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Representative of such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days (it
being acknowledged that any subsequent action, or any breach of any financial
covenants for a period ending after the date of commencement of such Payment
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provision under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
SECTION 10.04 ACCELERATION OF PAYMENT OF SECURITIES. If payment of the
Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify in writing the holders of the Designated Senior
Indebtedness of the Company (or their Representatives) of the acceleration
(although the failure to give any such notice shall not affect the
subordinations of this Article 10). If any Designated Senior Indebtedness of the
Company is outstanding, neither the Company nor any Guarantor shall pay the
Securities until five Business Days after the Representatives of all the issues
of Designated Senior Indebtedness of the Company receive written notice of such
acceleration and, thereafter, the Company and the Guarantors shall be entitled
to pay the Securities (and the Securityholders may accept and retain such
payment) only if this Article 10 otherwise permits payment (and the acceptance
and retention) at that time.
SECTION 10.05 WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
or payment is made to (or received by) the Trustee or Securityholders that
because of this Article 10 should not have been made to (or received by) them,
the Trustee or Securityholders who receive the distribution or payment shall
hold it in trust for holders of Senior Indebtedness of the Company and pay it
over to them, as soon as reasonably practicable, as their interests may appear.
SECTION 10.06 SUBROGATION. After all Senior Indebtedness of the
Company is paid in full in cash and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 10 to holders of Senior Indebtedness which
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company on such Senior Indebtedness.
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SECTION 10.07 RELATIVE RIGHTS. This Article 10 defines the relative
rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions or payments
otherwise payable to Securityholders.
SECTION 10.08 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY OR HOLDERS
OF SENIOR INDEBTEDNESS. No right of any holder of Senior Indebtedness of the
Company to enforce the subordination of the Indebtedness and other Obligations
evidenced by the Securities shall be impaired or prejudiced by any act or
failure to act by the Company or any such holder or by the Company's failure to
comply with this Indenture, in each case regardless of any knowledge thereof
which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders, without
incurring responsibility to the Trustee or the Securityholders and without
impairing or releasing the subordination provided in this Article 10 or the
obligations hereunder of the Trustee and the Securityholders to the holders of
Senior Indebtedness, do any one or more of the following: (1) change the manner,
place, terms or time of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
impair, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any Person liable in any
manner for the collection or payment of Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against the Company or any other Person.
SECTION 10.09 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
Section 10.03, the Trustee or Paying Agent shall continue to make payments on
the Securities and shall not be charged with knowledge of the existence of facts
that under this Article 10 would prohibit the making of any such payments
unless,
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not less than one Business Day (or if notice is received after 1:00 p.m.,
New
York City time, two Business Days) prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that such payments are
prohibited by this Article 10. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness of the Company
shall be entitled to give the notice; PROVIDED, HOWEVER, that, if an issue of
Senior Indebtedness of the Company has a Representative, only the Representative
shall be entitled to give the notice. Nothing in this Section 10.09 is intended
to or shall relieve any Securityholder from the obligations imposed under
Section 10.05 with respect to payments or distributions received (whether from
the Trustee or otherwise) in violation of the provisions hereof.
The Trustee in its individual or any other capacity shall be entitled
to hold Senior Indebtedness of the Company with the same rights it would have if
it were not Trustee. The Registrar and co-registrar and the Paying Agent shall
be entitled to do the same with like rights. The Trustee shall be entitled to
all the rights set forth in this Article 10 with respect to any Senior
Indebtedness of the Company which may at any time be held by it, to the same
extent as any other holder of such Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 10 shall apply to claims of, or payments to, the Trustee (in its
capacity as such) under or pursuant to Section 7.07.
SECTION 10.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever any
Person is to make a distribution or give a notice to holders of Senior
Indebtedness of the Company, such Person shall be entitled to make such
distribution or give such notice to their Representative (if any).
SECTION 10.11 ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities in accordance with Section 6.02.
SECTION 10.12 TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust in accordance with Article 8 (and only so
long as all of the conditions to the deposit into such trust were satisfied at
the time of such deposit) by the Trustee for the payment of principal
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of and interest on the Securities shall not be subordinated to the prior payment
of any Senior Indebtedness of the Company or subject to the restrictions set
forth in this Article 10, and none of the Securityholders shall be obligated to
pay over any such amount to the Company or any holder of Senior Indebtedness of
the Company or any other creditor of the Company.
SECTION 10.13 TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely
(1) upon any order or decree of a court of competent jurisdiction
in which any proceedings of the nature referred to in Section 10.02 are
pending,
(2) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or
(3) upon the Representatives of Senior Indebtedness of the Company
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of such Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10.
In the event that the Trustee determines, in good faith, that evidence
is required with respect to the right of any Person as a holder of Senior
Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article 10, the Trustee shall be entitled to request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee shall be entitled to defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
SECTION 10.14 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Securityholder
by accepting a Security authorizes and directs the Trustee on its behalf to take
such action as may be necessary or
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appropriate to acknowledge or effectuate the subordination between the
Securityholders and the holders of Senior Indebtedness of the Company as
provided in this Article 10 and appoints the Trustee as attorney-in-fact for any
and all such purposes.
If neither the Trustee nor the Securityholders files a permitted claim
or proof of debt in the form required in any proceeding referred to in Section
6.01(7) or 6.01(8) prior to the tenth Business Day before the expiration of the
time to file such claim or claims, then any Representative of the holders of
Senior Indebtedness of the Company is hereby authorized to file such appropriate
claim for and on behalf of the Securityholders. Nothing herein contained shall
be deemed to authorize the Trustee or the holders of Senior Indebtedness of the
Company or their Representative 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 Securityholder
thereof, or to authorize the Trustee or the holders of Senior Indebtedness of
the Company or their Representative to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 10.15 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
OF THE COMPANY. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Securityholders or
the Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article 10 or
otherwise.
SECTION 10.16 RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE
COMPANY ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security
(whether upon original issue or upon transfer, assignment or exchange thereof)
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
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ARTICLE 11
GUARANTIES
SECTION 11.01 GUARANTIES. Each Guarantor hereby unconditionally and
irrevocably guarantees, jointly and severally, to each Holder and to the Trustee
and its successors and assigns (a) the full and punctual payment of principal of
and interest on the Securities when due, whether at maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of the Company
under this Indenture and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Securities Obligations"). Each Guarantor
further agrees that the Securities Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Guarantor and that
such Guarantor will remain bound under this Article 11 notwithstanding any
extension or renewal of any Securities Obligation.
Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Securities Obligations and also waives
notice of protest for nonpayment. Each Guarantor waives notice of any default
under the Securities or the Securities Obligations. The obligations of each
Guarantor hereunder shall not be affected by
(a) the failure of any Holder or the Trustee to assert any claim
or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Securities or any other agreement or
otherwise;
(b) any extension or renewal of any such claim, demand, right or
remedy;
(c) any rescission, waiver, amendment or modification of any of
the terms or provisions of this Indenture, the Securities or any other
agreement;
(d) the release of any security held by any Holder or the Trustee
for the Securities Obligations or any of them;
(e) the failure of any Holder or the Trustee to exercise any right
or remedy against any other guarantor of the Securities Obligations; or
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(f) except as set forth in Section 11.06, any change in the
ownership of such Guarantor.
Each Guarantor further agrees that its Guaranty herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Securities
Obligations.
Each Guaranty is, to the extent and in the manner set forth in
Article 12, subordinated and subject in right of payment to the prior payment in
full of the principal of and premium, if any, interest on and all other
Obligations with respect to all Senior Indebtedness of the Guarantor giving such
Guaranty and each Guaranty is made subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06,
the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Securities Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of such Guarantor or would otherwise operate as a discharge of such
Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Securities Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Securities Obligation when and as the same shall become
due, whether at
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maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Securities Obligation, each Guarantor hereby promises to and
shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to
be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(1) the unpaid amount of such Securities Obligations,
(2) accrued and unpaid interest on such Securities Obligations
(but only to the extent not prohibited by law) and
(3) all other monetary Securities Obligations of the Company to
the Holders and the Trustee.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Securities Obligations guaranteed hereby until
payment in full of all Securities Obligations and all obligations to which the
Securities Obligations are subordinated as provided in Article 12. Each
Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand,
(x) the maturity of the Securities Obligations Guaranteed hereby
may be accelerated as provided in Article 6 for the purposes of such
Guarantor's Guaranty herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Securities
Obligations guaranteed hereby, and
(g) in the event of any declaration of acceleration of such
Securities Obligations as provided in Article 6, such Securities
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor for the purposes of this Section 11.01.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 11.01.
SECTION 11.02 LIMITATION ON LIABILITY. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Securities Obligations guaranteed hereunder by any Guarantor shall not exceed
the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
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affecting the rights of creditors generally, after giving effect to all Senior
Indebtedness of such Guarantor.
SECTION 11.03 SUCCESSORS AND ASSIGNS. This Article 11 shall be binding
upon each Guarantor and its successors and assigns and shall enure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04 NO WAIVER. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05 MODIFICATION. No modification, amendment or waiver of
any provision of this Article 11, nor the consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 11.06 RELEASE OF GUARANTOR. (a) Upon
(i) the sale (including any sale pursuant to any exercise of remedies
by a holder of Senior Indebtedness of the Company or of such Subsidiary
Guarantor) or other disposition (including by way of consolidation or
merger) of a Subsidiary Guarantor,
(ii) the sale or disposition of all or substantially all the assets of
such Subsidiary Guarantor,
(iii) upon the designation of such Subsidiary Guarantor as an
Unrestricted Subsidiary pursuant to the terms of this Indenture or
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(iv) in connection with any sale of Capital Stock of a Subsidiary
Guarantor to a Person in accordance with this Indenture that results in
such Subsidiary Guarantor no longer being a Restricted Subsidiary (PROVIDED
that after giving effect to such sale, such former Subsidiary Guarantor
shall have no Guarantees outstanding of any Indebtedness of the Company or
any Restricted Subsidiary),
such Subsidiary Guarantor shall be deemed released from all obligations under
this Article 11 without any further action required on the part of the Trustee
or any Holder, in each case other than a sale or disposition involving the
Rexnord Operating Company and other than a sale or disposition to the Company or
a Subsidiary of the Company. In the case of clauses (i), (ii) and (iv) above,
the Company shall provide an Officers' Certificate to the Trustee to the effect
that the Company will comply with its obligations under Section 4.06. At the
request of the Company, the Trustee shall execute and deliver an appropriate
instrument evidencing such release.
(b) If at any time following the Issue Date, Parent is no longer
Guaranteeing any Indebtedness of the Company (other than the Securities) or
any of the Restricted Subsidiaries, the Parent Guaranty shall be released
upon presentation to the Trustee of an Officers' Certificate to the effect
that no such Guarantees exist or are contemplated at such time. If Parent
thereafter shall enter into any Guarantee of any Indebtedness of the
Company or any of its Restricted Subsidiaries, Parent shall execute and
deliver to the Trustee, at the same time such other Guarantee is provided,
a Guaranty Agreement pursuant to which the Parent shall Guarantee payment
of the Securities on the same terms and conditions as those set forth in
this Indenture.
ARTICLE 12
SUBORDINATION OF GUARANTIES
SECTION 12.01 AGREEMENT TO SUBORDINATE. Each Guarantor agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness and
other Obligations evidenced by such Guarantor's Guaranty is subordinated in
right of payment, to the extent and in the manner provided in this Article 12,
to the prior payment of all Obligations with respect to Senior Indebtedness of
such Guarantor (whether outstanding on the Issue Date or thereafter incurred)
and that the subordination is for the benefit of and enforceable by the holders
of such Senior Indebtedness. The Securities Obligations of a Guarantor shall in
all respects rank
102
PARI PASSU with all other Senior Subordinated Indebtedness of such Guarantor and
only Senior Indebtedness of such Guarantor (including such Guarantor's Guarantee
of Senior Indebtedness of the Company) shall rank senior to the Securities
Obligations of such Guarantor in accordance with the provisions set forth
herein.
SECTION 12.02 LIQUIDATION, DISSOLUTION, BANKRUPTCY. (a) Upon any
payment or distribution of the assets of any Guarantor of any kind or character,
whether in cash, property or securities, to creditors upon any total or partial
liquidation or any total or partial dissolution of such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership, winding-up, assignment for
the benefit of creditors, marshalling of assets or similar proceeding relating
to such Guarantor or its property, whether voluntary or involuntary:
(1) the holders of Senior Indebtedness of such Guarantor shall be
entitled to receive payment in full in cash of all Obligations with respect
to all such Senior Indebtedness (including all interest accruing subsequent
to the filing of a petition in bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) before Securityholders shall be
entitled to receive any payment or distribution of any kind or character
with respect to any Obligations of such Guarantor or for the acquisition of
any Securities for cash, property or otherwise, except that Securityholders
may receive Permitted Junior Securities and any Guarantee thereof permitted
by the definition thereof; and
(2) until all the Senior Indebtedness of such Guarantor is paid in
full in cash, any payment or distribution to which Securityholders would be
entitled but for this Article 12 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Securityholders may
receive Permitted Junior Securities and any Guarantee thereof permitted by
the definition thereof.
(b) To the extent any payment of Senior Indebtedness of any
Guarantor (whether by or on behalf of the Company, as proceeds of security
or enforcement of any right of setoff or otherwise) is declared to be
fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid
over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior
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Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not
occurred.
SECTION 12.03 DEFAULT ON SENIOR INDEBTEDNESS OF GUARANTOR. No
Guarantor shall make any payment (in cash, property, securities or other assets)
with respect to its Guaranty or purchase, redeem or otherwise retire, acquire or
defease any Securities or other Securities Obligations (collectively, "pay its
Guaranty") if either of the following (a "Payment Default") occurs (1) any
Senior Indebtedness of such Guarantor or the Company is not paid in full in cash
when due or (2) any other default on Senior Indebtedness of such Guarantor or
the Company occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms, unless, in either case, the Payment Default has
been cured or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that any
Guarantor shall be entitled to make any payment with respect to its Guaranty
without regard to the foregoing if such Guarantor and the Trustee receive
written notice approving such payment from the Representatives of all Senior
Indebtedness with respect to which the Payment Default has occurred and is
continuing.
During the continuance of any default (other than a Payment Default)
with respect to any Designated Senior Indebtedness of such Guarantor or the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods (a "Non-Payment
Default"), such Guarantor shall not pay its Guaranty for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee of written notice
(a "Blockage Notice") of such default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter. The Payment Blockage Period shall end earlier if
such Payment Blockage Period is terminated
(1) by written notice to the Trustee and such Guarantor from the
Person or Persons who gave such Blockage Notice;
(2) because the default giving rise to such Blockage Notice is
cured, waived or otherwise no longer continuing and no other Non-Payment
Default then exists with respect to such Designated Senior Indebtedness; or
(3) because such Designated Senior Indebtedness has been repaid in
full in cash or otherwise has been satisfied in full
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to the satisfaction of, and with the consent of, the holders of such
Designated Senior Indebtedness.
Notwithstanding the provisions described in the immediately preceding two
sentences (but subject to the provisions contained in the first sentence of this
Section 12.03), unless a Payment Default exists, any Guarantor shall be entitled
to resume payments pursuant to its Guaranty after termination of such Payment
Blockage Period. No Guarantor shall be subject to more than one Blockage Period
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness of such Guarantor during such period;
PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day period is
given by or on behalf of any holders of Designated Senior Indebtedness of such
Guarantor (other than the Bank Indebtedness), the Representative of the Bank
Indebtedness shall be entitled to give another Blockage Notice within such
period; PROVIDED FURTHER, HOWEVER, that in no event shall the total number of
days during which any Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period.
For purposes of this Section 12.03, no default or event of default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness of such
Guarantor initiating such Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Payment Blockage Period by the
Representative of such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days (it
being acknowledged that any subsequent action, or any breach of any financial
covenants for a period ending after the date of commencement of such Payment
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provision under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
SECTION 12.04 DEMAND FOR PAYMENT. If a demand for payment is made on a
Guarantor pursuant to Article 11, the Trustee shall promptly notify in writing
the holders of the Designated Senior Indebtedness of such Guarantor (or their
Representatives) of such demand (although the failure to give any such notice
shall not affect the subordinations of this Article 12). If any Designated
Senior Indebtedness of such Guarantor is outstanding, the Guarantor shall not
pay its Guaranty until five Business Days after the Representatives of all the
issues of Designated Senior Indebtedness of such Guarantor receive written
notice of such acceleration and,
105
thereafter, such Guarantor shall be entitled to pay its Guaranty (and the
Securityholders may accept and retain such payment) only if this Article 12
otherwise permits payment (and the acceptance and retention) at that time.
SECTION 12.05 WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
or payment is made to (or received by) Securityholders that because of this
Article 12 should not have been made to (or received by) them, the Trustee or
Securityholders who receive the distribution or payment shall hold it in trust
for holders of Senior Indebtedness of the applicable Guarantor and pay it over
to them, as soon as practicable, as their interests may appear.
SECTION 12.06 SUBROGATION. After all Senior Indebtedness of a
Guarantor is paid in full in cash and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness of such
Guarantor. A distribution made under this Article 12 to holders of Senior
Indebtedness which otherwise would have been made to Securityholders is not, as
between the relevant Guarantor and Securityholders, a payment by such Guarantor
on such Senior Indebtedness.
SECTION 12.07 RELATIVE RIGHTS. This Article 12 defines the relative
rights of Securityholders and holders of Senior Indebtedness of a Guarantor.
Nothing in this Indenture shall:
(1) impair, as between a Guarantor and Securityholders, the
obligation of such Guarantor, which is absolute and unconditional, to pay
its Guaranty to the extent set forth in Article 11; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by such Guarantor under its Guaranty,
subject to the rights of holders of Senior Indebtedness of such Guarantor
to receive distributions or payments otherwise payable to Securityholders.
SECTION 12.08 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY OR HOLDERS
OF SENIOR INDEBTEDNESS. No right of any holder of Senior Indebtedness of any
Guarantor to enforce the subordination of the Guaranty and other Obligations of
such Guarantor shall be impaired or prejudiced by any act or failure to act by
such Guarantor or any such holder or by such Guarantor's failure to comply with
this Indenture, in each case regardless of
106
any knowledge thereof which any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders, without
incurring responsibility to the Trustee or the Securityholders and without
impairing or releasing the subordination provided in this Article 12 or the
obligations hereunder of the Trustee and the Securityholders to the holders of
Senior Indebtedness, do any one or more of the following: (1) change the manner,
place, terms or time of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
impair, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any Person liable in any
manner for the collection or payment of Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against such Guarantor or any other Person.
SECTION 12.09 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
Section 12.03, the Trustee or Paying Agent shall continue to make payments on
any Guaranty and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than one
Business Day (or if notice is received after 1:00 p.m.,
New York City time, two
Business Days) prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that such payments are prohibited by
this Article 12. The Company, the relevant Guarantor, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of such Guarantor shall be entitled to give the notice; PROVIDED,
HOWEVER, that, if an issue of Senior Indebtedness of any Guarantor has a
Representative, only the Representative shall be entitled to give the notice.
Nothing in this Section 12.09 is intended to or shall relieve any Securityholder
from the obligations imposed under Section 12.05 with respect to payments to
distributions received (whether from the Trustee or otherwise) in violation of
the provisions hereof.
The Trustee in its individual or any other capacity shall be entitled
to hold Senior Indebtedness of any Guarantor with the same rights it would have
if it were not the Trustee. The Registrar and co-registrar and the Paying Agent
may do the same with like rights. The Trustee shall be entitled to all the
rights set forth in this Article 12 with respect to any Senior Indebtedness of
any Guarantor which may at any time be held by it,
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to the same extent as any other holder of such Senior Indebtedness; and nothing
in Article 7 shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee
(in its capacity as such) under or pursuant to Section 7.07.
SECTION 12.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever any
Person is to make a distribution or give a notice to holders of Senior
Indebtedness of any Guarantor, such Person shall be entitled to make such
distribution or give such notice to their Representative (if any).
SECTION 12.11 ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO DEMAND PAYMENT. The failure to make a payment pursuant to a Guaranty by
reason of any provision in this Article 12 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 12 shall have any effect on
the right of the Securityholders or the Trustee to make a demand for payment on
any Guarantor pursuant to its Guaranty.
SECTION 12.12 TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely
(1) upon any order or decree of a court of competent jurisdiction
in which any proceedings of the nature referred to in Section 12.02 are
pending,
(2) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or
(3) upon the Representatives for the holders of Senior
Indebtedness of any Guarantor
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of such Senior Indebtedness and other
indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 12.
In the event that the Trustee determines, in good faith, that evidence
is required with respect to the right of any Person as a holder of Senior
Indebtedness of any Guarantor to participate in any payment or distribution
pursuant to this Article 12, the Trustee shall be entitled to request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the
108
amount of Senior Indebtedness of such Guarantor held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee shall be entitled to defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 12.
SECTION 12.13 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Securityholder
by accepting a Security authorizes and directs the Trustee on its behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of any Guarantor as provided in this Article 12 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
If neither the Trustee nor the Securityholders files a permitted claim
or proof of debt in the form required in any proceeding referred to in Section
6.01(7) or 6.01(8) prior to the tenth Business Day before the expiration of the
time to file such claim or claims, then any Representative of the holders of
Senior Indebtedness of the applicable Guarantor is hereby authorized to file
such appropriate claim for and on behalf of the Securityholders. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of Senior
Indebtedness of any Guarantor or their Representative 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 Securityholder thereof, or to authorize the Trustee or the holders of Senior
Indebtedness of any Guarantor or their Representative to vote in respect of the
claim of any Securityholder in any such proceeding.
SECTION 12.14 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
OF GUARANTOR. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of any Guarantor and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Securityholders or
the Company or any other Person, money or assets to which any holders of such
Senior Indebtedness shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15 RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF GUARANTORS
ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security
(whether upon original issue or upon transfer, assignment or exchange thereof)
acknowledges and agrees that the
109
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness of any Guarantor,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold, or to continue to
hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02 NOTICES. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail addressed as follows:
if to the Company or any Guarantor:
Rexnord Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Trustee:
Xxxxx Fargo Bank Minnesota, N. A.
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Corporate Trust Division
110
The Company, any Guarantor or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, each Guarantor, the Trustee, the Registrar and anyone
else shall have the protection of TIA Section 312(c).
SECTION 13.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
111
(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 individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06 WHEN SECURITIES DISREGARDED. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08 LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of
New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 13.09 GOVERNING LAW. This Indenture and the Securities shall
be governed by, and construed in accordance with, the laws of the State of
New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 13.10 NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, as such, of the
112
Company or any Guarantor shall not have any liability for any obligations of the
Company under the Securities or this Indenture or any such Guarantor under any
Guaranty, as the case may be, or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION 13.11 SUCCESSORS. All agreements of the Company or any
Guarantor in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12 MULTIPLE ORIGINALS. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 13.13 TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
113
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
REXNORD CORPORATION,
a Delaware corporation,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
RBS GLOBAL, INC.,
a Delaware corporation,
as Parent,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
ADDAX INC.,
a Nebraska corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BETZDORF CHAIN CO. INC.,
a Wisconsin corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
CLARKSON INDUSTRIES INC.,
a
New York corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
114
PRAGER INCORPORATED,
a Louisiana corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
PT COMPONENTS INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
RBS ACQUISITION CORPORATION,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
REXNORD NORTH AMERICA
HOLDINGS, INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
REXNORD GERMANY-1 INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
115
REXNORD INTERNATIONAL INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
REXNORD LTD.,
a Nevada corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
REXNORD PUERTO RICO INC.,
a Nevada corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
XXXXXXX XXXX LICENSCO INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
X.X. XXXX INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
000
XXX XXXXX XXXXXXX, INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
RAC-I, INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
RBS CHINA HOLDINGS, INC.,
a Delaware corporation,
as Guarantor,
by
/s/
-------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
117
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee,
by
/s/
-------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Vice President
RULE 144A/REGULATION S/IAI APPENDIX
PROVISIONS RELATING TO SECURITIES
1. DEFINITIONS
1.1 DEFINITIONS
Capitalized terms used but not otherwise defined in this Appendix shall
have the meanings assigned in the Indenture. For the purposes of this Appendix
the following terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Temporary Regulation S Global Security or beneficial
interest therein, the rules and procedures of the Depository, Euroclear and
Clearstream for such a Temporary Regulation S Global Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Clearstream" means Clearstream Banking, societe anonyme, or any
successor securities clearing agency.
"Definitive Security" means a certificated Security issued on the
Issue Date or Exchange Security or Private Exchange Security bearing, if
required, the restricted securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Distribution Compliance Period", with respect to any Securities,
means the period of 40 consecutive days beginning on and including the later of
(i) the day on which such Securities are first offered to Persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the Issue Date with respect to such Securities.
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System, or any successor securities clearing agency.
"IAI" means an institutional "accredited investor," as defined in Rule
501(a)(1),(2),(3) and (7) of Regulation D under the Securities Act.
"Initial Purchasers" means, with respect to the Initial Securities
issued on the Issue Date, Credit Suisse First
2
Boston Corporation, Deutsche Bank Securities Inc. and Wachovia Securities, Inc.
"Purchase Agreement" means (1) with respect to the Initial Securities
issued on the Issue Date, the Purchase Agreement dated November 19, 2002, among
the Company and the Initial Purchasers and (2) with respect to each issuance of
Additional Securities, the purchase agreement or underwriting agreement among
the Company and the Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Rule 144A Securities" means all Securities offered and sold to QIBs
in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository), or any successor Person thereto, and
shall initially be the Trustee.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend relating to restrictions on transfer relating to the
Securities Act set forth in Section 2.3(e).
1.2 OTHER DEFINITIONS
Defined in
Term Section:
---- ----------
Agent Members2.1(b)........................................... 2.1(b)
Global Security............................................... 2.1(a)
IAI Global Security........................................... 2.1(a)
Permanent Regulation S Global Security........................ 2.1(a)
Regulation S.................................................. 2.1(a)
Rule 144A..................................................... 2.1(a)
Rule 144A Global Security..................................... 2.1(a)
Temporary Regulation S Global Security........................ 2.1(a)
3
2. THE SECURITIES
2.1 (a) FORM AND DATING. The Securities will be offered and sold by the
Company pursuant to a Purchase Agreement. The Securities will be resold
initially only to (i) QIBs in reliance on Rule 144A under the Securities Act
("Rule 144A"), (ii) IAIs and (iii) Persons other than U.S. Persons (as defined
in Regulation S) in reliance on Regulation S under the Securities Act
("Regulation S"). Securities may thereafter be transferred to, among others,
QIBs, IAIs and purchasers in reliance on Regulation S, subject to the
restrictions on transfer set forth herein. Securities initially resold pursuant
to Rule 144A (collectively, the "Rule 144A Global Security") and to IAIs
(collectively, the "IAI Global Security") shall be issued initially in the form
of one or more permanent global Securities in definitive, fully registered form,
and Securities initially resold pursuant to Regulation S (collectively, the
"Temporary Regulation S Global Security") shall be issued initially in the form
of one or more temporary global securities in definitive, fully registered form,
in each case without interest coupons and with the global securities legend and
restricted securities legend set forth in Exhibit 1 hereto, which shall be
deposited on behalf of the purchasers of the Securities represented thereby with
the Securities Custodian and registered in the name of the Depository or a
nominee of the Depository, duly executed by the Company and authenticated by the
Trustee as provided in this Indenture. Beneficial ownership interests in the
Temporary Regulation S Global Security will not be exchangeable for interests in
the Rule 144A Global Security, the IAI Global Security, a permanent global
security (the "Permanent Regulation S Global Security") or any other Security
without a legend containing restrictions on transfer of such Security prior to
the expiration of the Distribution Compliance Period and then only upon
certification in form reasonably satisfactory to the Trustee that beneficial
ownership interests in such Temporary Regulation S Global Security are owned
either by non-U.S. persons or U.S. persons who purchased such interests in a
transaction that did not require registration under the Securities Act. The Rule
144A Global Security, the IAI Global Security, the Temporary Regulation S Global
Security and the Permanent Regulation S Global Security are collectively
referred to herein as "Global Securities". The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depository or its nominee as
hereinafter provided.
4
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository or by the Trustee as the custodian of the
Depository or under such Global Security, and the Company, the Trustee and any
agent of the Company or the Trustee shall be entitled to treat the Depository as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) CERTIFICATED SECURITIES. Except as provided in this Section 2.1
or Section 2.3 or 2.4, owners of beneficial interests in Global Securities shall
not be entitled to receive physical delivery of Definitive Securities.
2.2 AUTHENTICATION
The Trustee shall authenticate and deliver: (1) on the Issue Date, an
aggregate principal amount of $225,000,000 10 1/8% Senior Subordinated Notes Due
2012 and (2) any Additional Securities for an original issue in an aggregate
principal amount specified in the written order of the Company pursuant to
Section 2.02 of the Indenture, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of any issuance of Additional
Securities pursuant to Section 2.13 of
5
the Indenture, shall certify that such issuance is in compliance with Section
4.03 of the Indenture.
2.3 TRANSFER AND EXCHANGE
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive
Securities are presented to the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or its attorney duly
authorized in writing; and
(ii) if such Definitive Securities are required to bear a restricted
securities legend, they are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act, pursuant to
Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred (x)
pursuant to an exemption from registration in accordance with Rule
144A,
6
Regulation S or Rule 144 under the Securities Act; or (y) in reliance
upon another exemption from the requirements of the Securities Act:
(i) a certification to that effect (in the form set forth on the
reverse of the Security) and (ii) if the Company so requests, an
opinion of counsel or other evidence reasonably satisfactory to it as
to the compliance with the restrictions set forth in the legend set
forth in Section 2.3(e)(i).
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Rule 144A Global Security, an IAI
Global Security or a Permanent Regulation S Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being transferred to
a QIB in accordance with Rule 144A, (B) being transferred to an IAI or (C)
is being transferred after expiration of the Distribution Compliance Period
by a Person who initially purchased such Security in reliance on Regulation
S to a buyer who elects to hold its interest in such Security in the form
of a beneficial interest in the Permanent Regulation S Global Security; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Rule 144A Global Security (in the case of a transfer
pursuant to clause (b)(i)(A)), IAI Global Security (in the case of a
transfer pursuant to clause (b)(i)(B)) or Permanent Regulation S Global
Security (in the case of a transfer pursuant to clause (b)(i)(C)) to
reflect an increase in the aggregate principal amount of the Securities
represented by the Rule 144A Global Security, IAI Global Security or
Permanent Regulation S Global Security, as applicable, such instructions to
contain information regarding the Depository account to be credited with
such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures
7
existing between the Depository and the Securities Custodian, the aggregate
principal amount of Securities represented by the Rule 144A Global Security, IAI
Global Security or Permanent Regulation S Global Security, as applicable, to be
increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Rule 144A Global
Security, IAI Global Security or Permanent Regulation S Global Security, as
applicable, equal to the principal amount of the Definitive Security so
canceled. If no Rule 144A Global Securities, IAI Global Securities or Permanent
Regulation S Global Securities, as applicable, are then outstanding, the Company
shall issue and the Trustee shall authenticate, upon written order of the
Company in the form of an Officers' Certificate of the Company, a new Rule 144A
Global Security, IAI Global Security or Permanent Regulation S Global Security,
as applicable, in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depository, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depository therefor. A
transferor of a beneficial interest in a Global Security shall deliver to
the Registrar a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global
Security. The Registrar shall, in accordance with such instructions,
instruct the Depository to credit to the account of the Person specified in
such instructions a beneficial interest in the Global Security and to debit
the account of the Person making the transfer the beneficial interest in
the Global Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
8
amount of the Global Security from which such interest is being
transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 of this Appendix, prior to the
consummation of a Registered Exchange Offer or the effectiveness of a Shelf
Registration Statement with respect to such Securities, such Securities may
be exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Securities
intended to ensure that such transfers comply with Rule 144A, Regulation S
or another applicable exemption under the Securities Act, as the case may
be) and such other procedures as may from time to time be adopted by the
Company.
(d) RESTRICTIONS ON TRANSFER OF TEMPORARY REGULATION S GLOBAL
SECURITIES. During the Distribution Compliance Period, beneficial ownership
interests in Temporary Regulation S Global Securities may only be sold, pledged
or transferred through Euroclear or Clearstream in accordance with the
Applicable Procedures and only (i) to the Company, (ii) so long as such Security
is eligible for resale pursuant to Rule 144A, to a Person whom the selling
holder reasonably believes is a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, (iii) to an IAI who is purchasing for
its own account or for the account of another institutional investor, in each
case in a minimum principal amount of the Securities of $250,000, for investment
purposes and not with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act, (iv) in an offshore transaction
in accordance with Regulation S, (v) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act or (vi) pursuant to an effective registration statement under the
Securities Act, in each case in accordance
9
with any applicable securities laws of any State of the United States.
(e) LEGEND.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each Security certificate evidencing the Global Securities (and all
Securities issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS
SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),(2),(3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR
ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
904 UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
00
XXXXX XX XXX XXXXXX XXXXXX AND OTHER JURISDICTIONS, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
ABOVE.
Each Definitive Security shall also bear the following additional
legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, the Registrar
shall permit the transferee thereof to exchange such Transfer Restricted
Security for a certificated Security that does not bear the legend set
forth above and rescind any restriction on the transfer of such Transfer
Restricted Security, if the transferor thereof certifies in writing to the
Registrar that such sale or transfer was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Security).
(f) CANCELLATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, purchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for certificated Securities, redeemed,
purchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
(g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
SECURITIES.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall
11
authenticate Definitive Securities and Global Securities at the Registrar's
or co-registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 3.06, 4.06, 4.09 and 9.05 of the Indenture).
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article 3 of the Indenture,
except the unredeemed portion of any Definitive Security being redeemed in
part or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase or redeem Securities or 15
Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(h) NO OBLIGATION OF THE TRUSTEE.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depository or other Person with respect to the accuracy of the records of
the Depository or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Securities or with respect to the
delivery to any
12
participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments to
be made to Holders under the Securities shall be given or made only to or
upon the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 CERTIFICATED SECURITIES
(a) A Global Security deposited with the Depository or with the
Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 hereof and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security and the Depository fails to appoint a successor depositary or if at any
time such Depository ceases to be a "clearing agency" registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 90 days of such notice, or (ii) an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive Securities
under this Indenture.
13
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depository to the Trustee located at its principal corporate trust office in the
Borough of Manhattan, The City of
New York, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Definitive Securities of authorized
denominations. Any portion of a Global Security transferred pursuant to this
Section 2.4 shall be executed, authenticated and delivered only in denominations
of $1,000 principal amount and any integral multiple thereof and registered in
such names as the Depository shall direct. Any Definitive Security delivered in
exchange for an interest in the Transfer Restricted Security shall, except as
otherwise provided by Section 2.3(e) hereof, bear the restricted securities
legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b) hereof, the
registered Holder of a Global Security shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of one of the events specified in
Section 2.4(a) hereof, the Company shall promptly make available to the Trustee
a reasonable supply of Definitive Securities in definitive, fully registered
form without interest coupons.
EXHIBIT 1
to
RULE 144A/REGULATION S/IAI APPENDIX
[FORM OF FACE OF SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE
COMMENCEMENT OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED
STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE
OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) TO THE COMPANY, (II)
0
XXXXXX XXX XXXXXX XXXXXX TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),(2),(3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES AND OTHER JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT
OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN
THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN
INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND
CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY
DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE 903(b)(2) OF
REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM
REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED
EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A
TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING
SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR
TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.A., AS OPERATOR OF THE EUROCLEAR
SYSTEM OR CLEARSTREAM BANKING, SOCIETE ANONYME AND ONLY (I) TO THE COMPANY, (II)
WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING
3
OF RULE 501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN A TRANSACTION
IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (V)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES AND OTHER JURISDICTIONS. HOLDERS OF INTERESTS
IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS
SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY
MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH
EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE
WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST
DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS
CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING
TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON
WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND
(C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY
MAY BE EXCHANGED FOR INTERESTS IN AN IAI GLOBAL SECURITY ONLY IF (1) SUCH
EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE
WITH AN EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE
REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE
(IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S
GLOBAL SECURITY IS BEING TRANSFERRED (A) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
4
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.
BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL
SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN
INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE
EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR
FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO
THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE
WITH RULE 903 OR 904 OF REGULATION S, RULE 144 (IF AVAILABLE) OR ANOTHER
APPLICABLE EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE) AND THAT, IF SUCH
TRANSFER OCCURS PRIOR TO THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE
PERIOD, THE INTEREST TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH
EUROCLEAR BANK S.A./N.A. OR CLEARSTREAM BANKING SOCIETE ANONYME.
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
5
CUSIP __________
No. ______________ $_______________
10 1/8% Senior Subordinated Note Due 2012
REXNORD CORPORATION, a Delaware corporation, promises to pay to , or
registered assigns, the principal sum of Dollars on December 15, 2012.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
6
Additional provisions of this Security are set forth on the other side
of this Security.
Dated:
REXNORD CORPORATION
by
---------------------------------
Name:
Title:
7
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
----------------------------
Authorized Signatory
8
[FORM OF REVERSE SIDE OF SECURITY]
10 1/8% Senior Subordinated Note Due 2012
1. INTEREST
Rexnord Corporation, formerly known as RBS Holdings, Inc., a Delaware
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semiannually on June 15 and December
15 of each year, commencing June 15, 2003.
Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from November 25,
2002. Interest on overdue principal will be paid by the Issuer at 1% per annum
in excess of the rate shown above and the Issuer will pay interest on overdue
installments of interest at such higher rate to the extent lawful. Interest on
the Securities also may increase in the event the Company fails to comply with
the requirements set forth in the Registration Rights Agreement. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the June 1 or December 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Payments in respect of the Securities represented by a
Global Security (including principal, premium, if any, and interest) will be
made by wire transfer of immediately available funds to the accounts specified
by The Depository Trust Company. The Company will make all payments in respect
of a certificated Security (including principal, premium, if any, and interest)
by mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying
9
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, Xxxxx Fargo Bank Minnesota, National Association (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
November 25, 2002 (the "Indenture"), among the Company, the guarantors party
thereto and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company. The
Securities issued on the Issue Date, any Additional Securities and any Exchange
Securities or Private Exchange Securities will be treated as a single class for
all purposes under the Indenture. The Indenture contains covenants that limit
the ability of the Company and its subsidiaries to incur additional
indebtedness; pay dividends or distributions on, or redeem or repurchase capital
stock; make investments; issue or sell capital stock of subsidiaries; engage in
transactions with affiliates; transfer or sell assets; guarantee indebtedness;
change their line of business; restrict dividends or other payments of
subsidiaries; and consolidate, merge or transfer all or substantially all of its
assets and the assets of its subsidiaries. These covenants are subject to
important exceptions and qualifications.
10
5. OPTIONAL REDEMPTION
Except as set forth below, the Company shall not be entitled to redeem
the Securities at its option prior to December 15, 2007.
On and after December 15, 2007, the Company shall be entitled at its
option to redeem all or a portion of the Securities upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed in percentages of
principal amount on the redemption date), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on December 15 of the years set
forth below:
Redemption
Period Price
------ ----------
2007 105.063%
2008 103.375%
2009 101.688%
2010 and thereafter 100.000%
In addition, prior to December 15, 2005, the Company shall be entitled
at its option on one or more occasions to redeem Securities (which includes
Additional Securities, if any) in an aggregate principal amount not to exceed
35% of the aggregate principal amount of the Securities originally issued at a
redemption price (expressed as a percentage of principal amount) of 110.125%,
plus accrued and unpaid interest to the redemption date, with the net cash
proceeds received by the Company from one or more Equity Offerings (PROVIDED
that, if the Equity Offering is an offering by Parent, a portion of the Net Cash
Proceeds thereof equal to the amount required to redeem any such Notes is
contributed to the equity capital of the Company or used to acquire Capital
Stock of the Company (other than Disqualified Stock) from the Company);
PROVIDED, HOWEVER, that (1) at least 65% of such aggregate principal amount of
Securities (which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than Securities
held, directly or indirectly, by the Company or its Affiliates); and (2) each
such redemption occurs within 90 days after the date of the related Equity
Offering.
11
6. 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 its registered address. Securities in denominations larger than $1,000
principal amount may be redeemed in part but only in whole multiples of $1,000.
Securities in denominations of $1,000 principal amount or less may be redeemed
in whole but not in part. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to repurchase all of the Securities of such Holder at a
repurchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued interest to the date of repurchase (subject to the
right of holders of record on the relevant record date to receive interest due
on the related interest payment date) as provided in, and subject to the terms
of, the Indenture.
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the Company,
as defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be paid. The
Company agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. GUARANTY
The payment by the Company of the principal of, and premium and
interest on, the Securities is fully and unconditionally guaranteed on a joint
and several senior subordinated basis by each of the Guarantors.
12
10. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in denominations
of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer or exchange of any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of
it for all purposes.
12. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
13. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time shall be
entitled to terminate some or all of its obligations under the Securities and
the Indenture, and the obligations of the Guarantors under their Guaranties, if
the Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
14. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal
13
amount outstanding of the Securities. Subject to certain exceptions set forth in
the Indenture, without the consent of any Securityholder, the Company, the
Guarantors and the Trustee shall be entitled to amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities, including Subsidiary Guaranties, or
to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company or the Guarantors, or to comply with any request
of the SEC in connection with qualifying the Indenture under the Act, or to make
certain changes in the subordination provisions, or to make any change that does
not adversely affect the rights of any Securityholder.
15. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon acceleration or otherwise, or failure by the Company to redeem
or purchase Securities when required; (iii) failure by the Company or any
Guarantor to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company, Parent or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $20.0 million; (v) certain events of
bankruptcy or insolvency with respect to the Company, Parent and the Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $20.0 million; and (vii) certain defaults with respect to the
Guaranties. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security satisfactory to it.
Subject to certain limitations, Holders of a majority in principal amount
14
of the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is not opposed to the interest of the Holders.
16. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. AUTHENTICATION
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities
15
and has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in any notice
of redemption and reliance may be placed only on the other identification
numbers placed thereon.
21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
22. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Rexnord Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
16
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
-----------------------------------------------------------------------
Date: Your Signature:
-------------------- ----------------------------
-----------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) to the Company;
(2) pursuant to an effective registration statement under the
Securities Act of 1933;
(3) inside the United States to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to
17
and in compliance with Rule 144A under the Securities Act of
1933;
(4) to an "accredited investor" within the meaning of Rule
501(a)(1),(2),(3) or (7) under the Securities Act that is an
institutional investor acquiring the securities for its own
account or for the account of such an institutional accredited
investor, in each case in a minimum principal amount of the
securities of $250,000, for investment purposes and not with a
view to or for offer or sale in connection with any distribution
in violation of the Securities Act;
(5) outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or
(6) pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; PROVIDED, HOWEVER, that if box
(5) or (6) is checked, the Trustee shall be entitled to require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
---------------------------- -------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be
18
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
---------------- ------------------------------
NOTICE: To be executed by
an executive officer
19
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal in Principal amount this Global authorized officer
amount of this of this Global Security following of Trustee or
Global Security Security such decrease or Securities
increase) Custodian
20
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount
in principal amount: $__________
Date: Your Signature:
--------------- --------------------------
(Sign exactly as your name
appears on the other side of
this Security.)
Signature Guarantee:
----------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
