EXECUTION COPY
RITE AID CORPORATION
7.5% Senior Secured Notes due 2015
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INDENTURE
Dated as of January 11, 2005
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BNY Midwest Trust Company,
Trustee
TABLE OF CONTENTS
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Other Definitions..............................................33
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..............34
SECTION 1.04. Rules of Construction..........................................34
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series.......................35
SECTION 2.02. Form and Dating................................................36
SECTION 2.03. Execution and Authentication...................................36
SECTION 2.04. Registrar and Paying Agent.....................................37
SECTION 2.05. Paying Agent To Hold Money in Trust............................37
SECTION 2.06. Holder Lists...................................................37
SECTION 2.07. Replacement Securities.........................................38
SECTION 2.08. Outstanding Securities.........................................38
SECTION 2.09. Temporary Securities...........................................38
SECTION 2.10. Cancellation...................................................38
SECTION 2.11. Defaulted Interest.............................................39
SECTION 2.12. CUSIP Numbers..................................................39
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee.............................................39
SECTION 3.02. Selection of Securities To Be Redeemed.........................39
SECTION 3.03. Notice of Redemption...........................................40
SECTION 3.04. Effect of Notice of Redemption.................................40
SECTION 3.05. Deposit of Redemption Price....................................40
SECTION 3.06. Securities Redeemed in Part....................................41
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities..........................................41
SECTION 4.02. SEC Reports....................................................41
SECTION 4.03. Limitation on Debt.............................................41
SECTION 4.04. Limitation on Restricted Payments..............................45
SECTION 4.05. Limitation on Liens............................................48
SECTION 4.06. Limitation on Asset Sales and Specified Collateral
Dispositions...................................................48
SECTION 4.07. Limitation on Restrictions on Distributions from
Restricted Subsidiaries........................................52
SECTION 4.08. Limitation on Transactions with Affiliates.....................53
SECTION 4.09. Guarantees by Subsidiaries.....................................55
SECTION 4.10. Limitation on Sale and Leaseback Transactions..................56
SECTION 4.11. Designation of Restricted and Unrestricted Subsidiaries........56
SECTION 4.12. Additional Security Documents..................................57
SECTION 4.13. Change of Control..............................................58
SECTION 4.14. Further Instruments and Acts...................................59
SECTION 4.15. Covenant Suspension............................................59
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets......................60
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default..............................................63
SECTION 6.02. Acceleration...................................................65
SECTION 6.03. Other Remedies.................................................65
SECTION 6.04. Waiver of Past Defaults........................................65
SECTION 6.05. Control by Majority............................................65
SECTION 6.06. Limitation on Suits............................................66
SECTION 6.07. Rights of Holders to Receive Payment...........................66
SECTION 6.08. Collection Suit by Trustee.....................................66
SECTION 6.09. Trustee May File Proofs of Claim...............................66
SECTION 6.10. Priorities.....................................................67
SECTION 6.11. Undertaking for Costs..........................................67
SECTION 6.12. Waiver of Stay or Extension Laws...............................67
SECTION 6.13. Enforcement of Remedies........................................67
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee..............................................68
SECTION 7.02. Rights of Trustee..............................................69
SECTION 7.03. Individual Rights of Trustee...................................69
SECTION 7.04. Trustee's Disclaimer...........................................69
SECTION 7.05. Notice of Defaults.............................................70
SECTION 7.06. Reports by Trustee to Holders..................................70
SECTION 7.07. Compensation and Indemnity.....................................70
SECTION 7.08. Replacement of Trustee.........................................71
SECTION 7.09. Successor Trustee by Merger....................................72
SECTION 7.10. Eligibility; Disqualification..................................72
SECTION 7.11. Preferential Collection of Claims Against Company..............72
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance...............72
SECTION 8.02. Conditions to Defeasance.......................................73
SECTION 8.03. Application of Trust Money.....................................74
SECTION 8.04. Repayment to Company...........................................74
SECTION 8.05. Indemnity for Government Obligations...........................75
SECTION 8.06. Reinstatement..................................................75
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders.....................................75
SECTION 9.02. With Consent of Holders........................................76
SECTION 9.03. Compliance with Trust Indenture Act............................80
SECTION 9.04. Revocation and Effect of Consents and Waivers..................80
SECTION 9.05. Notation on or Exchange of Securities..........................81
SECTION 9.06. Trustee To Sign Amendments.....................................81
SECTION 9.07. Payment for Consent............................................81
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls...................................81
SECTION 10.02. Notices........................................................81
SECTION 10.03. Communication by Holders with Other Holders....................82
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.............82
SECTION 10.05. Statements Required in Certificate or Opinion..................83
SECTION 10.06. When Securities Disregarded....................................83
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar...................83
SECTION 10.08. Legal Holidays.................................................83
SECTION 10.09. Governing Law..................................................83
SECTION 10.10. No Recourse Against Others.....................................84
SECTION 10.11. Successors.....................................................84
SECTION 10.12. Multiple Originals.............................................84
SECTION 10.13. Table of Contents; Headings....................................84
Appendix A - Provisions Relating to Initial Securities and Exchange Securities
Exhibit 1 to Appendix A - Form of Initial Security
Exhibit A - Form of Exchange Security
Exhibit B - Form of Transferee Letter of Representation
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310 (a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(b)................................................................ 7.08;
7.10
(c)................................................................ N.A.
311 (a)................................................................ 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312 (a)................................................................ 2.06
(b)................................................................ 10.03
(c)................................................................ 10.03
313 (a)................................................................ 7.06
(b)(1)............................................................. 7.06;
10.02
(b)(2)............................................................. 7.06
(c)................................................................ 7.06;
10.02
(d)................................................................ 7.06
314 (a)................................................................ 4.02;
4.09;
7.06;
10.02
(b)................................................................ 4.09;
7.02;
10.02
(c)(1)............................................................. 7.02
(c)(2)............................................................. 7.02
(c)(3)............................................................. N.A.
(d)................................................................ 1.03;
7.02
(e)................................................................ 10.05
(f)................................................................ 4.14
315 (a)................................................................ 7.01
(b)................................................................ 7.05;
10.02
(c)................................................................ 7.01
(d)................................................................ 7.01
(e)................................................................ 6.11
316 (a)
(last sentence).................................................... 10.06
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
TIA Indenture
Section Section
------- -------
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
317 (a)(1)............................................................. 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 2.05
318 (a)................................................................ 10.01
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purposes, be deemed to be
part of this Indenture.
INDENTURE dated as of January 11, 2005, among RITE
AID CORPORATION, a Delaware corporation (the
"Company"), each of the SUBSIDIARY GUARANTORS named in
Schedule A hereto and BNY MIDWEST TRUST COMPANY, an
Illinois trust company, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's 7.5% Senior
Secured Notes due 2015, to be issued, from time to time, in one or more series
as provided in this Indenture (the "Initial Securities") and, if and when issued
pursuant to a registered or private exchange for the Initial Securities, the
Company's 7.5% Senior Secured Notes due 2015 (the "Exchange Securities" and,
together with the Initial Securities, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
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SECTION 1.01. Definitions.
"Additional Assets" means:
(a) any Property (other than cash, cash equivalents and securities) to
be owned by the Company or any Restricted Subsidiary and used in a Related
Business; or
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as
a result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary from any Person other than the Company or an
Affiliate of the Company; provided, however, that, in the case of this
clause (b), such Restricted Subsidiary is primarily engaged in a Related
Business.
"Additional Senior Debt" means any other Debt of the Company
Guaranteed by the Subsidiary Guarantors pursuant to the Senior Subsidiary
Guarantee Agreement with such Guarantees secured by the Senior Collateral on a
pari passu basis with the Senior Bank Obligations; provided, however, that such
Debt is permitted to be incurred, secured and guaranteed on such basis by this
Indenture and the Second Priority Collateral Documents.
"Additional Senior Debt Documents" means, with respect to any series,
issue or class of Additional Senior Debt, the promissory notes, indentures,
Collateral Documents or other operative agreements evidencing or governing such
Debt, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Additional Senior Debt Facility" means the indenture or other
governing agreement with respect to any Additional Senior Debt, as the same may
be amended, restated, supplemented or otherwise modified from time to time.
"Additional Senior Debt Obligations" means, with respect to any
series, issue or class of Additional Senior Debt, (a) all principal of and
interest (including any interest which accrues after the commencement of any
case, proceeding or other action relating to the
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bankruptcy, insolvency or reorganization of the Company, whether or not allowed
or allowable as a claim in any such proceeding) on such Additional Senior Debt,
(b) all other amounts payable by the Company to the related Additional Senior
Debt Parties under the related Additional Senior Debt Documents and (c) any
renewals, extensions or Refinancings of the foregoing.
"Additional Senior Debt Parties" means, with respect to any series,
issue or class of Additional Senior Debt, the holders of such indebtedness from
time to time, any trustee or agent therefore under any related Additional Senior
Debt Documents and the beneficiaries of each indemnification obligation
undertaken by the Company or any Obligor under any related Additional Senior
Debt Documents, but shall not include the Obligors or any controlled Affiliates
thereof.
"Affiliate" of any specified Person means:
(a) any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person;
or
(b) any other Person who is a director or executive officer of:
(1) such specified Person;
(2) any Subsidiary of such specified Person; or
(3) any Person described in clause (a) above.
For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Sale" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition"), of:
(a) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares); or
(b) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary,
in the case of either clause (a) or clause (b) above, whether in a single
transaction or a series of related transactions, (i) that have a Fair Market
Value in excess of $10 million or (ii) for aggregate consideration in excess of
$10 million, other than, in the case of clause (a) or (b) above:
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(1) any disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly Owned Restricted
Subsidiary;
(2) any disposition that constitutes a Permitted Investment or
Restricted Payment permitted by Section 4.04;
(3) any disposition effected in compliance with Section 5.01(a);
(4) a sale of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Entity;
(5) a transfer of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" (or a
fractional undivided interest therein) by a Receivables Entity in
connection with a Qualified Receivables Transaction; or
(6) a sale by the Company or a Restricted Subsidiary of Property by
way of a Sale and Leaseback Transaction but only if (A) such Property was
owned by the Company or a Restricted Subsidiary on the Issue Date, (B) the
requirements of clause (a) of Section 4.10 are satisfied with respect to
such Sale and Leaseback Transaction, (C) the requirements of clauses (a),
(b) and (c) of the first paragraph of Section 4.06 are satisfied as though
such Sale and Leaseback Transaction constituted an Asset Sale and (D) the
aggregate Fair Market Value of such Property, when added to the Fair Market
Value of all other sales of Property pursuant to this clause (6) since
February 12, 2003, does not exceed $150 million.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at any date of determination:
(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the
definition of "Capital Lease Obligation," and
(b) in all other instances, the greater of:
(1) the Fair Market Value of the Property subject to such Sale
and Leaseback Transaction; and
(2) the present value (discounted at the interest rate borne by
the Securities, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (in each case
including any period for which such lease has been extended).
"Average Life" means, as of any date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing:
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(a) the sum of the product of the numbers of years (rounded to the
nearest one-twelfth of one year) from the date of determination to the
dates of each successive scheduled principal payment of such Debt or
redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by
(b) the sum of all such payments.
"Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or
any duly authorized and constituted committee thereof.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in The City of New York, New York are authorized
or obligated by law, regulation, executive order or governmental decree to
close.
"Capital Lease Obligations" means any obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP; and the amount of Debt represented by such obligation shall be the
capitalized amount of such obligations determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty. For purposes of
Section 4.05, a Capital Lease Obligation shall be deemed secured by a Lien on
the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash proceeds
received by the Company from the issuance or sale (other than to a Subsidiary of
the Company or an employee stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of their employees) by the
Company of its Capital Stock (other than Disqualified Stock) after February 12,
2003, net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof.
"Change of Control" means the occurrence of any of the following
events:
5
(a) if any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act or any successor provisions to either
of the foregoing), including any group acting for the purpose of acquiring,
holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act (other than one or more Permitted
Holders), becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 40% or more of the total
voting power of the Voting Stock of the Company (for purposes of this
clause (a), such person or group shall be deemed to beneficially own any
Voting Stock of a corporation held by any other corporation (the "parent
corporation") so long as such person or group beneficially owns, directly
or indirectly, in the aggregate a majority of the total voting power of the
Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets
of the Company and the Restricted Subsidiaries, considered as a whole
(other than a disposition of such assets as an entirety or virtually as an
entirety to a Wholly Owned Restricted Subsidiary) shall have occurred, or
the Company merges, consolidates or amalgamates with or into any other
Person or any other Person merges, consolidates or amalgamates with or into
the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is reclassified into or exchanged
for cash, securities or other Property, other than any such transaction
where:
(1) the outstanding Voting Stock of the Company is reclassified
into or exchanged for other Voting Stock of the Company or for Voting
Stock of the surviving corporation; and
(2) the holders of the Voting Stock of the Company immediately
prior to such transaction own, directly or indirectly, not less than a
majority of the Voting Stock of the Company or the surviving
corporation immediately after such transaction and in substantially
the same proportion as before the transaction; or
(c) during any period of two consecutive years commencing after
February 12, 2003, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election or appointment by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of not
less than three-fourths of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(d) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.
"Class A Cumulative Preferred Stock" means Rite Aid Lease Management
Company's Preferred Stock, par value $100.00 per share, designated as Class A
Cumulative.
6
"Class C Cumulative Preferred Stock" means the Rite Aid Risk
Management Corp.'s Preferred Stock, par value $1.00 per share, designated as
Class C Cumulative Participating Voting.
"Class D Cumulative Preferred Stock" means the Rite Aid Risk
Management Corp.'s Preferred Stock, par value $100.00 per share, designated as
Class D Cumulative Participating Voting.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all the collateral described in the Collateral
Documents.
"Collateral Disposition" means (a) any sale, transfer or other
disposition of Collateral (including any property or assets that would
constitute Collateral but for the release of the Senior Lien and the Second
Priority Lien with respect thereto in connection with such sale, transfer or
other disposition), or (b) any casualty or other insured damage or Condemnation
with respect to Collateral.
"Collateral Documents" means (a) the Senior Collateral Documents and
(b) the Second Priority Collateral Documents.
"Collateral Subsidiary Guarantor" means any Subsidiary of the Company
that is a party to the Senior Subsidiary Guarantee Agreement or the Second
Priority Subsidiary Guarantee Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Commodity Price Protection Agreement" means, in respect of a Person,
any forward contract, commodity swap agreement, commodity option agreement or
other similar agreement or arrangement designed to protect such Person against
fluctuations in commodity prices.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person and, for purposes of any provision
contained herein and expressly required by the TIA, each other obligor on the
indenture securities.
"Condemnation" means any action or proceeding for the taking of any
assets of the Company or its Subsidiaries, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any similar public improvement or condemnation proceeding.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of:
7
(a) the aggregate amount of EBITDA for the most recent four
consecutive fiscal quarters ending at least 45 days prior to such
determination date to
(b) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that:
(1) if
(A) since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Debt that remains outstanding
or Repaid any Debt; or
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence or Repayment of
Debt,
Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Incurrence or
Repayment as if such Debt was Incurred or Repaid on the first day of
such period, provided that, in the event of any such Repayment of
Debt, EBITDA for such period shall be calculated as if the Company or
such Restricted Subsidiary had not earned any interest income actually
earned during such period in respect of the funds used to Repay such
Debt, and
(2) if
(A) since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Sale or an Investment
(by merger or otherwise) in any Restricted Subsidiary (or any Person
which becomes a Restricted Subsidiary) or an acquisition of Property
which constitutes all or substantially all of an operating unit of a
business;
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment
or acquisition; or
(C) since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made such an Asset Sale, Investment or acquisition,
EBITDA for such period shall be calculated after giving pro forma
effect to such Asset Sale, Investment or acquisition as if such Asset
Sale, Investment or acquisition occurred on the first day of such
period.
If any Debt bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Debt shall be calculated as if the
base interest rate in effect for such floating rate of interest on the date of
determination had been the applicable
8
base interest rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Debt if such Interest Rate Agreement has a
remaining term in excess of 12 months). In the event the Capital Stock of any
Restricted Subsidiary is sold during the period, the Company shall be deemed,
for purposes of clause (1) above, to have Repaid during such period the Debt of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Debt after such sale.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries
(excluding the non-cash interest expense related to (x) litigation reserves, (y)
closed store liability reserves and (z) self-insurance reserves), plus, to the
extent not included in such total interest expense, and to the extent Incurred
by the Company or its Restricted Subsidiaries, and without duplication:
(a) interest expense attributable to Capital Lease Obligations;
(b) amortization of debt discount and debt issuance cost, including
commitment fees;
(c) capitalized interest;
(d) non-cash interest expense other than expenses under clauses (x),
(y) and (z) above;
(e) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers acceptance financing;
(f) net costs associated with Hedging Obligations (including
amortization of fees but excluding costs associated with forward contracts
for inventory in the ordinary course of business);
(g) Disqualified Stock Dividends;
(h) Preferred Stock Dividends;
(i) interest Incurred in connection with Investments in discontinued
operations;
(j) interest accruing on any Debt of any other Person to the extent
such Debt is Guaranteed by the Company or any Restricted Subsidiary; and
(k) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Debt Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:
9
(a) any net income (loss) of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that:
(1) subject to the exclusion contained in clause (d) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (c)
below); and
(2) the Company's equity in a net loss of any such Person other
than an Unrestricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(b) [Intentionally omitted];
(c) any net income (loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions, directly or
indirectly, to the Company, except that:
(1) subject to the exclusion contained in clause (d) below, the
Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to another Restricted Subsidiary,
to the limitation contained in this clause); and
(2) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(d) any gain or loss realized upon the sale or other disposition of
any Property of the Company or any of its consolidated Subsidiaries
(including pursuant to any Sale and Leaseback Transaction) that is not sold
or otherwise disposed of in the ordinary course of business;
(e) any extraordinary gain or loss;
(f) the cumulative effect of a change in accounting principles;
(g) any non-cash compensation expense realized for grants of
performance shares, stock options or other rights to officers, directors
and employees of the Company or any Restricted Subsidiary, provided that
such shares, options or other rights can be redeemed at the option of the
holder only for Capital Stock of the Company (other than Disqualified
Stock);
10
(h) store closing costs;
(i) non-cash charges or credits that relate to use of the
last-in-first-out method of accounting for inventory; and
(j) loss on debt modifications.
Notwithstanding the foregoing, for purposes of Section 4.04 only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted by Section 4.04
pursuant to clause (c)(4) thereof.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located in the City of
Chicago, State of Illinois).
"corporation" means a corporation, association, company, limited
liability company, joint-stock company, partnership or business trust.
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt or commercial paper facilities with
banks or other institutional lenders (including the Senior Credit Facilities),
providing for revolving credit loans, term loans, receivables or inventory
financing (including through the sale of receivables or inventory to such
lenders or to special purpose, bankruptcy remote entities formed to borrow from
such lenders against such receivables or inventory), or trade letters of credit,
in each case together with Refinancings thereof on any basis so long as such
Refinancing constitutes Debt.
"Currency Exchange Protection Agreement" means, in respect of a
Person, any foreign exchange contract, currency swap agreement, currency option
or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Debt" means, with respect to any Person on any date of determination
(without duplication):
(a) the principal of and premium (if any) in respect of:
(1) debt of such Person for money borrowed; and
(2) debt evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or
liable;
(b) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale and Leaseback Transactions entered into by such
Person;
11
(c) all obligations of such Person issued or assumed as the deferred
purchase price of Property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(d) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (a) through (c)
above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the
Repayment of any Disqualified Stock or, with respect to any Subsidiary of
such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(f) all obligations of the type referred to in clauses (a) through (e)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(g) all obligations of the type referred to in clauses (a) through (f)
of other Persons secured by any Lien on any Property of such Person
(whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the value of such Property
or the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
The amount of Debt of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date. The amount of Debt represented by a
Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant to
clause (g) or (h) of the second paragraph of Section 4.03; or
(2) the notional amount of such Hedging Obligation if not
Incurred pursuant to such clauses.
"Debt Issuances" means, with respect to the Company or any Restricted
Subsidiary, one or more issuances of Debt evidenced by notes, debentures, bonds
or other similar securities or instruments.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
12
"Depositary" means, with respect to any Securities, a clearing agency
that is registered as such under the Exchange Act and is designated by the
Company to act as Depositary for such Securities (or any successor securities
clearing agency so registered).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option of the
holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(b) is or may become redeemable or repurchaseable at the option of the
holder thereof, in whole or in part; or
(c) is convertible or exchangeable at the option of the holder thereof
for Debt or Disqualified Stock;
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the Securities.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Restricted Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1 and
0) then applicable to the Company.
"EBITDA" means, for any period, an amount equal to, for the Company
and its consolidated Restricted Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus the
following to the extent reducing Consolidated Net Income for such period:
(1) the provision for taxes based on income or profits or
utilized in computing net loss;
(2) Consolidated Interest Expense and non-cash interest expense
related to litigation reserves, closed store liability reserves and
self-insurance reserves, to the extent excluded from Consolidated
Interest Expense;
(3) depreciation;
(4) amortization of intangibles;
(5) non-cash impairment charges;
(6) charges relating to the investigations of the Company pending
on the Issue Date, by the United States Attorney and by the U.S.
Department of Labor and amounts paid in satisfaction of any judgment,
fine or settlement resulting therefrom; and
13
(7) any other non-cash items (other than any such non-cash item
to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), minus
(b) all non-cash items increasing Consolidated Net Income for such
period (other than any such non-cash item to the extent that it will result
in the receipt of cash payments in any future period).
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and non-cash items of a Restricted Subsidiary shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its shareholders.
"8.125% Notes" means the Company's 8.125% Senior Secured Notes due
2010 issued under the Indenture dated as of April 22, 2003, among the Company,
the Subsidiary Guarantors and BNY Midwest Trust Company, as trustee, and
outstanding on the Issue Date.
"Equipment Financing Transaction" means any arrangement (together with
any Refinancing thereof) with any Person pursuant to which the Company or any
Restricted Subsidiary Incurs Debt secured by a Lien on equipment or equipment
related property of the Company or any Restricted Subsidiary.
"Equity Offering" means (a) an underwritten offering of common stock
of the Company by the Company pursuant to an effective registration statement
under the Securities Act or (b) so long as the Company's common stock is, at the
time, listed or quoted on a national securities exchange (as such term is
defined in the Exchange Act), an offering of common stock by the Company in a
transaction exempt from or not subject to the registration requirements of the
Securities Act.
"Event of Default" has the meaning set forth under Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Expansion Capital Expenditure" means any capital expenditure incurred
by the Company or any Restricted Subsidiary in developing, relocating,
remodeling and refurbishing a warehouse, distribution center, store or other
facility (other than ordinary course maintenance) for carrying on the business
of the Company and its Restricted Subsidiaries that the Board of Directors
determines in good faith will enhance the income generating ability of the
warehouse, distribution center, store or other facility.
"Fair Market Value" means, with respect to any Property, the price
that could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller
14
and a willing buyer, neither of whom is under undue pressure or compulsion to
complete the transaction. Fair Market Value shall be determined, except as
otherwise provided:
(a) if such Property has a Fair Market Value equal to or less than $25
million, by any Officer of the Company; or
(b) if such Property has a Fair Market Value in excess of $25 million,
by a majority of the Board of Directors and evidenced by a Board
Resolution, dated within 30 days of the relevant transaction, delivered to
the Trustee.
"Foreign Subsidiary" means any Subsidiary of the Company which (a) is
organized under the laws of any jurisdiction outside of the United States, (b)
is organized under the laws of Puerto Rico or the U.S. Virgin Islands, (c) has
substantially all its operations outside of the United States, (d) has
substantially all its operations in Puerto Rico or the U.S. Virgin Islands, or
(e) does not own any material assets other than Capital Stock of one or more
Subsidiaries of the type described in (a) through (d) above.
"GAAP" means United States generally accepted accounting principles as
in effect on February 12, 2003, including those set forth:
(a) in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants;
(b) in the statements and pronouncements of the Financial Accounting
Standards Board;
(c) in such other statements by such other entity as approved by a
significant segment of the accounting profession; and
(d) the rules and regulations of the Commission governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13
of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting
staff of the Commission.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise); or
(b) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include:
15
(1) endorsements for collection or deposit in the ordinary course
of business; or
(2) a contractual commitment by one Person to invest in another
Person for so long as such Investment is reasonably expected to
constitute a Permitted Investment under clause (b) of the definition
of "Permitted Investment."
The term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of such Person
pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement,
Commodity Price Protection Agreement or any other similar agreement or
arrangement.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by merger, conversion, exchange or otherwise),
extend, assume, Guarantee or become liable in respect of such Debt or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Debt or obligation on the balance sheet of such Person (and "Incurrence"
and "Incurred" shall have meanings correlative to the foregoing); provided,
however, that a change in GAAP that results in an obligation of such Person that
exists at such time, and is not theretofore classified as Debt, becoming Debt
shall not be deemed an Incurrence of such Debt; provided further, however, that
any Debt or other obligations of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary; and provided further, however, that solely for purposes of
determining compliance with Section 4.03, amortization of debt discount shall
not be deemed to be the Incurrence of Debt, provided that in the case of Debt
sold at a discount, the amount of such Debt Incurred shall at all times be the
aggregate principal amount at Stated Maturity.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Independent Financial Advisor" means an investment banking firm of
national standing or any third party appraiser of national standing, provided
that such firm or appraiser is not an Affiliate of the Company.
"Intercreditor Agreement" means the Amended and Restated Collateral
Trust and Intercreditor Agreement, dated as of May 28, 2003, as amended as of
September 22, 2004, among the Company, the Subsidiary Guarantors, the Second
Priority Collateral Trustee, the Senior Collateral Agents and each Second
Priority Representative, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
16
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect against fluctuations in interest
rates.
"Investment" by any Person means any direct or indirect loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Debt issued by, any other Person. For purposes
of Sections 4.04 and 4.11, and the definition of "Restricted Payment",
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary of an amount (if
positive) equal to:
(a) the Company's "Investment" in such Subsidiary at the time of such
redesignation; less
(b) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation.
In determining the amount of any Investment made by transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such Investment.
"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by Xxxxx'x and BBB- (or the equivalent) by S&P, without
regard to outlook.
"Issue Date" means the date on which the Original Securities are
initially issued.
"Lien" means, with respect to any Property of any Person, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien, charge, easement (other than any easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to
the rating agency business thereof.
"Net Available Cash" from any Asset Sale means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal
17
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of:
(a) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Sale;
(b) all payments made on any Debt that is secured by any Property
subject to such Asset Sale, in accordance with the terms of any Lien upon
or other security agreement of any kind with respect to such Property, or
which must by its terms, or in order to obtain a necessary consent to such
Asset Sale, or by applicable law, be repaid out of the proceeds from such
Asset Sale;
(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale; and
(d) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the Property disposed in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.
"9 1/2% Notes" means the Company's 9 1/2% Senior Secured Notes Due
2011 issued under the indenture dated as of February 12, 2003, among the
Company, the Subsidiary Guarantors and BNY Midwest Trust Company, as trustee,
and outstanding on the Issue Date.
"Obligors" means the Company, the Subsidiary Guarantors and any other
Person who is liable for any of the Secured Obligations.
"Officer" means the Chief Executive Officer, the President, the Chief
Financial Officer or any Executive Vice President of the Company.
"Officers' Certificate" means a certificate signed by two Officers of
the Company, at least one of whom shall be the principal executive officer or
principal financial officer of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Original Exchange Securities" means the 7.5% Senior Secured Notes due
2015 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer or Private Exchanges pursuant to the Registration Agreement.
"Original Securities" has the meaning specified in Section 2.01.
18
"Permitted Holder" means Xxxxxxx Xxxxx & Partners L.P. or any of its
Affiliates.
"Permitted Investment" means any Investment by the Company or a
Restricted Subsidiary in:
(a) (1) the Company, (2) any Restricted Subsidiary or (3) any Person
that will, upon the making of such Investment, become a Restricted
Subsidiary;
(b) any Person if as a result of such Investment such Person is merged
or consolidated with or into, or transfers or conveys all or substantially
all its Property to, the Company or a Restricted Subsidiary;
(c) cash and Temporary Cash Investments;
(d) receivables owing to the Company or a Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or such Restricted Subsidiary deems reasonable under the
circumstances;
(e) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(f) loans and advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary, as the case may be, provided that such loans and advances do
not exceed $25 million at any one time outstanding;
(g) stock, obligations or other securities received in settlement of
debts created in the ordinary course of business and owing to the Company
or a Restricted Subsidiary or in satisfaction of judgments;
(h) any Person to the extent such Investment represents the non-cash
portion of the consideration received in connection with an Asset Sale
consummated in compliance with Section 4.06;
(i) Hedging Obligations permitted under clause (g), (h) or (i) of
Section 4.03;
(j) any Person if the Investments are outstanding on February 12, 2003
and not otherwise described in clauses (a) through (i) above;
(k) Investments in Unrestricted Subsidiaries or joint venture entities
(including purchasing cooperatives) that do not exceed $10 million
outstanding at any one time in the aggregate;
(l) other Investments that do not exceed $5 million outstanding at any
one time in the aggregate;
19
(m) Investments in any entity, formed by the Company or a Restricted
Subsidiary, organized under Section 501(c)(3) of the Code, that do not
exceed an aggregate amount of $5 million in any fiscal year; and
(n) any assets, Capital Stock or other securities to the extent
acquired in exchange for shares of Capital Stock of the Company (other than
Disqualified Stock).
"Permitted Liens" means:
(a) Liens to secure (x) Debt evidenced by the Original Securities, the
Original Exchange Securities or Subsidiary Guarantees relating to the
Original Securities or the Original Exchange Securities or (y) Debt
permitted to be Incurred under clause (a), (b), (d) or (l) of the second
paragraph of Section 4.03 provided, however, that:
(1) if such Debt is Incurred pursuant to such clause (b) (other
than pursuant to a Sale and Leaseback Transaction, a Capital Lease
Obligation or by a Receivables Entity in a Qualified Receivables
Transaction) or clause (l), a second priority Lien (subject to
Permitted Liens) upon the Property (if such Property does not
otherwise constitute Second Priority Collateral at such time) subject
to such Lien is concurrently granted as security for the Securities
such that such Property also constitutes Second Priority Collateral
subject to the Second Priority Collateral Documents, except to the
extent such Property constitutes cash or cash equivalents securing
only letter of credit obligations under Credit Facilities following a
default under such Credit Facilities; and
(2) if such Debt is Incurred pursuant to such clause (a) or (d),
a second priority Lien (subject to Permitted Liens) upon the Property
subject to such Lien is concurrently granted as security for the
Securities such that such Property constitutes Second Priority
Collateral subject to the Second Priority Lien and the Securities are
secured by such Lien equally and ratably (or prior to) such Debt
pursuant to the Second Priority Collateral Documents, except as
required by the terms of the 12.5% Notes, but only to the extent the
terms as in effect on the Issue Date would have so required, with
respect to proceeds of Collateral Dispositions;
(b) Liens to secure Debt permitted to be Incurred under clause (e),
(q) or (r) of the second paragraph of Section 4.03, provided that any such
Lien may not extend to any Property of the Company or any Restricted
Subsidiary, other than the Property acquired, developed, constructed or
leased with the proceeds of such Debt and any improvements or additions to
such Property;
(c) Liens for taxes, assessments or governmental charges or levies on
the Property of the Company or any Restricted Subsidiary if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall
have been made therefor;
20
(x) Xxxxx imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens, on the Property of the Company or
any Restricted Subsidiary arising in the ordinary course of business and
securing payment of obligations that are not more than 60 days past due or
are being contested in good faith and by appropriate proceedings;
(e) Liens on the Property of the Company or any Restricted Subsidiary
Incurred in the ordinary course of business to secure performance of
obligations with respect to statutory or regulatory requirements,
performance or return-of-money bonds, surety bonds or other obligations of
a like nature and Incurred in a manner consistent with industry practice,
in each case which are not Incurred in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of Property and which do not in the aggregate impair in any
material respect the use of Property in the operation of the business of
the Company and the Restricted Subsidiaries taken as a whole;
(f) Liens on Property at the time the Company or any Restricted
Subsidiary acquired such Property, including any acquisition by means of a
merger or consolidation with or into the Company or any Restricted
Subsidiary; provided, however, that any such Lien may not extend to any
other Property of the Company or any Restricted Subsidiary; provided
further, however, that such Liens shall not have been Incurred in
anticipation of or in connection with the transaction or series of
transactions pursuant to which such Property was acquired by the Company or
any Restricted Subsidiary;
(g) Liens on the Property of a Person at the time such Person becomes
a Restricted Subsidiary; provided, however, that any such Lien may not
extend to any other Property of the Company or any other Restricted
Subsidiary that is not a direct Subsidiary of such Person; provided
further, however, that any such Lien was not Incurred in anticipation of or
in connection with the transaction or series of transactions pursuant to
which such Person became a Restricted Subsidiary;
(h) pledges or deposits by the Company or any Restricted Subsidiary
under workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Debt) or leases to which the
Company or any Restricted Subsidiary is party, or deposits to secure public
or statutory obligations of the Company or any Restricted Subsidiary, or
deposits for the payment of rent, in each case Incurred in the ordinary
course of business;
(i) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character;
(j) Liens arising out of judgments or awards against the Company or a
Restricted Subsidiary with respect to which the Company or the Restricted
Subsidiary shall then be proceeding with an appeal or other proceeding for
review and which do not give rise to an Event of Default;
21
(k) leases or subleases of real property granted by the Company or a
Restricted Subsidiary to any other Person in the ordinary course of
business and not materially impairing the use of the real property in the
operation of the business of the Company or the Restricted Subsidiary;
(l) licenses of intellectual property in the ordinary course of
business;
(m) Liens existing on February 12, 2003 not otherwise described in
clauses (a) through (l) above;
(n) Liens on the Property of the Company or any Restricted Subsidiary
to secure any Refinancing, in whole or in part, of any Debt secured by
Xxxxx referred to in clause (a) (but only to the extent it relates to
clause (a) or (d) referred to therein), (b) (other than Liens securing Debt
Incurred pursuant to clause (r) referred to therein), (f), (g), or (m)
above; provided, however, that (1) in the case of clause (a) or (b) above,
the proviso to such clause remains satisfied and (2) any such Lien shall be
limited to all or part of the same Property that secured the original Lien
(together with improvements and accessions to such Property) and the
aggregate principal amount of Debt that is secured by such Lien shall not
be increased to an amount greater than the sum of:
(A) the outstanding principal amount, or, if greater, the
committed amount, of the Debt secured by Xxxxx described under clause
(b) (except as referred to above), (f), (g), or (m) above, as the case
may be, at the time the original Lien became a Permitted Lien under
this Indenture; and
(B) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, incurred by the Company or such
Restricted Subsidiary in connection with such Refinancing; and
(o) Liens not otherwise permitted by clauses (a) through (n) above
encumbering assets that have an aggregate Fair Market Value not in excess
of $2 million.
"Permitted Refinancing Debt" means any Debt that Refinances any other
Debt, including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) not in excess of the sum
of:
(1) the aggregate principal amount (or if Incurred with original
issue discount, the aggregate accreted value) then outstanding of the
Debt being Refinanced; and
(2) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, related to such Refinancing;
(b) the Average Life of such Debt is equal to or greater than the
Average Life of the Debt being Refinanced;
22
(c) the Stated Maturity of such Debt is no earlier than the Stated
Maturity of the Debt being Refinanced; and
(d) the new Debt shall not be senior in right of payment to the Debt
that is being Refinanced;
provided, however, that Permitted Refinancing Debt shall not include: (x) Debt
of a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of the
Company or a Subsidiary Guarantor, or (y) Debt of the Company or a Restricted
Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including any
limited liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect to
Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Wholly Owned Restricted Subsidiary. The amount of any such dividend
shall be equal to the quotient of such dividend divided by the difference
between one and the maximum statutory federal income rate (expressed as a
decimal number between 1 and 0) then applicable to the issuer of such Preferred
Stock.
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms hereof, a calculation performed in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the Board of Directors after consultation with the
independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including Capital Stock in, and other securities of, any
other Person. For purposes of any calculation required pursuant to this
Indenture, the value of any Property shall be its Fair Market Value.
"Public Debt" means obligations of the Company or of a Subsidiary
Guarantor evidenced by bonds, debentures, notes and similar instruments issued
in a manner and pursuant to documentation customary in the market for
obligations publicly traded or traded in the high yield bond or other private
placement or similar market primarily among financial institutions (other than
any such obligations that are traded primarily among commercial banks).
23
"Purchase Money Debt" means Debt Incurred to finance the acquisition,
development, construction or lease by the Company or a Restricted Subsidiary of
Property, including additions and improvements thereto, where the maturity of
such Debt does not exceed the anticipated useful life of the Property being
financed; provided, however, that such Debt is Incurred within 24 months after
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the completion of the acquisition, development, construction or lease of such
Property by the Company or such Restricted Subsidiary.
"Qualified Consideration" means, with respect to any Asset Sale (or
any other transaction or series of related transactions required to comply with
clause (b) of the first paragraph of Section 4.06), any one or more of (a) cash
or cash equivalents, (b) notes or obligations that are converted into cash (to
the extent of the cash received) within 90 days of such Asset Sale, (c) equity
securities listed on a national securities exchange (as such term is defined in
the Exchange Act) or quoted on the Nasdaq National Market and converted into
cash (to the extent of the cash received) within 120 days of such Asset Sale,
(d) the assumption by the purchaser of liabilities of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Securities) as a result of which the Company and the
Restricted Subsidiaries are no longer obligated with respect to such
liabilities, (e) Additional Assets or (f) other Property, provided that the
aggregate Fair Market Value of all Property received since February 12, 2003 by
the Company and its Restricted Subsidiaries pursuant to Asset Sales (or such
other transactions) that is used to determine Qualified Consideration pursuant
to this clause (f) does not exceed $100 million.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any of its Subsidiaries may sell, convey or
otherwise transfer to:
(a) a Receivables Entity (in the case of a transfer by the Company or
any of its Subsidiaries); and
(b) any other Person (in the case of a transfer by a Receivables
Entity),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its
Subsidiaries, and any assets related thereto including all collateral
securing those accounts receivable, all contracts and all Guarantees or
other obligations in respect of those accounts receivable, proceeds of
those accounts receivable and other assets which are customarily
transferred or in respect of which security interests are customarily
granted in connection with asset securitization transactions involving
accounts receivable; provided that:
(1) if the transaction involves a transfer of accounts receivable
with Fair Market Value equal to or greater than $25.0 million, the
Board of Directors shall have determined in good faith that the
Qualified Receivables Transaction is economically fair and reasonable
to the Company and the Receivables Entity;
(2) all sales of accounts receivable and related assets to or by
the Receivables Entity are made at Fair Market Value; and
24
(3) the financing terms, covenants, termination events and other
provisions thereof shall be market terms (as determined in good faith
by the Board of Directors).
"Real Estate Financing Transaction" means any arrangement with any
Person pursuant to which the Company or any Restricted Subsidiary Incurs Debt
secured by a Lien on real property of the Company or any Restricted Subsidiary
and related personal property together with any Refinancings thereof.
"Receivables Entity" means a Wholly Owned Subsidiary of the Company
(or another Person formed for the purposes of engaging in a Qualified
Receivables Transaction with the Company in which the Company or any Subsidiary
of the Company makes an Investment and to which the Company or any Subsidiary of
the Company transfers accounts receivable and related assets) which engages in
no activities other than in connection with the financing of accounts receivable
of the Company and its Subsidiaries, all proceeds thereof and all rights
(contractual or other), collateral and other assets relating thereto, and any
business or activities incidental or related to that business, and (with respect
to any Receivables Entity formed after the Issue Date) which is designated by
the Board of Directors (as provided below) as a Receivables Entity and:
(a) no portion of the Debt or any other obligations (contingent or
otherwise) of which:
(1) is Guaranteed by the Company or any Subsidiary of the Company
(excluding Guarantees of obligations (other than the principal of, and
interest on, Debt) pursuant to Standard Securitization Undertakings);
(2) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to Standard Securitization
Undertakings; or
(3) subjects any property or asset of the Company or any
Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(b) with which neither the Company nor any Subsidiary of the Company
has any material contract, agreement, arrangement or understanding other
than on terms which the Company reasonably believes to be no less favorable
to the Company or the Subsidiary than those that might be obtained at the
time from Persons that are not Affiliates of the Company; and
(c) to which neither the Company nor any Subsidiary of the Company has
any obligation to maintain or preserve the entity's financial condition or
cause the entity to achieve certain levels of operating results other than
pursuant to Standard Securitization Undertakings.
Any designation of this kind by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to the
25
designation and an Officers' Certificate certifying that the designation
complied with the foregoing conditions. For the avoidance of doubt, Rite Aid
Funding I and Rite Aid Funding II are designated Receivables Entities without
any further action on the part of the Company.
"Receivables Facility" means the Receivables Financing Agreement dated
as of September 21, 2004 (as such may be further amended, modified, supplemented
or Refinanced from time to time), among Rite Aid Funding II, the Investors named
therein, the Banks named therein, Citicorp North America Inc., as Program Agent,
Rite Aid Headquarters Funding Inc., as Collection Agent, the Originators named
therein and JPMorgan Chase Bank, as trustee.
"Refinance" means, in respect of any Debt, to refinance, extend,
renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue
other Debt, in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Related Business" means any business that is related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Repay" means, in respect of any Debt, to repay, prepay, repurchase,
redeem, legally defease or otherwise retire such Debt. "Repayment" and "Repaid"
shall have correlative meanings. For purposes of Section 4.06 and the definition
of "Consolidated Interest Coverage Ratio," Debt shall be considered to have been
Repaid only to the extent the related loan commitment, if any, shall have been
permanently reduced in connection therewith.
"Representatives" means each of the Senior Collateral Agents and the
Second Priority Representatives.
"Restricted Payment" means:
(a) any dividend or distribution (whether made in cash, securities or
other Property) declared or paid on or with respect to any shares of
Capital Stock of the Company or any Restricted Subsidiary (including any
payment in connection with any merger or consolidation with or into the
Company or any Restricted Subsidiary), except for any dividend or
distribution that is made solely to the Company or a Restricted Subsidiary
(and, if such Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, to the other shareholders of such Restricted Subsidiary on a
pro rata basis or on a basis that results in the receipt by the Company or
a Restricted Subsidiary of dividends or distributions of greater value than
it would receive on a pro rata basis) or any dividend or distribution
payable solely in shares of Capital Stock (other than Disqualified Stock)
of the Company;
(b) the purchase, repurchase, redemption, acquisition or retirement
for value of any Capital Stock of the Company or any Restricted Subsidiary
(other than from the Company or a Restricted Subsidiary);
26
(c) the purchase, repurchase, redemption, acquisition or retirement
for value, prior to the date for any scheduled maturity, sinking fund or
amortization or other installment payment, of any Subordinated Obligation
(other than the purchase, repurchase or other acquisition of any
Subordinated Obligation purchased in anticipation of satisfying a scheduled
maturity, sinking fund or amortization or other installment obligation, in
each case due within one year of the date of acquisition);
(d) any Investment (other than Permitted Investments) in any Person;
or
(e) the issuance, sale or other disposition of Capital Stock of any
Restricted Subsidiary to a Person other than the Company or another
Restricted Subsidiary if the result thereof is that such Restricted
Subsidiary shall cease to be a Restricted Subsidiary, in which event the
amount of such "Restricted Payment" shall be the Fair Market Value of the
remaining interest, if any, in such former Restricted Subsidiary held by
the Company and the other Restricted Subsidiaries.
Notwithstanding the foregoing, no payment or other transaction permitted by
clause (c) or (f) of the second paragraph of Section 4.08 will be considered a
Restricted Payment.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor to the
rating agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement relating to Property now owned or hereafter acquired whereby the
Company or a Restricted Subsidiary transfers such Property to another Person and
the Company or a Restricted Subsidiary leases it from such Person.
"Second Priority Collateral" means all the "Second Priority
Collateral" as defined in any Second Priority Collateral Documents and shall
also include the mortgaged properties described in the Senior Credit Facility
and the proceeds thereof.
"Second Priority Collateral Documents" means the Second Priority
Subsidiary Security Agreement, the Second Priority Subsidiary Guarantee
Agreement, the Second Priority Indemnity, Subrogation and Contribution
Agreement, the Intercreditor Agreement and each of the mortgages, security
agreements and other instruments and documents executed and delivered by any
Subsidiary Guarantor pursuant to any of the foregoing for purposes of providing
collateral security or credit support for any Second Priority Debt Obligation or
obligation under the Second Priority Subsidiary Guarantee Agreement (including,
in each case, any schedules, exhibits or annexes thereto), in each case as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Second Priority Collateral Trustee" means Wilmington Trust Company,
in its capacity as collateral trustee under the Intercreditor Agreement and the
Second Priority Collateral Documents, and its successors.
27
"Second Priority Debt" means the Securities, the 12.5% Notes, the 9
1/2% Notes, the 8.125% Notes and any other Debt of the Company Guaranteed by the
Subsidiary Guarantors pursuant to the Second Priority Subsidiary Guarantee
Agreement with such Guarantee secured on a pari passu basis by the Second
Priority Collateral; provided, however, that such Debt is permitted to be
-------- -------
incurred, secured and guaranteed on such basis by each Senior Debt Document and
each Second Priority Debt Document.
"Second Priority Debt Documents" means (a) with respect to the
Securities, this Indenture, the Securities and the Registration Agreement and
(b) with respect to any other series, issue or class of Second Priority Debt,
the promissory notes, indentures, Collateral Documents or other operative
agreements evidencing or governing such Debt, in each case as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Second Priority Debt Facility" means the indenture or other governing
agreement with respect to any Second Priority Debt.
"Second Priority Debt Obligations" means, with respect to any series,
issue or class of Second Priority Debt, (a) all principal of and interest
(including any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim in
any such proceeding) on such Second Priority Debt, (b) all other amounts payable
by the Company to the related Second Priority Debt Parties under the related
Second Priority Debt Documents and (c) any renewals, extensions or Refinancings
thereof of the foregoing.
"Second Priority Debt Parties" means, with respect to any series,
issue or class of Second Priority Debt, the holders of such indebtedness from
time to time, any trustee or agent therefor under any related Second Priority
Debt Documents and the beneficiaries of each indemnification obligation
undertaken by the Company or any Obligor under any related Second Priority Debt
Documents, but shall not include the Obligors or any controlled Affiliates
thereof.
"Second Priority Indemnity, Subrogation and Contribution Agreement"
means the Second Priority Indemnity, Subrogation and Contribution Agreement,
dated as of June 27, 2001, as amended and restated as of May 28, 2003, among the
Company, the Subsidiary Guarantors and the Second Priority Collateral Trustee,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Second Priority Instructing Group" means Second Priority
Representatives with respect to Second Priority Debt Facilities under which at
least a majority of the then aggregate amount of Second Priority Debt
Obligations are outstanding.
"Second Priority Lien" means the liens on the Second Priority
Collateral in favor of the Second Priority Debt Parties under the Second
Priority Collateral Documents.
"Second Priority Representative" means, in respect of a Second
Priority Debt Facility, the Trustee and the trustee, administrative agent,
security agent or similar agent
28
under each other Second Priority Debt Facility, as the case may be, and each of
their successors in such capacities.
"Second Priority Subsidiary Guarantee Agreement" means the Second
Priority Subsidiary Guarantee Agreement, dated as of June 27, 2001, as amended
and restated as of May 28, 2003, made by the Subsidiary Guarantors (including
any additional Subsidiary Guarantor becoming party thereto after May 28, 2003)
in favor of the Second Priority Collateral Trustee for the benefit of the Second
Priority Debt Parties, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Second Priority Subsidiary Security Agreement" means the Second
Priority Subsidiary Security Agreement, dated as of June 27, 2001, as amended
and restated as of May 28, 2003, made by the Subsidiary Guarantors (including
any additional Subsidiary Guarantor becoming party thereto after May 28, 2003)
in favor of the Second Priority Collateral Trustee for the benefit of the Second
Priority Debt Parties, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Secured Debt" means indebtedness for money borrowed which is secured
by a mortgage, pledge, lien, security interest or encumbrance on property of the
Company or any Restricted Subsidiary, but shall not include guarantees arising
in connection with the sale, discount, guarantee or pledge of notes, chattel
mortgages, leases, accounts receivable, trade acceptances and other paper
arising, in the ordinary course of business, out of installment or conditional
sales to or by, or transactions involving title retention with, distributors,
dealers or other customers, of merchandise, equipment or services.
"Secured Obligations" means the Senior Obligations, the Second
Priority Debt Obligations and any other Debt or obligations related to such Debt
that is secured by a Lien on any Collateral.
"Securities" means Securities designated in the first paragraph of
this Indenture.
"Securities Act" means the Securities Act of 1933, as it may be
amended and any successor act thereto.
"Senior Bank" means a "Bank" as defined in the Senior Credit Facility.
"Senior Bank Obligations" means (a) the principal of each loan made
under the Senior Credit Facility, (b) all reimbursement and cash
collateralization obligations in respect of letters of credit issued under the
Senior Credit Facility, (c) all monetary obligations of the Company or any
Subsidiary under each Senior Interest Rate Agreement (as defined in the Senior
Credit Facility) entered into (1) prior to September 22, 2004 with any
counterparty that was a Senior Bank (or an Affiliate thereof) on September 22,
2004 or (2) on or after September 22, 2004 with any counterparty that was a
Senior Bank (or an Affiliate thereof) at the time such Senior Interest Rate
Agreement was entered into, (d) all interest on the loans, letter of credit
reimbursement and other obligations under the Senior Credit Facility or such
Senior Interest Rate Agreements (including, without limitation, any interest
which accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Company or any
Subsidiary Guarantor, whether or not
29
allowed or allowable as a claim in such proceeding), (e) all other amounts
payable by the Company under the Senior Debt Documents and (f) all increases,
renewals, extensions and Refinancings of the foregoing.
"Senior Bank Parties" means each party to the Senior Credit Facility
from time to time other than any Obligor, each counterparty to a Senior Interest
Rate Agreement, the beneficiaries of each indemnification obligation undertaken
by the Company or any other Obligor under any Senior Debt Document, and the
successors and permitted assigns of each of the foregoing.
"Senior Collateral" means all the "Senior Collateral" as defined in
any Senior Collateral Document and shall also include the mortgaged properties
described in the Senior Credit Facility and the proceeds thereof.
"Senior Collateral Agents" means Citicorp North America, Inc. and
JPMorgan Chase Bank, in their capacities as Senior Collateral Agents under the
Senior Collateral Documents, and their respective successors.
"Senior Collateral Documents" means the Senior Mortgages, the Senior
Subsidiary Security Agreement, the Senior Subsidiary Guarantee Agreement, the
Senior Indemnity, Subrogation and Contribution Agreement, the Intercreditor
Agreement and each of the mortgages, security agreements and other instruments
and documents executed and delivered by any Subsidiary Guarantor pursuant to any
of the foregoing or pursuant to the Senior Credit Facility or any Additional
Senior Debt Facility or for purposes of providing collateral security or credit
support for any Senior Bank Obligation or Additional Senior Debt Obligation or
obligation under the Senior Subsidiary Guarantee Agreement (including, in each
case, any schedules, exhibits or annexes thereto), as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Senior Credit Facility" means the Senior Credit Agreement dated as of
June 27, 2001, as amended and restated as of August 4, 2003, as further amended
and restated as of September 22, 2004 (as may be further amended, modified,
supplemented or Refinanced from time to time), among the Company, the Banks as
defined therein, Citicorp North America, Inc., as administrative agent and
collateral processing co-agent, JPMorgan Chase Bank, as syndication agent and
collateral processing co-agent, Fleet Retail Group, Inc., as co-documentation
agent and collateral agent and The CIT Group/Business Credit, Inc. and General
Electric Capital Corporation, as co-documentation agents.
"Senior Debt Documents" means (a) the Senior Credit Facility, each
"Loan Document" as defined in the Senior Credit Facility, each Senior Interest
Rate Agreement and the Senior Collateral Documents and (b) any Additional Senior
Debt Documents.
"Senior Facilities" means the Senior Credit Facility and any
Additional Senior Debt Facilities.
"Senior Indemnity, Subrogation and Contribution Agreement" means the
Senior Indemnity, Subrogation and Contribution Agreement, dated as of June 27,
2001, as amended and restated as of May 28, 2003, as further amended and
restated as of September 22, 2004, among the Company, the Subsidiary Guarantors
(including Subsidiary
30
Guarantors becoming party thereto after June 27, 2001) and the Senior Collateral
Agents, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Senior Lien" means the liens on the Senior Collateral in favor of the
Senior Bank Parties under the Senior Collateral Documents.
"Senior Mortgages" means the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to the Senior Credit Facility.
"Senior Obligations" means the Senior Bank Obligations and any
Additional Senior Debt Obligations.
"Senior Secured Parties" means the Senior Bank Parties and any
Additional Senior Debt Parties.
"Senior Subsidiary Guarantee Agreement" means the Senior Subsidiary
Guarantee Agreement, made by the Subsidiary Guarantors (including Subsidiary
Guarantors that become parties thereto after June 27, 2001) in favor of the
Senior Collateral Agents for the benefit of the Senior Secured Parties, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Senior Subsidiary Security Agreement" means the Senior Subsidiary
Security Agreement, made by the Subsidiary Guarantors (including Subsidiary
Guarantors that become parties thereto after June 27, 2001) in favor of the
Senior Collateral Agent for the benefit of the Senior Secured Parties, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Series D Preferred Stock" means the Company's Preferred Stock, par
value $1.00 per share, designated as Series D.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
"Specified Collateral Disposition" means any Collateral Disposition
(other than a Collateral Disposition occurring following the occurrence of a
Triggering Event) in respect of which all or a portion of the resulting proceeds
are required by the terms of any Second Priority Debt Obligations to be used or
allocated to Repay such Second Priority Debt Obligations.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are customary in an accounts receivable
securitization transaction involving a comparable company.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any
31
provision providing for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency beyond the control of the
issuer unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities or
the applicable Subsidiary Guarantee pursuant to a written agreement to that
effect.
"Subsidiary" means, in respect of any Person, any corporation, company
(including any limited liability company), association, partnership, joint
venture or other business entity of which a majority of the total voting power
of the Voting Stock is at the time owned or controlled, directly or indirectly,
by:
(a) such Person;
(b) such Person and one or more Subsidiaries of such Person; or
(c) one or more Subsidiaries of such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities pursuant to the Second
Priority Subsidiary Guarantee Agreement or otherwise on the terms set forth in
this Indenture.
"Subsidiary Guarantor" means each Subsidiary that is a party to the
Second Priority Subsidiary Guarantee Agreement as of the Issue Date and any
other Person that Guarantees the Securities pursuant to Section 4.09.
"Temporary Cash Investments" means any of the following:
(a) Investments in U.S. Government Obligations maturing within 365
days of the date of acquisition thereof;
(b) Investments in time deposit accounts, certificates of deposit,
money market deposits maturing within 90 days of the date of acquisition
thereof issued by a bank or trust company organized under the laws of the
United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $500 million and whose long-term
debt is rated "A-3" or "A-" or higher according to Xxxxx'x or S&P (or such
similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the
Securities Act));
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) entered into
with:
(1) a bank meeting the qualifications described in clause (b)
above; or
(2) any primary government securities dealer reporting to the
Market Reports Division of the Federal Reserve Bank of New York;
32
(d) Investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America with a rating at the time as of which any
Investment therein is made of "P-1" (or higher) according to Xxxxx'x or
"A-1" (or higher) according to S&P (or such similar equivalent rating by at
least one "nationally recognized statistical rating organization" (as
defined in Rule 436 under the Securities Act));
(e) direct obligations (or certificates representing an ownership
interest in such obligations) of any state of the United States of America
(including any agency or instrumentality thereof) for the payment of which
the full faith and credit of such state is pledged and which are not
callable or redeemable at the issuer's option, provided that:
(1) the long-term debt of such state is rated "A-3" or "A-" or
higher according to Xxxxx'x or S&P (or such similar equivalent rating
by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); and
(2) such obligations mature within 180 days of the date of
acquisition thereof; and
(f) money market funds at least 95% of the assets of which constitute
Temporary Cash Equivalents of the kinds described in clauses (a) through
(e) of this definition.
"Triggering Event" at any time has the meaning set forth in the
Intercreditor Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date as of which this Indenture was executed, except as
provided in Section 9.03; provided, however, that in the event the Trust
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Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Officer" means any officer within the Corporate Trust
department of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"12.5% Notes" means the Company's 12.5% Senior Secured Notes Due 2006
issued under the indenture dated as of June 27, 2001, among the Company, the
Subsidiary Guarantors and State Street Bank and Trust Company, as trustee, and
outstanding on February 12, 2003.
33
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that is designated after the Issue
Date as an Unrestricted Subsidiary as permitted or required pursuant to
Section 4.11 and is not thereafter redesignated as a Restricted Subsidiary
as permitted pursuant thereto; and
(b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means, at any time, a Restricted
Subsidiary all the Voting Stock of which (except directors' qualifying shares)
is at such time owned, directly or indirectly, by the Company and its other
Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
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"Affiliate Transaction"............................................. 4.08
"Asset Sales Prepayment Offer"...................................... 4.06
"Bankruptcy Law".................................................... 6.01
"Change of Control Offer"........................................... 4.13
"Change of Control Payment Date".................................... 4.13
"Change of Control Purchase Price".................................. 4.13
"covenant defeasance option"........................................ 8.01
"Custodian"......................................................... 6.01
"Exchange Security"................................................. Appendix A
"Global Security"................................................... Appendix A
"legal defeasance option"........................................... 8.01
"Legal Holiday"..................................................... 10.08
"Offer Amount"...................................................... 4.06
34
"Offer Period"...................................................... 4.06
"OID"............................................................... 2.01
"Original Securities................................................ 2.01
"Paying Agent"...................................................... 2.04
"Registered Exchange Offer.......................................... Appendix A
"Registrar"......................................................... 2.04
"Registration Agreement"............................................ Appendix A
"Reversion Date".................................................... 4.15(b)
"Securities Custodian".............................................. Appendix A
"Shelf Registration statement....................................... Appendix A
"Surviving Person".................................................. 5.01
"Suspension Period"................................................. 4.15(b)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
35
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or junior to
secured Debt merely by virtue of its nature as unsecured Debt;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the greater
of (i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock.
ARTICLE II
The Securities
--------------
SECTION 2.01. Amount of Securities; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited. All Securities shall be identical in all respects
other than issue prices and issuance dates. The Securities may be issued in one
or more series; provided, however, that any Securities issued with original
issue discount ("OID") for Federal income tax purposes shall not be issued as
part of the same series as any Securities that are issued with a different
amount of OID or are not issued with OID. All Securities of any one series shall
be substantially identical except as to denomination.
Subject to Section 2.03, the Trustee shall authenticate Securities for
original issue on the Issue Date in the aggregate principal amount of
$200,000,000 (the "Original Securities"). With respect to any Securities issued
after the Issue Date (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, Original
Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A), there
shall be established in or pursuant to a Board Resolution, and subject to
Section 2.03, set forth, or determined in the manner provided in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of such Securities:
(1) whether such Securities shall be issued as part of a new or
existing series of Securities and, if issued as part of a new series, the
title of such Securities (which shall distinguish the Securities of the
series from Securities of any other series);
(2) the aggregate principal amount of such Securities to be
authenticated and delivered under this Indenture, which may be issued for
an unlimited aggregate principal amount (except for Securities
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the same series pursuant
to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A and except for Securities
which, pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder);
36
(3) the issue price and issuance date of such Securities, including
the date from which interest on such Securities shall accrue;
(4) if applicable, that such Securities shall be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
respective depositories for such Global Securities; the form of any legend
or legends that shall be borne by any such Global Security in addition to
or in lieu of that set forth in Exhibit 1 to Appendix A and any
circumstances in addition to or in lieu of those set forth in Section 2.3
of Appendix A in which any such Global Security may be exchanged in whole
or in part for Securities registered; and any transfer of such Global
Security in whole or in part may be registered in the name or names of
Persons other than the depository for such Global Security or a nominee
thereof; and
(5) if applicable, that such Securities shall not be issued in the
form of Initial Securities subject to Appendix A, but shall be issued in
the form of Exchange Securities as set forth in Exhibit A.
SECTION 2.02. Form and Dating. Provisions relating to the Initial
Securities of each series and the Exchange Securities are set forth in Appendix
A, which is hereby incorporated in and expressly made part of this Indenture.
The Initial Securities of each series and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities of each series may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage, provided that any
such notation, legend or endorsement is in a form reasonably acceptable to the
Company. Each Security shall be dated the date of its authentication. The terms
of the Securities of each series set forth in Exhibit 1 to Appendix A and
Exhibit A are part of the terms of this Indenture.
SECTION 2.03. Execution and Authentication. An Officer (and for
purposes of this Section 2.03, the term Officer shall include any Vice President
of the Company authorized by the Board of Directors) shall sign the Securities
for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company in the form of an Officers' Certificate for the authentication and
delivery of such Securities, and the Trustee in accordance with such written
order of the Company shall authenticate and deliver such Securities.
37
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in the city of New York where Securities may be presented
for registration of transfer or for exchange (the "Registrar") and an office or
agency in the city of New York where Securities may be presented for payment
(the "Paying Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may have one or more co-registrars
and one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Wholly Owned Subsidiary acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate trust fund. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed by the Paying Agent. Upon complying with
this Section 2.05, the Paying Agent shall have no further liability for the
money delivered to the Trustee.
SECTION 2.06. Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee, in writing at least five Business Days before each
interest payment date and at such other times
38
as the Trustee may request in writing, a list in such form and as of such date
as the Trustee may reasonably require of the names and addresses of Holders.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that such
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.08 as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
39
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment
of interest on the Securities, the Company shall pay the defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Holders on a subsequent special record date. The Company shall fix or cause to
be fixed any such special record date and payment date to the reasonable
satisfaction of the Trustee and shall promptly mail to each Holder a notice that
states the special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that neither the Company nor the Trustee shall have any responsibility
for any defect in the "CUSIP" number that appears on any Security, check, advice
of payment or redemption notice, and any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE III
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and that such redemption is being made pursuant to such paragraph 5
of the Securities.
The Company shall give each notice to the Trustee provided for in this
Section 3.01 at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply with
the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed pursuant to paragraph 5 of the Securities,
the Trustee shall select the Securities to be redeemed pro rata or by lot or by
a method that complies with applicable legal and securities exchange
requirements, if any, and that the Trustee considers fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions of them the Trustee selects shall be
in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee shall notify the Company promptly
of the Securities or portions of Securities to be redeemed.
40
SECTION 3.03. Notice of Redemption. At least 30 days but not more than
60 days before a date for redemption of Securities, the Company shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date, and the only remaining
right of the Holders is to receive payment of the redemption price upon
surrender to the Paying Agent; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03 at least 45 days before the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date that is on or prior to
the date of redemption). Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to or on the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest, if any (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date that is
on or prior to the date of redemption), on all Securities to be redeemed on that
date other than Securities or portions of Securities called for redemption that
have been delivered by the Company to the Trustee for cancellation.
41
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.
The Company shall pay interest on overdue principal at the rate per
annum specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the rate borne by the Securities, to the extent
lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission and provide the Trustee with
such annual and quarterly reports and such information, documents and other
reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and reports to be so filed and provided at the times specified for the
filing of such information, documents and reports under such Sections; provided,
however, that the Company shall not be so obligated to file such information,
documents and reports with the Commission if the Commission does not permit such
filings; provided further, however, that the Company shall be required also to
provide to Holders any such information, documents or reports that are not so
filed. The Company shall also comply with the other provisions of TIA ss.
314(a).
SECTION 4.03. Limitation on Debt. The Company shall not, and shall not
permit any Restricted Subsidiary to, Incur, directly or indirectly, any Debt
unless, after giving effect to the application of the proceeds thereof, no
Default or Event of Default would occur as a consequence of such Incurrence and
no Default or Event of Default would be continuing following such Incurrence and
application of proceeds and either:
(1) such Debt is Debt of the Company or a Subsidiary Guarantor and
after giving effect to the Incurrence of such Debt and the application of
the proceeds thereof, the Consolidated Interest Coverage Ratio would be
greater than 2.00 to 1.00; or
(2) such Debt is Permitted Debt.
The term "Permitted Debt" is defined to include the following:
42
(a) Debt of the Company outstanding on the Issue Date and evidenced by
the 9 1/2% Notes and of Subsidiary Guarantors, including any future
Guarantor, evidenced by guarantees relating to the 9 1/2% Notes;
(b) Debt of the Company or a Subsidiary Guarantor (including
Guarantees thereof) (1) under any Credit Facilities, (2) Incurred pursuant
to a Real Estate Financing Transaction, a Sale and Leaseback Transaction or
an Equipment Financing Transaction, (3) Incurred in respect of Capital
Lease Obligations, (4) Incurred pursuant to Debt Issuances or (5) Incurred
by a Receivables Entity in a Qualified Receivables Transaction that is not
recourse to the Company or any other Restricted Subsidiary (except for
Standard Securitization Undertakings), provided that the aggregate
principal amount of all such Debt in clauses (1) through (5) hereof at any
one time outstanding shall not exceed the greater of (A) $2,500 million,
which amount shall be permanently reduced by the amount of Net Available
Cash used to Repay Debt under the Credit Facilities, and not subsequently
reinvested in Additional Assets or used to purchase Securities or Repay
other Debt, pursuant to Section 4.06 and (B) the sum of the amount equal to
(i) 60% of the book value of the inventory (determined using the
first-in-first-out method of accounting) of the Company and the Restricted
Subsidiaries and (ii) 85% of the book value of the accounts receivables of
the Company and the Restricted Subsidiaries;
(c) [Intentionally omitted];
(d) Debt of the Company outstanding on the Issue Date and evidenced by
the 12.5% Notes and of Subsidiary Guarantors, including any future
Guarantor, evidenced by guarantees relating to the 12.5% Notes;
(e) Debt Incurred after the Issue Date in respect of Purchase Money
Debt, provided that the aggregate principal amount of such Debt does not
exceed 80% of the Fair Market Value (on the date of the Incurrence thereof)
of the Property acquired, constructed, developed or leased, including
additions and improvements thereto;
(f) Debt of the Company owing to and held by any consolidated
Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held
by the Company or any consolidated Restricted Subsidiary; provided,
however, that any subsequent issue or transfer of Capital Stock or other
event that results in any such consolidated Restricted Subsidiary ceasing
to be a consolidated Restricted Subsidiary or any subsequent transfer of
any such Debt (except to the Company or a consolidated Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of
such Debt by the issuer thereof;
(g) Debt under Interest Rate Agreements entered into by the Company or
a Restricted Subsidiary for the purpose of limiting interest rate risk in
the ordinary course of the financial management of the Company or such
Restricted Subsidiary and not for speculative purposes, provided that the
obligations under such agreements are directly related to payment
obligations on Debt otherwise permitted by the terms of this Section 4.03;
43
(h) Debt under Currency Exchange Protection Agreements entered into by
the Company or a Restricted Subsidiary for the purpose of limiting currency
exchange rate risks directly related to transactions entered into by the
Company or such Restricted Subsidiary in the ordinary course of business
and not for speculative purposes;
(i) Debt under Commodity Price Protection Agreements entered into by
the Company or a Restricted Subsidiary in the ordinary course of the
financial management of the Company or that Restricted Subsidiary and not
for speculative purposes;
(j) Debt in connection with one or more standby letters of credit,
banker's acceptance, performance or surety bonds or completion guarantees
issued by the Company or a Restricted Subsidiary in the ordinary course of
business or pursuant to self-insurance obligations and not in connection
with the borrowing of money or the obtaining of advances or credit;
(k) Debt outstanding on February 12, 2003 not otherwise described in
clauses (a) through (j) above or clauses (p) through (q) below;
(l) other Debt of the Company or a Subsidiary Guarantor (including
Guarantees thereof) in an aggregate principal amount outstanding at any one
time not to exceed $400 million;
(m) Debt of a Restricted Subsidiary outstanding on the date on which
that Restricted Subsidiary was acquired by the Company or otherwise became
a Restricted Subsidiary (other than Debt Incurred as consideration in, or
to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of transactions pursuant to which
that Restricted Subsidiary became a Subsidiary of the Company or was
otherwise acquired by the Company), provided that at the time that
Restricted Subsidiary was acquired by the Company or otherwise became a
Restricted Subsidiary and after giving effect to the Incurrence of that
Debt, the Company would have been able to Incur $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of this Section 4.03;
(n) Debt arising from the honoring by a bank or other financial
institution of a check or draft or other similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business,
provided that such Debt is extinguished within five Business Days of its
Incurrence;
(o) endorsements of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;
(p) [Intentionally omitted];
(q) Debt in respect of Sale and Leaseback Transactions or Real Estate
Financing Transactions involving only real property (and the related
personal property) owned by the Company or a Subsidiary Guarantor on the
Issue Date in an aggregate principal amount outstanding at any one time not
to exceed $150 million,
44
provided that such Sale and Leaseback Transactions or Real Estate Financing
Transactions may involve Property other than real property (and the related
personal property) owned on the Issue Date to the extent the portion of the
Debt related to such Property is permitted by another provision of this
Section 4.03 at the time of Incurrence;
(r) Debt in respect of Sale and Leaseback Transactions that are not
Capital Lease Obligations Incurred to finance the acquisition, construction
and development of Property after the Issue Date, including additions and
improvements thereto, provided that any reclassification of such Debt as a
Capital Lease Obligation shall be deemed an Incurrence of such Debt;
(s) Permitted Refinancing Debt Incurred in respect of Debt Incurred
pursuant to clause (1) of the first paragraph of this Section 4.03 and
clauses (a), (d), (e), (k) and (q) above; and
(t) Debt arising from agreements of the Company or any Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, Incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary, other than
Guarantees of Debt incurred by any Person acquiring all or any portion of
such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition; provided, however, that (1) such Debt is not reflected on
the balance sheet of the Company or any Restricted Subsidiary (contingent
obligations referred to in a footnote or footnotes to financial statements
and not otherwise reflected on the balance sheet will not be deemed to be
reflected on such balance sheet for purposes of this clause (1)) and (2)
the maximum assumable liability in respect of such Debt will at no time
exceed the gross proceeds including non-cash proceeds (the fair market
value of such non-cash proceeds being measured at the time received and
without giving effect to any subsequent changes in value) actually received
by the Company or such Restricted Subsidiary in connection with such
disposition.
Notwithstanding anything to the contrary contained in this Section
4.03, the Company shall not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to Incur any Debt pursuant to this Section 4.03 if the
proceeds thereof are used, directly or indirectly, to Refinance any Debt of the
Company or any Subsidiary Guarantor. In addition, the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur, directly or indirectly, any
Senior Obligation that is subordinate or junior in right of payment to any other
Debt of the Company or any Subsidiary Guarantor.
For purposes of determining compliance with this Section 4.03, (1) in
the event that an item of Debt meets the criteria of more than one of the types
of Debt described herein, the Company, in its sole discretion, will classify
such item of Debt at the time of Incurrence and only be required to include the
amount and type of such Debt in one of the above clauses, (2) the Company will
be entitled at the time of such Incurrence to divide and classify an item of
Debt in more than one of the types of Debt described herein and (3) with respect
to Debt permitted under clause (k) of this Section 4.03 in respect of Sale and
Leaseback Transactions that are not Capital Lease Obligations on February 12,
2003, any
45
reclassification of such Debt as a Capital Lease Obligation shall not be deemed
an Incurrence of such Debt; provided, however, that (A) all outstanding Debt
evidenced by the 8.125% Notes will be deemed to have been Incurred pursuant to
clause (b) of this Section 4.03, (B) all outstanding Debt evidenced by the
Receivables Facility will be deemed to have been Incurred pursuant to clause (b)
of this Section 4.03, (C) all outstanding Debt evidenced by the Original
Securities and of Subsidiary Guarantors evidenced by Subsidiary Guarantees
relating to the Original Securities immediately following the Issue Date will be
deemed to have been Incurred pursuant to clause (b) of this Section 4.03, (D)
all outstanding Debt under the Senior Credit Facility immediately following the
Issue Date will be deemed to have been Incurred pursuant to clause (b) of this
Section 4.03, (E) all outstanding Debt in respect of Sale and Leaseback
Transactions involving real property owned by the Company on February 12, 2003
will be deemed to have been Incurred pursuant to clause (q) of this Section
4.03, and all outstanding Debt in respect of Sale and Leaseback Transactions
involving property acquired by the Company after February 12, 2003 will be
deemed to have been Incurred pursuant to clause (r) of this Section 4.03 and (F)
any Permitted Debt may later be reclassified as having been Incurred pursuant to
any other Permitted Debt clause of this Section 4.03 to the extent such Debt
could be Incurred pursuant to such clause at the time of such reclassification.
SECTION 4.04. Limitation on Restricted Payments. The Company shall not
make, and shall not permit any Restricted Subsidiary to make, directly or
indirectly, any Restricted Payment if at the time of, and after giving effect
to, such proposed Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing;
(b) the Company could not Incur at least $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of Section 4.03; or
(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since February 12, 2003 (the amount of
any Restricted Payment, if made other than in cash, to be based upon Fair
Market Value) would exceed an amount equal to the sum of:
(1) 50% of the aggregate amount of Consolidated Net Income
accrued during the period (treated as one accounting period) from the
beginning of the first fiscal quarter that commences after February
12, 2003 occurs to the end of the most recent fiscal quarter for which
financial statements have been filed with the Commission (or if the
aggregate amount of Consolidated Net Income for such period shall be a
deficit, minus 100% of such deficit); plus
(2) 100% of Capital Stock Sale Proceeds; plus
(3) the sum of:
(A) the aggregate net cash proceeds received by the Company
or any Restricted Subsidiary from the issuance or sale after
February 12, 2003 of convertible or exchangeable Debt that has
been converted into or
46
exchanged for Capital Stock (other than Disqualified Stock) of
the Company; and
(B) the aggregate amount by which Debt (other than
Subordinated Obligations) of the Company or any Restricted
Subsidiary is reduced on the Company's consolidated balance sheet
after February 12, 2003 upon the conversion or exchange of any
Debt (other than convertible or exchangeable debt issued or sold
after February 12, 2003) for Capital Stock (other than
Disqualified Stock) of the Company;
excluding, in the case of clause (A) or (B):
(x) any such Debt issued or sold to the Company or a
Subsidiary of the Company or an employee stock ownership plan or
trust established by the Company or any such Subsidiary for the
benefit of their employees; and
(y) the aggregate amount of any cash or other Property
distributed by the Company or any Restricted Subsidiary upon any
such conversion or exchange;
plus
(4) an amount equal to the sum of:
(A) the net reduction in Investments in any Person other than the
Company or a Restricted Subsidiary resulting from dividends,
repayments of loans or advances or other transfers of Property made
after February 12, 2003, in each case to the Company or any Restricted
Subsidiary from such Person less the cost of the disposition of such
Investments; and
(B) the portion (proportionate to the Company's equity interest
in such Unrestricted Subsidiary) of the Fair Market Value of the net
assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary (provided that such
designation occurs after February 12, 2003);
provided, however, that the foregoing sum shall not exceed, in the
-------- -------
case of any Person, the amount of Investments previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in such Person.
Notwithstanding the foregoing limitation, the Company may:
(a) pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on said declaration date, such dividends could have
been paid in compliance with this Indenture; provided, however, that at the
time of such payment of such dividend, no other Default or Event of Default
shall have occurred and be continuing (or result therefrom); provided
further, however, that, if declared on or
47
after February 12, 2003, such dividend shall be included in the calculation
of the amount of Restricted Payments;
(b) purchase, repurchase, redeem, legally defease, acquire or retire
for value Capital Stock of the Company or Subordinated Obligations on or
after February 12, 2003 in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees); provided, however, that:
-------- -------
(1) such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the
amount of Restricted Payments; and
(2) the Capital Stock Sale Proceeds from such exchange or sale
shall be excluded from the calculation pursuant to clause (c)(2)
above;
(c) purchase, repurchase, redeem, legally defease, acquire or retire
for value any Subordinated Obligations on or after February 12, 2003 in
exchange for, or out of the proceeds of the substantially concurrent sale
of, Permitted Refinancing Debt; provided, however, that such purchase,
-------- -------
repurchase, redemption, legal defeasance, acquisition or retirement shall
be excluded in the calculation of the amount of Restricted Payments;
(d) so long as no Default or Event of Default shall have occurred or
be continuing, declare and pay dividends to the holders of Series D
Preferred Stock, Class A Cumulative Preferred Stock, Class C Cumulative
Preferred Stock and Class D Cumulative Preferred Stock outstanding on
February 12, 2003 or issued after February 12, 2003 solely in payment of
dividends on the same class of stock; provided, however, that such
dividends shall be included in the calculation of the amount of Restricted
Payments;
(e) so long as no Default or Event of Default has occurred and is
continuing the repurchase or other acquisition on or after February 12,
2003 of shares of or options to purchase shares of, Capital Stock of the
Company or any of its Subsidiaries from employees, former employees,
directors or former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees, directors or
former directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by the
Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital Stock;
provided, however, that the aggregate amount of such repurchases and other
acquisitions shall not exceed $10 million; provided further, however, that
such repurchases and other acquisitions shall be included in the
calculation of the amount of Restricted Payments;
(f) make payments not to exceed $1 million in the aggregate to enable
the Company to make payments to holders of its Capital Stock in lieu of the
issuance of
48
fractional shares of its Capital Stock on or after February 12, 2003;
provided, however, that such payments shall be included in the calculation
of the amount of Restricted Payments; and
(g) make any other Restricted Payments on or after February 12, 2003
not to exceed an aggregate amount of $25 million; provided, however, that
such payments shall be included in the calculation of the amount of
Restricted Payments.
SECTION 4.05. Limitation on Liens. The Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer
to exist, any Lien (other than Permitted Liens) upon any of its Property
(including Capital Stock of a Restricted Subsidiary), whether owned at February
12, 2003 or thereafter acquired, or any interest therein or any income or
profits therefrom. If the Company or any Subsidiary Guarantor creates any
additional Lien upon any Property to secure any Secured Obligations, it must
concurrently grant a second priority Lien (subject to Permitted Liens) upon such
Property as security for the Securities or Subsidiary Guarantees of the
Securities such that the Property subject to such Lien becomes Second Priority
Collateral subject to the Second Priority Liens, except (a) to the extent the
terms of the 12.5% Notes as in effect on the Issue Date require, with respect to
proceeds of Collateral Dispositions and (b) to the extent such Property
constitutes cash or cash equivalents required to secure only letter of credit
obligations under Credit Facilities following a default under such Credit
Facilities.
Notwithstanding anything in the preceding paragraph, (1) (A) the
aggregate principal amount of all Secured Debt at any one time outstanding under
clauses (a), (b), (l) and (s) (as it relates to clauses (a)) of Section 4.03
shall not exceed the aggregate amount of Debt that at such time may be
outstanding at any one time under such clauses (b) and (l) and (B) the aggregate
principal amount of Senior Obligations constituting Debt and any other Debt
secured by a Lien on the Collateral that shares in the distribution of proceeds
of Collateral prior to the Securities, at any one time outstanding shall not
exceed the sum of the aggregate amount of Debt that at such time may be
outstanding at any one time under such clause (b) and $200 million; and (2) the
Company shall not, and shall not permit any of its Subsidiaries to, create or
suffer to exist any Lien upon any of the Collateral (including Collateral
consisting of Capital Stock or Debt of any Subsidiary of the Company) now owned
or hereafter acquired by it securing any Public Debt unless the holders of such
Public Debt share in the distribution of proceeds from the foreclosure on
Collateral either (A) on an equal and ratable basis with the holders of the
Senior Obligations or (B) on an equal and ratable basis with the Holders (and
any other obligations that share on an equal and ratable basis with the
Holders).
SECTION 4.06. Limitation on Asset Sales and Specified Collateral
Dispositions. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Sale unless:
(a) the Company or such Restricted Subsidiary receives consideration
at the time of such Asset Sale at least equal to the Fair Market Value of
the Property subject to such Asset Sale;
49
(b) at least 75% of the consideration paid to the Company or such
Restricted Subsidiary in connection with such Asset Sale is in the form of
Qualified Consideration; and
(c) the Company delivers an Officers' Certificate to the Trustee
certifying that such Asset Sale complies with the foregoing clauses (a) and
(b).
The Net Available Cash (or any portion thereof) from Asset Sales and
Specified Collateral Dispositions may be applied by the Company or a Restricted
Subsidiary, to the extent the Company or such Restricted Subsidiary elects (or
is required by the terms of any Debt):
(a) to Repay the Secured Obligations (or, to the extent required by
the terms of the 12.5% Notes (but only to the extent the terms as in effect
on February 12, 2003 would have so required) with respect to proceeds of
Specified Collateral Dispositions, to provide for such Repayment) or any
other Debt of the Company or any Restricted Subsidiary secured by a Lien on
Property of the Company or any Restricted Subsidiary of the Company
(excluding, in any such case, any Debt owed to the Company or an Affiliate
of the Company); provided, however, that to the extent the proceeds from a
Specified Collateral Disposition will be allocated pursuant to the terms of
any other Second Priority Debt Obligations to Repay or provide for the
Repayment of such Second Priority Debt Obligations, a pro rata portion of
such proceeds must, to the extent not inconsistent with the terms of such
other Second Priority Debt Obligations, be allocated to Repay the
Securities pursuant to an Asset Sales Prepayment Offer and the full amount
of such allocated portion (1) will be deemed Excess Proceeds and (2) will,
upon such Asset Sales Prepayment Offer, be deemed Allocable Excess
Proceeds; or
(b) to reinvest in Additional Assets or Expansion Capital Expenditures
(including by means of an Investment in Additional Assets or Expansion
Capital Expenditures by a Restricted Subsidiary with Net Available Cash
received by the Company or another Restricted Subsidiary); provided,
however, that (1) the Net Available Cash (or any portion thereof) from
Asset Sales from the Company to any Subsidiary must be reinvested in
Additional Assets or Expansion Capital Expenditures of the Company and (2)
if the assets that were the subject of such Asset Disposition constituted
Collateral, then such Net Available Cash must be reinvested in Additional
Assets that are pledged at the time as Collateral to secure the Securities
or Subsidiary Guarantees of the Securities, subject to the Collateral
Documents, or in Expansion Capital Expenditures to improve assets that
constitute Collateral securing the Securities or Subsidiary Guarantees of
the Securities at the time.
Pending application of Net Available Cash pursuant to this Section
4.06, which shall not be required in respect of an Asset Sale that is not a
Specified Collateral Disposition if the Net Available Cash from such Asset Sale
is less than $1 million, such Net Available Cash shall be invested in Temporary
Cash Investments or applied to temporarily reduce revolving credit indebtedness.
If the Net Available Cash from an Asset Sale that is not a Specified Collateral
Disposition equals or exceeds $1 million, any Net Available Cash from such Asset
Sale not applied in accordance with the preceding paragraph within 270
50
days from the date of the receipt of such Net Available Cash or that is not
segregated from the general funds of the Company for investment in identified
Additional Assets in respect of a project that shall have been commenced, and
for which binding contractual commitments have been entered into, prior to the
end of such 270-day period and that shall not have been completed or abandoned
shall constitute "Excess Proceeds"; provided, however, that the amount of any
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Net Available Cash that ceases to be so segregated as contemplated above and any
Net Available Cash that is segregated in respect of a project that is abandoned
or completed shall also constitute "Excess Proceeds" at the time any such Net
Available Cash ceases to be so segregated or at the time the relevant project is
so abandoned or completed, as applicable; provided further, however, that the
amount of any Net Available Cash that continues to be segregated for investment
and that is not actually reinvested within 24 months from the date of the
receipt of such Net Available Cash shall also constitute "Excess Proceeds".
When the aggregate amount of Excess Proceeds exceeds $20.0 million
(taking into account income earned on such Excess Proceeds, if any), the Company
will be required to make an offer to purchase (the "Asset Sales Prepayment
Offer") the Securities which offer shall be in the amount of the Allocable
Excess Proceeds, on a pro rata basis according to principal amount at maturity,
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth herein. To the extent that
any portion of the amount of Net Available Cash remains after compliance with
the preceding sentence and provided that all Holders have been given the
opportunity to tender their Securities for purchase in accordance with this
Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by this Indenture and the amount of Excess
Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" will mean the product of:
(a) the Excess Proceeds; and
(b) a fraction,
(1) the numerator of which is the aggregate principal amount of
the Securities outstanding on the date of the Asset Sales Prepayment
Offer; and
(2) the denominator of which is the sum of the aggregate
principal amount of the Securities outstanding on the date of the
Asset Sales Prepayment Offer and the aggregate principal amount of
other Debt of the Company outstanding on the date of the Asset Sales
Prepayment Offer that is pari passu in right of payment with the
Securities and subject to terms and conditions in respect of Asset
Sales similar in all material respects to this covenant and requiring
the Company to make an offer to purchase such Debt or otherwise repay
such Debt at substantially the same time as the Asset Sales Prepayment
Offer.
51
Within five Business Days after the Company is obligated to make an
Asset Sales Prepayment Offer as described in the preceding paragraph, the
Company shall send a written notice, by first-class mail, to the Holders,
accompanied by such information regarding the Company and its Subsidiaries as
the Company in good faith believes will enable such Holders to make an informed
decision with respect to such Asset Sales Prepayment Offer. Such notice shall
state, among other things, the purchase price and the purchase date (the
"Purchase Date"), which shall be, subject to any contrary requirements of
applicable law, a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed.
Not later than the date upon which written notice of an Asset Sales
Prepayment Offer is delivered to the Trustee as provided above, the Company
shall deliver to the Trustee an Officers' Certificate as to (a) the amount of
the Asset Sales Prepayment Offer (the "Offer Amount"), (b) the allocation of the
Net Available Cash from the Asset Sales pursuant to which such Prepayment Offer
is being made and (c) the compliance of such allocation with the provisions of
clause (b) of the second paragraph of this Section 4.06. On or before the
Purchase Date, the Company shall also irrevocably deposit with the Trustee or
with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the
Paying Agent, shall segregate and hold in trust) in Temporary Cash Investments
(other than in those enumerated in such clause (b) of the definition of
Temporary Cash Investments), maturing on the last day prior to the Purchase Date
or on the Purchase Date if funds are immediately available by open of business,
an amount equal to the Offer Amount to be held for payment in accordance with
the provisions of this Section 4.06. Upon the expiration of the period for which
the Prepayment Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancellation the Securities or portions thereof that
have been properly tendered to and are to be accepted by the Company. The
Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price. In the event that
the aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall
deliver the excess to the Company immediately after the expiration of the Offer
Period for application in accordance with this Section 4.06.
Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
or its agent at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security that was
delivered for purchase by the Holder and a statement that such Xxxxxx is
withdrawing its election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis for all Securities (with such adjustments as may
be deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part shall be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
52
At the time the Company delivers Securities to the Trustee that are to
be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.06. A Security
shall be deemed to have been accepted for purchase at the time the Trustee or
the Paying Agent mails or delivers payment therefor to the surrendering Holder.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and 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 will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.06 by virtue
thereof.
SECTION 4.07. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist any consensual restriction on the right of any Restricted
Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or
other obligation owed, to the Company or any other Restricted Subsidiary;
(b) make any loans or advances to the Company or any other Restricted
Subsidiary; or
(c) transfer any of its Property to the Company or any other
Restricted Subsidiary.
The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c), to restrictions:
(A) in effect on the Issue Date;
(B) relating to Debt of a Restricted Subsidiary and existing
at the time it became a Restricted Subsidiary if such restriction
was not created in connection with or in anticipation of the
transaction or series of transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company;
(C) that result from the Refinancing of Debt Incurred
pursuant to an agreement referred to in clause (1)(A) or (B)
above or in clause (2)(A) or (B) below, provided such restriction
is no less favorable to the Holders in any material respect, as
reasonably determined by the Board of Directors (as evidenced by
a Board Resolution), than those under the agreement evidencing
the Debt so Refinanced;
53
(D) resulting from the Incurrence of any Debt permitted
pursuant to Section 4.03, provided that (i) the restriction is no
--------
less favorable to the Holders in any material respect, as
reasonably determined by the Board of Directors (as evidenced by
a Board Resolution), than the restrictions of the same type
contained in this Indenture and (ii) the Board of Directors
determines (as evidenced by a Board Resolution) in good faith
that such restrictions will not impair the ability of the Company
to make payments of principal and interest on the Securities when
due;
(E) existing by reason of applicable law; or
(F) any contractual requirements incurred with respect to
Qualified Receivables Transactions relating exclusively to a
Receivables Entity that, in the good faith determination of the
Board of Directors, are customary for Qualified Receivables
Transactions; and
(2) with respect to clause (c) only, to restrictions:
(A) relating to Debt that is permitted to be Incurred and
secured pursuant to Sections 4.03 and 4.05 that limit the right
of the debtor to dispose of the Property securing such Debt;
(B) encumbering Property at the time such Property was
acquired by the Company or any Restricted Subsidiary, so long as
such restriction relates solely to the Property so acquired and
was not created in connection with or in anticipation of such
acquisition;
(C) resulting from customary provisions restricting
subletting or assignment of leases or customary provisions in
other agreements that restrict assignment of such agreements or
rights thereunder; or
(D) customary restrictions contained in agreements relating
to the sale or other disposition of Property limiting the
transfer of such Property pending the closing of such sale.
SECTION 4.08. Limitation on Transactions with Affiliates. The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, conduct any business or enter into or suffer to exist any
transaction or series of transactions (including the purchase, sale, transfer,
assignment, lease, conveyance or exchange of any Property or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction"), unless:
(a) the terms of such Affiliate Transaction are:
(1) set forth in writing;
(2) in the best interest of the Company or such Restricted
Subsidiary, as the case may be; and
54
(3) no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained in a
comparable arm's-length transaction with a Person that is not an
Affiliate of the Company;
(b) if such Affiliate Transaction involves aggregate payments or value
to the Affiliate in excess of $25.0 million in any 12-month period, the
Board of Directors (including a majority of the disinterested members of
the Board of Directors) approves such Affiliate Transaction and, in its
good faith judgment, believes that such Affiliate Transaction complies with
clauses (a)(2) and (3) of this Section 4.08 as evidenced by a Board
Resolution promptly delivered to the Trustee; and
(c) if such Affiliate Transaction involves aggregate payments or value
to the Affiliate in excess of $50.0 million in any 12-month period, the
Company obtains a written opinion from an Independent Financial Advisor to
the effect that the consideration to be paid or received in connection with
such Affiliate Transaction is fair, from a financial point of view, to the
Company and the Restricted Subsidiaries, taken as a whole.
Notwithstanding the foregoing limitation, the Company or any
Restricted Subsidiary may enter into or suffer to exist the following:
(a) any transaction or series of transactions between the Company and
one or more Restricted Subsidiaries or between two or more Restricted
Subsidiaries in the ordinary course of business, provided that no more than
5% of the total voting power of the Voting Stock (on a fully diluted basis)
of any such Restricted Subsidiary is owned by an Affiliate of the Company
(other than a Restricted Subsidiary);
(b) any Restricted Payment permitted to be made pursuant to Section
4.04 or any Permitted Investment (other than pursuant to clauses (a)(3),
(b), (g), (h), (i), (k) or (l) of the definition of "Permitted
Investment");
(c) the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of and related
indemnities provided to officers, directors, consultants and employees of
the Company or any of the Restricted Subsidiaries, so long as the Board of
Directors in good faith shall have approved the terms thereof and deemed
the services theretofore or thereafter to be performed for such
compensation to be fair consideration therefor;
(d) loans and advances to employees made in the ordinary course of
business and consistent with the past practices of the Company or such
Restricted Subsidiary, as the case may be, provided that such loans and
advances do not exceed $25 million in the aggregate at any one time
outstanding;
(e) any transaction effected as part of a Qualified Receivables
Transaction or any transaction involving the transfer of accounts
receivable of the type specified in the definition of "Credit Facilities"
and permitted under clause (b) of Section 4.03;
(f) payments of customary fees by the Company or any of its Restricted
Subsidiaries to Xxxxxxx Xxxxx & Partners L.P. or any of its Affiliates made
for any
55
corporate advisory services or financial advisory, financing, underwriting
or placement services or in respect of other investment banking activities
including in connection with acquisitions or divestitures, which are
approved by a majority of the Board of Directors in good faith;
(g) if such Affiliate Transaction is with any Person solely in its
capacity as a holder of Debt or Capital Stock of the Company or any of its
Restricted Subsidiaries, where such Person is treated no more favorably
than any other holder of such Debt or Capital Stock of the Company or any
of its Restricted Subsidiaries; and
(h) any agreement as in effect on the Issue Date or any amendment
thereto (so long as such amendment is not disadvantageous to the Holders in
any material respect) or any transaction contemplated thereby.
SECTION 4.09. Guarantees by Subsidiaries. (a) The Company shall cause
each Subsidiary that becomes or is a Collateral Subsidiary Guarantor or an
obligor with respect to any of the Secured Obligations (except a Foreign
Subsidiary that becomes an obligor solely in respect of Debt or other
obligations of itself or another Foreign Subsidiary), in each case, to become a
Subsidiary Guarantor by becoming a party to this Indenture, the Second Priority
Subsidiary Guarantee Agreement and the Intercreditor Agreement, if such
Subsidiary is not already a Subsidiary Guarantor party thereto, and delivering
evidence thereof to the Trustee at the time such Person becomes a Collateral
Subsidiary Guarantor or such an obligor.
(b) The Company shall not permit any Restricted Subsidiary that is not
a Subsidiary Guarantor to Guarantee the payment of any Debt or Capital Stock of
the Company (other than Guarantees permitted pursuant to clauses (j) or (o) of
Section 4.03), except that a Restricted Subsidiary that is not a Subsidiary
Guarantor may Guarantee Debt of the Company, provided that:
(1) such Debt and the Debt represented by such Guarantee is
permitted by Section 4.03;
(2) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to this Indenture providing for a
Guarantee of payment of the Securities by such Restricted Subsidiary
and such Guarantee of Debt of the Company:
(A) unless such Debt is a Subordinated Obligation, shall be
pari passu (or subordinate) in right of payment to and on
substantially the same terms as (or less favorable to such Debt
than) such Restricted Subsidiary's Guarantee with respect to the
Securities; and
(B) if such Debt is a Subordinated Obligation, shall be
subordinated in right of payment to such Restricted Subsidiary's
Guarantee with respect to the Securities to at least the same
extent as such Debt is subordinated to the Securities.
56
(c) Upon any Subsidiary becoming a Subsidiary Guarantor as described
above, such Subsidiary shall deliver to the Trustee an Opinion of Counsel to the
effect that:
(1) such Guarantee of the Securities has been duly executed and
authorized; and
(2) such Guarantee of the Securities constitutes a valid, binding
and enforceable obligation of such Subsidiary, except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or
similar laws (including all laws relating to fraudulent transfers) and
except insofar as enforcement thereof is subject to general principles
of equity.
In addition, no Subsidiary Guarantor shall Guarantee, directly or
indirectly, (1) any Debt of the Company that is subordinate or junior in right
of payment to any other Debt of the Company unless such Guarantee is expressly
subordinate in right of payment to the Subsidiary Guarantee of such Subsidiary
Guarantor or (2) any Debt of the Company other than Senior Obligations unless
such Guarantee is expressly subordinate in right of payment to or ranks pari
passu with, the Subsidiary Guarantee of such Subsidiary Guarantor.
SECTION 4.10. Limitation on Sale and Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale and Leaseback Transaction with respect to any Property unless:
(a) the Company or such Restricted Subsidiary would be entitled to:
(1) Incur Debt in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction pursuant to Section
4.03; and
(2) create a Lien on such Property securing such Attributable
Debt without also securing the Securities or the applicable Subsidiary
Guarantee pursuant to Section 4.05; and
(b) such Sale and Leaseback Transaction is effected in compliance with
Section 4.06, provided that such Sale and Leaseback Transaction constitutes
an Asset Sale.
SECTION 4.11. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Subsidiary of the Company to be an
Unrestricted Subsidiary if:
(a) the Subsidiary to be so designated does not own any Capital Stock
or Debt of, or own or hold any Lien on any Property of, the Company or any
other Restricted Subsidiary and is not required to be a Subsidiary
Guarantor pursuant to this Indenture; and
(b) either:
(1) the Subsidiary to be so designated has total assets of $1,000
or less; or
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(2) such designation is effective immediately upon such entity
becoming a Subsidiary of the Company.
Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company will be classified as a Restricted
Subsidiary; provided, however, that such Subsidiary shall not be designated a
Restricted Subsidiary and shall be automatically classified as an Unrestricted
Subsidiary if either of the requirements set forth in clauses (x) and (y) of the
second immediately following paragraph will not be satisfied after giving pro
forma effect to such classification as a Restricted Subsidiary or if such Person
is a Subsidiary of an Unrestricted Subsidiary.
Except as provided in the first sentence of the second preceding
paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder thereof may (with the passage of time or notice or both) declare a
default thereon or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity upon the occurrence of a default with respect to any
Debt, Lien or other obligation of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary).
The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary if, immediately after giving pro forma effect to such
designation, (x) the Company could Incur at least $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of Section 4.03 and (y) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom.
Any such designation or redesignation by the Board of Directors will
be evidenced to the Trustee by filing with the Trustee a Board Resolution giving
effect to such designation or redesignation and an Officers' Certificate that:
(a) certifies that such designation or redesignation complies with the
foregoing provisions; and
(b) gives the effective date of such designation or redesignation,
such filing with the Trustee to occur within 45 days after the end of the fiscal
quarter of the Company in which such designation or redesignation is made (or,
in the case of a designation or redesignation made during the last fiscal
quarter of the Company's fiscal year, within 90 days after the end of such
fiscal year).
SECTION 4.12. Additional Security Documents. From and after the Issue
Date, if the Company or any Subsidiary of the Company executes and delivers in
respect of any Property of such Person any mortgages, deeds of trust, security
agreements, pledge agreements or similar instruments to secure Debt or other
obligations that at the time constitute Secured Obligations (except for a
Foreign Subsidiary that does so solely in respect of Debt or other obligations
of itself or another Foreign Subsidiary), then the Company shall, or shall cause
such Subsidiary to, execute and deliver substantially identical mortgages, deeds
of trust, security agreements, pledge agreements or similar instruments in order
to vest in the Second Priority Collateral Trustee a perfected second priority
security interest, subject
58
only to Permitted Liens and the Intercreditor Agreement, in such Property for
the benefit of the Second Priority Collateral Trustee on behalf of the holders
of the Securities, among others, and thereupon all provisions of this Indenture
relating to the Collateral will be deemed to relate to such Property to the same
extent and with the same force and effect.
SECTION 4.13. Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require the Company to
repurchase all or any part of such Xxxxxx's Securities pursuant to the offer
described below (the "Change of Control Offer") at a purchase price (the "Change
of Control Purchase Price") equal to 101.0% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the purchase date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date). If the purchase date is on or after a
record date and on or before the relevant interest payment date, the accrued and
unpaid interest, if any, will be paid to the person or entity in whose name the
Security is registered at the close of business on that record date, and no
additional interest will be payable to Holders whose Securities shall be subject
to redemption.
(b) Within 30 days following any Change of Control, the Company shall
(1) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Xxxxx News Service or similar business news service in the
United States and (2) send, by first-class mail, with a copy to the
Trustee, to each Holder, at such Holder's address appearing in the Security
Register, a notice stating: (A) that a Change of Control Offer is being
made pursuant to this Section 4.13 and that all Securities timely tendered
will be accepted for payment; (B) the Change of Control Purchase Price and
the purchase date, which shall be, subject to any contrary requirements of
applicable law, a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed (the "Change of Control Payment
Date"); (C) the circumstances and relevant facts regarding the Change of
Control (including, to the extent reasonably practicable, information with
respect to pro forma historical income, cash flow and capitalization after
giving effect to the Change of Control); and (D) the procedures that
Holders must follow in order to tender their Securities (or portions
thereof) for payment and the procedures that Holders must follow in order
to withdraw an election to tender Securities (or portions thereof) for
payment.
(c) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the
Company or its agent at the address specified in the notice at least three
Business Days prior to the Change of Control Payment Date. Holders shall be
entitled to withdraw their election if the Trustee or the Company receives
not later than one Business Day prior to the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security that was delivered
for purchase by the Holder and a statement that such Xxxxxx is withdrawing
its election to have such Security purchased.
(d) On or prior to the Change of Control Payment Date, the Company
shall irrevocably deposit with the Trustee or with the Paying Agent (or, if
the Company or any of its Wholly Owned Subsidiaries is acting as the Paying
Agent, segregate and hold in trust) in cash an amount equal to the Change
of Control Purchase Price
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payable to the Holders entitled thereto, to be held for payment in
accordance with the provisions of this Section 4.13. On the Change of
Control Payment Date, the Company shall deliver to the Trustee the
Securities or portions thereof that have been properly tendered to and are
to be accepted by the Company for payment. The Trustee or the Paying Agent
shall, on the Change of Control Payment Date, mail or deliver payment to
each tendering Holder of the Change of Control Purchase Price. In the event
that the aggregate Change of Control Purchase Price is less than the amount
delivered by the Company to the Trustee or the Paying Agent, the Trustee or
the Paying Agent, as the case may be, shall deliver the excess to the
Company immediately after the Change of Control Payment Date.
(e) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant
to this Section 4.13. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.13, the
Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this Section 4.13
by virtue thereof.
SECTION 4.14. Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.15. Covenant Suspension. (a) During any period of time that:
(1) the Securities have Investment Grade Ratings from both Rating
Agencies and
(2) no Default or Event of Default has occurred and is
continuing,
the Company and the Restricted Subsidiaries will not be subject to the following
Sections of this Indenture: Section 4.03, Section 4.04, Section 4.06, Section
4.07, Section 4.08, clauses (a)(1) and (b) of Section 4.10, clause (x) of the
fourth paragraph (and such clause (x) as referred to in the second paragraph) of
Section 4.11, and clause (a)(5) of Section 5.01 (collectively, the "Suspended
Covenants").
(b) Solely for the purpose of determining the amount of permitted
Liens under Section 4.05 during any Suspension Period (as defined below)
and without limiting the Company's or any Restricted Subsidiary's ability
to Incur Indebtedness during any Suspension Period, to the extent that
calculations in Section 4.05 refer to Section 4.03, such calculations shall
be made as though Section 4.03 remains in effect during the Suspension
Period. In the event that the Company and the Restricted Subsidiaries are
not subject to the Suspended Covenants for any period of time as a result
of paragraph (a) of this Section 4.15 and, on any subsequent date (the
"Reversion Date "), one or both of the Rating Agencies withdraws its
ratings or downgrades the ratings assigned to the Securities below the
required Investment Grade Ratings or a Default or Event of Default occurs
and is continuing, then the
60
Company and the Restricted Subsidiaries will thereafter again be subject to
the Suspended Covenants. The period of time between the Suspension Date and
the Reversion Date is referred to as the "Suspension Period."
Notwithstanding that the Suspended Covenants may be reinstated, no Default
will be deemed to have occurred as a result of a failure to comply with the
Suspended Covenants during the Suspension Period. On the Reversion Date,
all Debt Incurred during the Suspension Period will be classified to have
been Incurred pursuant to clause (1) of the first paragraph or one of the
clauses set forth in the second paragraph of Section 4.03 (to the extent
such Debt would be permitted to be Incurred thereunder as of the Reversion
Date and after giving effect to Debt Incurred prior to the Suspension
Period and outstanding on the Reversion Date). To the extent such Debt
would not be permitted to be Incurred pursuant to clause (1) of the first
paragraph or one of the clauses set forth in the second paragraph of
Section 4.03, such Debt will be deemed to have been outstanding on February
12, 2003, so that it is classified as permitted under clause (k) of the
second paragraph of Section 4.03. Calculations made after the Reversion
Date of the amount available to be made as Restricted Payments under
Section 4.04 will be made as though Section 4.04 had been in effect during
the entire period of time from February 12, 2003. Accordingly, Restricted
Payments made during the Suspension Period will reduce the amount available
to be made as Restricted Payments under the first paragraph of Section 4.04
following any Reversion Date, and the items specified in clauses (c)(1)
through (c)(4) of the first paragraph of Section 4.04 will increase the
amount available to be made under the first paragraph thereof following any
Reversion Date. For purposes of determining compliance with the first five
paragraphs of Section 4.06, on the Reversion Date, the Net Available Cash
from all Asset Sales not applied in accordance with the covenant will be
deemed to be reset to zero.
ARTICLE V
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The
Company shall not merge, consolidate or amalgamate with or into any other Person
(other than a merger of a Wholly Owned Restricted Subsidiary into the Company)
or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of transactions
unless:
(1) the Company will be the surviving Person (the "Surviving
Person") or the Surviving Person (if other than the Company) formed by
such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made will be
a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
(2) the Surviving Person (if other than the Company) expressly
assumes, by supplemental indenture in form satisfactory to the
Trustee, executed and delivered to the Trustee by such Surviving
Person, the due and punctual payment of the principal of, and premium,
if any, and interest on, all the
61
Securities, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this
Indenture to be performed by the Company;
(3) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the
Property of the Company, such Property shall have been transferred as
an entirety or virtually as an entirety to one Person;
(4) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating, for purposes of this clause (4) and clause (5) below, any
Debt that becomes, or is anticipated to become, an obligation of the
Surviving Person or any Restricted Subsidiary as a result of such
transaction or series of transactions as having been Incurred by the
Surviving Person or such Restricted Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing;
(5) immediately after giving effect to such transaction or series
of transactions on a pro forma basis, either (A) the Company or the
Surviving Person, as the case may be, would be able to Incur at least
$1.00 of additional Debt under clause (1) of the first paragraph of
Section 4.03 or (B) the Surviving Person would have a Consolidated
Interest Coverage Ratio which is not less than the Consolidated
Interest Coverage Ratio of the Company immediately prior to such
transaction or series of transactions; and
(6) the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee,
an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction and the supplemental indenture, if any, in respect
thereto comply with this covenant and that all conditions precedent
herein provided for relating to such transaction have been satisfied.
(b) The Company shall not permit any Subsidiary Guarantor to merge,
consolidate or amalgamate with or into any other Person (other than a
merger of a Wholly Owned Restricted Subsidiary into such Subsidiary
Guarantor, or a merger of a Subsidiary Guarantor into the Company or
another Subsidiary Guarantor) or sell, transfer, assign, lease, convey or
otherwise dispose of all or substantially all its Property in any one
transaction or series of transactions unless:
(1) such Subsidiary Guarantor will be the Surviving Person or the
Surviving Person (if other than such Subsidiary Guarantor) formed by
such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made will be
a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
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(2) the Surviving Person (if other than such Subsidiary
Guarantor) expressly assumes, by a Subsidiary Guarantee or a
supplement to the Second Priority Subsidiary Guarantee Agreement or a
supplemental indenture in form satisfactory to the Trustee, executed
and delivered to the Trustee by such Surviving Person, the due and
punctual performance and observance of all the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee;
(3) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating, for purposes of this clause (3), any Debt that becomes, or
is anticipated to become, an obligation of the Surviving Person, the
Company or any Restricted Subsidiary as a result of such transaction
or series of transactions as having been Incurred by the Surviving
Person, the Company or such Restricted Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing; and
(4) the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee,
an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction and such Subsidiary Guarantee, if any, in respect
thereto comply with this covenant and that all conditions precedent
herein provided for relating to such transaction have been satisfied.
The foregoing provisions (other than clause (3)) shall not apply to
(A) any transactions which do not constitute an Asset Sale if the Subsidiary
Guarantor is otherwise being released from its Subsidiary Guarantee at the time
of such transaction in accordance with this Indenture and the Second Priority
Collateral Documents or (B) any transactions which constitute an Asset Sale if
the Company has complied with Section 4.06 and the Subsidiary Guarantor is
released from its Subsidiary Guarantee at the time of such transaction in
accordance with this Indenture and the Second Priority Collateral Documents.
The Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of the Company under this Indenture (or of the
Subsidiary Guarantor under the Subsidiary Guarantee, as the case may be), but
the predecessor Company in the case of:
(a) a sale, transfer, assignment, conveyance or other disposition
(unless such sale, transfer, assignment, conveyance or other disposition is
of all the assets of the Company as an entirety or virtually as an
entirety); or
(b) a lease,
shall not be released from any obligation to pay the principal of, premium, if
any, and interest on, the Securities.
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ARTICLE VI
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. The following events shall be "Events
of Default":
(a) the Company fails to make the payment of any interest on any of
the Securities when the same becomes due and payable, and such failure
continues for a period of 30 days;
(b) the Company fails to make the payment of any principal of, or
premium, if any, on any of the Securities when the same becomes due and
payable at its Stated Maturity, upon acceleration, redemption, optional
redemption, required repurchase or otherwise;
(c) the Company fails to comply with Article V;
(d) the Company fails to comply with any covenant or agreement in the
Securities or in this Indenture (other than a failure that is the subject
of the foregoing clauses (a), (b) or (c)) and such failure continues for 30
days after written notice is given to the Company as provided below;
(e) a default under any Debt by the Company or any Restricted
Subsidiary that results in acceleration of the final maturity of such Debt,
or the failure to pay any such Debt at final maturity (giving effect to
applicable grace periods), in an aggregate amount in excess of $35,000,000
or its foreign currency equivalent at the time (the "cross acceleration
provisions");
(f) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(1) commences a voluntary case;
(2) consents to the entry of an order for relief against it in an
involuntary case;
(3) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(4) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(1) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
64
(2) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(3) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
and in each such case the order or decree remains unstayed and in effect
for 45 days; or
(h) any judgment or judgments for the payment of money in an aggregate
amount in excess of $35,000,000 or its foreign currency equivalent at the
time is rendered against the Company or any Restricted Subsidiary and shall
not be waived, satisfied or discharged for any period of 30 consecutive
days during which a stay of enforcement shall not be in effect;
(i) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guarantee and
this Indenture) and such default continues for 10 days after notice or any
Subsidiary Guarantor denies or disaffirms its obligations under its
Subsidiary Guarantee (the "guarantee provisions");
(j) the material impairment of the security interests under the Second
Priority Collateral Documents (other than in accordance with the terms of
the Second Priority Collateral Documents and this Indenture as each may be
amended from time to time) for any reason other than the satisfaction in
full of all obligations under this Indenture and discharge of the Second
Priority Collateral Documents and this Indenture or any security interest
created thereunder shall be declared invalid or unenforceable or the
Company or any of its Subsidiaries asserting, in any pleading in any court
of competent jurisdiction, that any such security interest is invalid or
unenforceable (the "security default provisions"); and
(k) for so long as the 12.5% Notes remain outstanding, a default under
clause (9) or (10) of the definition of "Event of Default" under the
Indenture governing the 12.5% Notes that is not cured or waived in
accordance with the terms thereof.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (d), (i) or (j) is not an Event of Default
until the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities then outstanding notify the Company (and in the case of
such notice by Holders, the Trustee) of the Default and the Company does not
cure such Default within the time specified after
65
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event that with the giving of notice or the lapse of time would become an
Event of Default, its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default with respect to the
Securities (other than an Event of Default specified in Section 6.01(f) or
6.01(g) with respect to the Company) shall have occurred and be continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Securities then outstanding by notice to the
Company and the Trustee, may declare to be immediately due and payable the
principal amount at maturity of all the Securities then outstanding, plus
accrued but unpaid interest to the date of acceleration on all the Securities to
be due and payable. Upon such a declaration, such principal and interest shall
be due and payable immediately. If an Event of Default specified in Section
6.01(f) or 6.01(g) with respect to the Company occurs, the principal of and
accrued and unpaid interest on all the Securities shall, automatically and
without any action by the Trustee or any Holder, become and be immediately due
and payable. The Holders of a majority in aggregate principal amount of the
outstanding Securities by notice to the Trustee and the Company may rescind and
annul such declaration of acceleration if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal, premium or interest that has become due
solely because of the acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the principal of, premium, if any, or interest on a Security
or (ii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder affected. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
aggregate principal amount of the Securities then outstanding may direct the
time, method and place of
66
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee with respect to the
Securities. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01, that the
Trustee determines is unduly prejudicial to the rights of other Holders or would
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action or following any direction
hereunder, the Trustee shall be entitled to reasonable indemnification against
all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:
(1) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of
the Securities then outstanding shall have made a written request, and
such Holder of or Holders shall have offered reasonable indemnity, to
the Trustee to pursue a remedy; and
(3) the Trustee has failed to institute such proceeding and has
not received from the Holders of at least a majority in aggregate
principal amount of the Securities outstanding a direction
inconsistent with such request, within 60 days after such notice,
request and offer.
The foregoing limitations on the pursuit of remedies by a Holder shall
not apply to a suit instituted by a Holder for the enforcement of payment of the
principal of and premium, if any, or interest on such Security on or after the
applicable due date specified in such Security. A Holder may not use this
Indenture to prejudice the rights of another Holder or to obtain a preference or
priority over another Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable
67
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10. At least 15 days before such record date,
the Company shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in aggregate principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 6.13. Enforcement of Remedies. Notwithstanding any of the
foregoing, any enforcement of the Guarantees under the Second Priority Guarantee
Agreement or any remedies with respect to the Second Priority Collateral under
the Second Priority Collateral Documents is subject to the provisions of the
Intercreditor Agreement.
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ARTICLE VII
Trustee
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SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Xxxxxx's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers.
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(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA, and
the provisions of this Article VII shall apply to the Trustee in its role as
Registrar, Paying Agent and Security Custodian.
(i) The Trustee shall not be deemed to have notice of a Default or an
Event of Default unless (a) the Trustee has received written notice thereof from
the Company or any Holder or (b) a Trust Officer shall have actual knowledge
thereof.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document. The Trustee may, however, in its discretion make such further
inquiry or investigation into such facts or matters as it may see fit and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care and with
the consent of the Company.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its rights or
powers; provided, however, that, subject to paragraph (b) of Section 7.01, the
Trustee's conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty unless so specified herein.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity, priority or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture
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or in any document issued in connection with the sale of the Securities or in
the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Holder notice of the Default or Event of Default within 30 days
after it is known to a Trust Officer or written notice of it is received by the
Trustee. Except in the case of a Default or Event of Default in payment of
principal of or interest on any Security, the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
February 1 each year beginning with February 1, 2005, the Trustee shall mail to
each Holder a brief report dated as of such February 1 that complies with TIA
ss. 313(a), if and to the extent required by such subsection. The Trustee shall
also comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Holders shall be
filed with the Commission and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees) incurred by it in
connection with the acceptance and administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations hereunder
unless the Company has been prejudiced thereby. The Company shall defend the
claim, and the Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
The Company need not pay for any settlement made by the Trustee without the
Company's consent, such consent not to be unreasonably withheld. All
indemnifications and releases from liability granted hereunder to the Trustee
shall extend to its officers, directors, employees, agents, successors and
assigns.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
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The Company's payment obligations pursuant to this Section 7.07 shall
survive the resignation or removal of the Trustee and the discharge of this
Indenture. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(f) or (g) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in aggregate
principal amount of the Securities the outstanding may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee, provided that so long
as no Default or Event of Default has occurred and is continuing, the Company
shall have the right to consent to the successor Trustee, such consent not to be
unreasonably withheld. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders
of a majority in aggregate principal amount of the Securities then outstanding,
and such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in aggregate principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder who has
been a bona fide Holder of a Security for at least six months may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
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SECTION 7.09. Successor Trustee by Xxxxxx. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
such successor to the Trustee may authenticate such Securities either in the
name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have (or, in
the case of a corporation included in a bank holding company system, the related
bank holding company shall have) a combined capital and surplus of at least
$50,000,000 as set forth in its (or its related bank holding company's) most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
that there shall be excluded from the operation of TIA ss. 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
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(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.14 and the
operation of Sections 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i), 6.01(j) and
6.01(k) (but, in the case of Sections 6.01(f) and (g), with respect only to
Significant Subsidiaries) and the limitations contained in Section 5.01(a)(5)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.01(d) (with
respect to the covenants of Article IV identified in the immediately preceding
paragraph), 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i), 6.01(j) or 6.01(k)
(with respect only to Significant Subsidiaries in the case of Sections 6.01(f)
and 6.01(g)) or because of the failure of the Company to comply with the
limitations contained in Section 5.01(a)(5). If the Company exercises its legal
defeasance option or its covenant defeasance option, the Second Priority Lien,
as it pertains to the Securities, will be released and each Subsidiary Guarantor
will be released from all its obligations under its Subsidiary Guarantee, as it
pertains to the Securities.
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.07 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(a) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and interest
on the Securities to maturity or redemption, as the case may be;
(b) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent certified public accountants
expressing their opinion that the payments of principal and interest when
due and without reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case may
be;
(c) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(f) or 6.01(g) occurs with
respect to the Company or any other Person making such deposit which is
continuing at the end of the period;
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(d) no Default or Event of Default has occurred and is continuing on
the date of such deposit and after giving effect thereto;
(e) such deposit does not constitute a default under any other
agreement or instrument binding on the Company;
(f) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(g) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that
(1) the Company has received from the Internal Revenue Service a
ruling; or
(2) since the date of this Indenture there has been a change in
the applicable Federal income tax law, to the effect, in either case,
that, and based thereon such Opinion of Counsel shall confirm that,
the Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not
occurred;
(h) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(i) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
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.
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Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Holders entitled to the money must look to the Company for payment
as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
----------
SECTION 9.01. Without Consent of Holders. Without the consent of any
Holders, the Company, when authorized by a Board Resolution, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities and,
subject to any other consent required under the terms of the applicable Second
Priority Collateral Documents, the Second Priority Collateral Documents, in each
case without notice to:
(a) cure any ambiguity, omission, defect or inconsistency;
(b) provide for the assumption by a successor corporation of the
obligations of the Company or any Subsidiary Guarantor under this Indenture
or any Second Priority Collateral Documents;
(c) provide for uncertificated Securities in addition to or in place
of certificated Securities; provided, however, that the uncertificated
Securities are issued in registered form for purposes of Section 163(f) of
the Code, or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Code;
(d) add additional Guarantees with respect to the Securities or
release Subsidiary Guarantors from Subsidiary Guarantees as provided by the
terms of this Indenture or the Subsidiary Guarantees;
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(e) further secure the Securities (and if such security interest
includes Liens on Property of the Company, provide for releases of such
Property on terms comparable to the terms on which Collateral constituting
Property of Subsidiary Guarantors may be released), release all or any
portion of the Collateral pursuant to the terms of the Second Priority
Collateral Documents, add to the covenants of the Company or the Subsidiary
Guarantors for the benefit of the Holders or surrender any right or power
herein conferred upon the Company;
(f) in the case of this Indenture, make any change that does not
adversely affect the rights of any Holder;
(g) make any change to the subordination provisions of a Subsidiary
Guarantee or any Second Priority Collateral Documents that would limit or
terminate the benefits available to any holder of Senior Obligations under
such provisions; or
(h) msake any change to comply with any requirements of the Commission
in connection with the qualification of this Indenture under the Trust
Indenture Act.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. (a) The Company, when
authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee may
amend this Indenture or the Securities and, subject to any other consent
required under the terms of the applicable Second Priority Collateral Documents,
the Second Priority Collateral Documents, and (subject as aforesaid) waive any
past default or compliance with any provisions (except, in the case of this
Indenture, as provided in Section 6.04), with the consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities). However, without the consent of each Holder
affected thereby, an amendment may not:
(1) amend this Indenture to reduce the amount of Securities whose
Holders are required to consent to an amendment or waiver;
(2) amend this Indenture to reduce the rate of or extend the time for
payment of interest on any Security;
(3) amend this Indenture to reduce the principal of or extend the
Stated Maturity of any Security;
(4) amend this Indenture to make any Security payable in money other
than that stated in the Security;
(5) amend this Indenture or any Subsidiary Guarantee to impair the
right of any Holder to receive payment of principal of and interest on such
Xxxxxx's Securities on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such Holder's
Securities or any Subsidiary Guarantee;
77
(6) amend this Indenture or any Subsidiary Guarantee to subordinate
the Securities or any Subsidiary Guarantee to any other obligation of the
Company or the applicable Subsidiary Guarantor (except in the case of the
Second Priority Subsidiary Guarantee Agreement, as permitted by paragraph
(b) below);
(7) amend this Indenture to reduce the premium payable upon the
redemption of any Security or change the time at which any Security may be
redeemed in accordance with Article III;
(8) amend this Indenture to reduce the premium payable upon a Change
of Control or, at any time after a Change of Control has occurred, amend
the definition of "Change of Control" or change the time at which any
Change of Control Offer relating thereto must be made or at which the
Securities must be repurchased pursuant to such Change of Control Offer; or
(9) at any time after the Company is obligated to make a Prepayment
Offer with the Excess Proceeds from Asset Sales, amend this Indenture to
change the time at which such Prepayment Offer must be made or at which the
Securities must be repurchased pursuant thereto.
(b) Without limiting the foregoing, the Holders will be deemed to have
consented for purposes of the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group) to
(i) any amendment, waiver or other modification (including any consent
thereunder) of the Second Priority Collateral Documents (including any annexes,
exhibits or schedules thereto) that would not be adverse to the Holders in any
material respect, as reasonably determined by the Board of Directors (as
evidenced by a Board Resolution), and (ii) to any of the following amendments,
waivers and other modifications to the Second Priority Collateral Documents (the
"Second Priority Collateral Documents Amendments"):
(1) an amendment to the Intercreditor Agreement to modify the
restriction on changes to Second Priority Collateral Documents and Second
Priority Debt Documents without the consent of holders of Senior
Obligations or their representatives (but without modifying any provisions
relating to consent of Holders or other Second Priority Debt to various
actions);
(2) to the extent such amendment, waiver or modification relates to
the amount (including amounts of Senior Obligations and Second Priority
Debt) or the terms of Debt (including as reflected in related definitions
such as "Replacement Second Priority Debt") that may be secured by Liens on
the Collateral, as may be consented to by the Senior Collateral Agents or
the Senior Banks in accordance with the terms of the Intercreditor
Agreement or the applicable Second Priority Collateral Document (but
without limiting any of the restrictive covenants and related definitions
contained in this Indenture);
(3) an amendment to the Second Priority Subsidiary Guarantee Agreement
to subordinate, on comparable terms to those provided therein with respect
to Senior Bank Obligations, the obligations of the Subsidiary Guarantors
under the Second
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Priority Subsidiary Guarantee Agreement to the prior payment when due of
the guarantees by such Subsidiary Guarantor of any Additional Senior Debt,
provided that such amendment applies equally with respect to all Second
Priority Debt;
(4) an amendment to the Second Priority Collateral Documents to
provide for a class of Secured Obligations having rights in respect of the
Collateral that are subordinated to the Second Priority Debt Obligations to
at least the same extent that the Second Priority Debt Obligations are
subordinated to the Senior Obligations, as reasonably determined by the
Board of Directors (as evidenced by a Board Resolution), provided that (A)
such Debt is not secured by Liens on any assets other than Collateral and
(B) to the extent such Secured Obligations represent Debt of a Subsidiary
of the Company, such Subsidiary is a Subsidiary Guarantor and such Debt is
subordinated to the prior payment of the Second Priority Debt Obligation to
at least the same extent as the Subsidiary Guarantees are subordinated to
the Senior Obligations (determined as aforesaid);
(5) an amendment to the Intercreditor Agreement to provide, on
comparable terms to those provided therein with respect to Senior Bank
Obligations, the lenders under any Senior Obligations (including Additional
Senior Debt Obligations) with rights and remedies with respect to the
Collateral, including the rights to distributions of proceeds of Collateral
and rights to control all remedies or other activities related to the
Collateral so long as any Senior Obligations remain outstanding, comparable
to those provided therein with respect to the Senior Bank Obligations,
provided that (A) the holders of Senior Obligations and their
representatives have obligations to holders of Second Priority Debt and
their representatives comparable to the obligation of holders of Senior
Bank Obligations and their representatives provided therein and (B) such
amendment applies equally with respect to all Second Priority Debt;
(6) an amendment to the Intercreditor Agreement to change the
conditions that must be satisfied in order for a representative of
additional Debt to become a party to the Intercreditor Agreement, provided
that (A) such amendment is consented to by the Senior Collateral Agents in
accordance with the terms of the Intercreditor Agreement, (B) the
conditions continue to require a representative of such holders on behalf
of such holders to become a party to the Intercreditor Agreement, (C) such
amendment applies equally with respect to all Second Priority Debt, (D) the
ability of the Second Priority Collateral Trustee and the holders of Second
Priority Debt and their representatives to enforce their rights under the
Intercreditor Agreement are not adversely affected in any material respect
by such amendment and (E) the Lien on the Collateral securing the
Subsidiary Guarantees of the Securities will not be impaired (other than
the addition of new Secured Obligations that will be secured by the
Collateral) as a result of implementation of such amendment;
(7) an amendment, waiver or modification to the Second Priority
Collateral Documents to effectuate (A) (i) the release of assets included
in the Collateral from the Liens securing the Securities (I) if all other
Liens on those assets securing the Senior Obligations (including all
commitments thereunder) are released, (II) if the Company or a Subsidiary
of the Company provides substitute Collateral for all or a portion of those
assets with at least an equivalent fair value, as determined in good
79
faith by the Board of Directors (as evidenced by a Board Resolution) or
(III) if those assets are owned by a Subsidiary that is a Subsidiary
Guarantor and that Subsidiary Guarantor is released from its Subsidiary
Guarantee, provided that in the case of each of clauses (I)-(III) after
giving effect to the release there remains no Lien on such assets securing
any Secured Obligations, or (ii) the release of the Subsidiary Guarantee of
a Subsidiary Guarantor of the Securities upon such Subsidiary Guarantor
ceasing to Guarantee or be an obligor in respect of, or to pledge any of
its assets to secure, any Senior Obligations, provided that after giving
effect to the release the Subsidiary Guarantor ceases to Guarantee or be an
obligor in respect of, or to pledge its assets to secure, any Secured
Obligations and provided, in the case of both (i) and (ii), that after
giving effect to the release, at least $300 million in aggregate principal
amount of Senior Obligations under Credit Facilities will remain
outstanding or (B) a release of Collateral or a Subsidiary Guarantee of a
Subsidiary Guarantor otherwise in accordance with the terms of this
Indenture and the Second Priority Collateral Documents;
(8) with respect to any amendment, waiver or modification agreed to by
the Senior Collateral Agents or the holders of the Senior Obligations under
any provision of any Senior Collateral Documents, a comparable amendment,
waiver or modification to the comparable provision of the comparable Second
Priority Collateral Document, provided that such amendment, waiver or
modification applies equally with respect to all Second Priority Debt;
(9) upon request of the Company without consent of any Holders unless,
within 20 Business Days after written notice of the proposed amendment,
waiver or modification is mailed to the Trustee and Holders, 25% in
interest of the Holders delivers to the Trustee written objection thereto;
(10) with the written consent of the Holders of at least a majority of
the aggregate principal amount of the Securities then outstanding pursuant
to Section 9.02(a); or
(11) an amendment, waiver or modification permitted pursuant to
Section 9.01.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing such deemed consent of the
Holders. The Trustee, in its capacity as Second Priority Representative to
Holders, shall take such action under the Second Priority Collateral Documents
as may be requested by the Company to give effect to any such amendment, waiver
or modification. Notwithstanding the foregoing, no such consent or deemed
consent shall be deemed or construed to represent an amendment or waiver, in
whole or in part, of any provision of this Indenture or the Securities.
The foregoing shall not limit the right of the Company to amend, waive
or otherwise modify the Second Priority Collateral Documents in accordance with
their terms.
80
(c) In addition and without limiting the foregoing, (x) Collateral
securing a Subsidiary Guarantee of the Securities or (y) a Subsidiary Guarantee
of the Securities provided by a Subsidiary Guarantor may be released only in
respect of the Securities:
(i) upon request of the Company without consent of any Holder unless,
within 20 Business Days after written notice of the proposed release of
such (1) Collateral from the Liens securing Subsidiary Guarantees of the
Securities or (2) Subsidiary Guarantor, as the case may be, is mailed to
the Trustee and the Holders, Holders of 25% of the outstanding principal
amount of Securities deliver to the Company a written objection to such
release; or
(ii) with the written consent of the Holders of at least a majority of
the aggregate principal amount of the Securities then outstanding.
Under the circumstances described in clauses (i) and (ii) above,
Holders shall also be deemed to have consented to such release for purposes of
any consent required under the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group),
subject to any other consent required under the Second Priority Collateral
Documents.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing the consent of the Holders
to such release. The Trustee, in its capacity as Second Priority Representative
for Holders, shall take such action under the Second Priority Collateral
Documents or otherwise as may be requested by the Company to give effect to any
such release.
(d) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to each Holder at such Xxxxxx's address appearing in the Security
Register a notice briefly describing such amendment. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Holder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.
81
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver such Security to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return such
Security to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment or release authorized pursuant to this Article IX if the amendment or
release does not adversely affect the rights, duties, liabilities or immunities
of the Trustee. If such amendment or release does adversely affect the rights,
duties, liabilities or immunities of the Trustee, the Trustee may but need not
sign it. In signing such amendment or release 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 or release is authorized
or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision that is required
to be included in this Indenture by the TIA, the required provision shall
control.
SECTION 10.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail or sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter)
and addressed as follows:
82
if to the Company:
Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
facsimile: 000-000-0000
Attention of: Xxxxxx X. Xxxx, Esq.
if to the Trustee:
BNY Midwest Trust Company
0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
facsimile: 000-000-0000
Attention of: Corporate Trust
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA ss. 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA ss. 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) except in the case of Section 3.01 under which an opinion will not
be required, an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with; provided, however,
that with respect to matters of fact an
83
Opinion of Counsel may rely on an Officers' Certificate or certificates of
public officials.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
certificate with respect to compliance with a covenant or condition provided for
in this Indenture shall include:
(1) a statement that the individual making such certificate has read
such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate are
based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with,
Each opinion with respect to compliance with a covenant or condition provided
for in this Indenture shall be in form and substance reasonably satisfactory to
the party requesting such opinion and the party giving such opinion.
SECTION 10.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent or co-registrar may make reasonable rules for
their functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 10.09. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
84
SECTION 10.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 10.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
RITE AID CORPORATION,
By
-------------------------
Name:
Title
EACH OF THE SUBSIDIARY
GUARANTORS LISTED ON SCHEDULE A
HERETO,
By
-------------------------
Name:
Title
2
BNY MIDWEST TRUST COMPANY,
By
-------------------------
Name:
Title
SCHEDULE A
----------
Subsidiary Guarantors
---------------------
Corporations
------------
Thrifty PayLess, Inc.
Rite Aid of Vermont, Inc.
Rite Aid of Ohio, Inc.
Rite Aid of Maine, Inc.
Rite Aid of West Virginia, Inc.
The Lane Drug Company
0000 Xxxxxx Xxxx Xxxx - Xxxxxxxxxx Corp.
0000 Xxxxxxxxxxxx Xxxxxx Xxxx - Xxxxxxxxxxxx Xxxx, Inc.
5277 Associates, Inc.
000 Xxx Xxxxxx Corp.
5600 Superior Properties, Inc.
000-000 Xxxxx Xx. Xxxx.
Apex Drug Stores, Inc.
Broadview and Wallings - Broadview Heights Ohio, Inc.
Dominion Drug Stores Corp.
Eagle Managed Care Corp.
England Street-Asheland Corporation
GDF, Inc.
Harco, Inc.
K&B Alabama Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Incorporated
K&B Tennessee Corporation
K&B Texas Corporation
K&B, Incorporated
Keystone Centers, Inc.
Lakehurst and Broadway Corporation
P.L.D. Enterprises, Inc.
Xxxxxx Drive and Navy Boulevard Property Corporation
PDS-1 Michigan, Inc.
Perry Distributors, Inc.
Perry Drug Stores, Inc.
PL Xpress, Inc.
Ram-Utica, Inc.
RDS Detroit, Inc.
Read's Inc.
Rite Aid Drug Palace, Inc.
Rite Aid Hdqtrs. Corp
Rite Aid Hdqtrs. Funding, Inc.
Rite Aid of Alabama, Inc.
Rite Aid of Connecticut, Inc.
2
Rite Aid of Delaware, Inc.
Rite Aid of Florida, Inc.
Rite Aid of Georgia, Inc.
Rite Aid of Illinois, Inc.
Rite Aid of Indiana, Inc.
Rite Aid of Kentucky, Inc.
Rite Aid of Maryland, Inc.
Rite Aid of Massachusetts, Inc.
Rite Aid of Michigan, Inc.
Rite Aid of New Hampshire, Inc.
Rite Aid of New Jersey, Inc.
Rite Aid of New York, Inc.
Rite Aid of North Carolina, Inc.
Rite Aid of Pennsylvania, Inc.
Rite Aid of South Carolina, Inc.
Rite Aid of Tennessee, Inc.
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid Realty Corp.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
Rite Fund, Inc.
Rite Investments Corp.
Rx Choice, Inc.
The Xxxx Company
Thrifty Corporation
Virginia Corporation
Limited Liability Companies
---------------------------
000 Xxxxx Xxxxxxxx - Xxxxxx, Ohio, LLC
Eighth and Water Streets - Urichsville, Ohio, LLC
Gettysburg and Xxxxxx-Dayton, Ohio, LLC
Xxxxxxxx & Chillicothe Roads - Chesterland, LLC
Xxxxxx & Xxxxxxx, LLC
Silver Springs Road - Baltimore, Maryland/One, LLC
Silver Springs Road - Baltimore, Maryland/Two, LLC
State Street and Hill Road-Xxxxxx, Ohio, LLC
000 Xxxxxxxx Xxxxxx Norfolk, LLC
0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx, LLC
1740 Associates, L.L.C.
Xxx & Government Streets - Mobile, Alabama, LLC
Central Avenue and Main Street - Petal, MS, LLC
Fairground, L.L.C.
Name Xxxx, X.X.X.
Northline & Xxx - Xxxxxx - Southgate, LLC
3
Paw Paw Lake Road & Paw Paw Avenue - Coloma, Michigan, LLC
Seven Mile and Evergreen - Detroit, LLC
State & Fortification Streets - Jackson, Mississippi, LLC
Tyler and Xxxxxxx Roads, Birmingham - Alabama, LLC
Rite Aid Services, L.L.C.
APPENDIX A
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE 144A, TO
CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S AND,
SUBJECT TO THE APPLICABLE PURCHASE AGREEMENT, TO INSTITUTIONAL ACCREDITED
INVESTORS.
PROVISIONS RELATING TO INITIAL SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Definitive Security" means a certificated Initial Security or
Exchange Security or Private Exchange Security bearing, if required, the
restricted securities legend set forth in Section 2.3(d).
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Exchange Securities" means the 7.5% Senior Secured Notes due 2015 to
be issued pursuant to this Indenture in connection with a Registered Exchange
Offer pursuant to a Registration Agreement.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Citigroup Global Markets Inc. and X.X.
Xxxxxx Securities Inc.
"Initial Securities" means the 7.5% Senior Secured Notes due 2015, to
be issued from time to time, in one or more series as provided for in this
Indenture.
"Original Securities" means Initial Securities in the aggregate
principal amount of $200,000,000 issued on January 11, 2005.
"Private Exchange" means the offer by the Company, pursuant to Section
1 of the Registration Agreement, or pursuant to any similar provision of any
other Registration Agreement, to issue and deliver to certain purchasers, in
exchange for the Initial Securities held by such purchasers as part of their
initial distribution, a like aggregate principal amount of Private Exchange
Securities.
"Private Exchange Securities" means the 7.5% Senior Secured Notes due
2015 to be issued pursuant to this Indenture in connection with a Private
Exchange pursuant to a Registration Agreement.
2
"Purchase Agreement" means the Purchase Agreement dated January 4,
2005, among the Company, the Subsidiary Guarantors named therein and the Initial
Purchasers relating to the Original Securities, or any similar agreement
relating to any future sale of Initial Securities by the Company.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration Agreement, to certain Holders of Initial Securities, to issue
and deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration Rights
Agreement dated January 11, 2005, among the Company, the Subsidiary Guarantors
named therein and the Initial Purchasers relating to the Original Securities, or
any similar agreement relating to any additional Initial Securities.
"Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities" means the Initial Securities and the Exchange Securities,
treated as a single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository) or any successor person thereto, who
shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement issued
by the Company in connection with the offer and sale of Initial Securities or
Private Exchange Securities pursuant to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the legend set forth in
Section 2.3(c) hereto.
1.2 Other Definitions
Defined in
Term Section:
---- --------
"Agent Members"..........................................................2.1(b)
"Global Security"........................................................2.1(a)
"IAI Global Security"....................................................2.1(a)
"Regulation S" .............................................................2.1
"Regulation S Global Security" ..........................................2.1(a)
"Rule 144A".................................................................2.1
"Rule 144A Global Security"..............................................2.1(a)
3
2. The Securities
2.1 Form and Dating
The Initial Securities will be offered and sold by the Company, from
time to time, pursuant to one or more Purchase Agreements. The Initial
Securities will be resold initially only to QIBs in reliance on Rule 144A under
the Securities Act ("Rule 144A") and in reliance on Regulation S under the
Securities Act ("Regulation S"). Initial Securities may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1), (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfer set forth herein.
(a) Global Securities. Initial Securities initially resold pursuant to
Rule 144A shall be issued initially in the form of one or more permanent global
Securities in definitive, fully registered form (collectively, the "Rule 144A
Global Security"), Initial Securities initially resold pursuant to Regulation S
shall be issued initially in the form of one or more global securities
(collectively, the "Regulation S Global Security") and, subject to Section 2.4
hereof, Initial Securities transferred subsequent to the initial resale thereof
to IAIs shall be issued initially in the form of one or more permanent global
securities in definitive, fully registered form (collectively, the "IAI Global
Security"), in each case without interest coupons and with the global securities
legend and restricted securities legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Securities Custodian, and registered in the name of
the Depository or a nominee of the Depository, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. The Rule 144A Global
Security, IAI Global Security, and Regulation S Global Security are collectively
referred to herein as "Global Securities." The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depository or its nominee as
hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depository for such Global Security or Global Securities or the
nominee of such Depository and (b) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instructions or held by the Trustee
as Securities Custodian.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository or by the Trustee as Securities Custodian or
under such Global Security, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to
4
any written certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of Definitive Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1)
Original Securities for original issue in an aggregate principal amount of
$200,000,000, (2) additional Initial Securities, if and when issued, in an
unlimited aggregate principal amount, and (3) the Exchange Securities or Private
Exchange Securities for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to a Registration Agreement, for a like
principal amount of Initial Securities or Private Exchange Securities, as
applicable, upon a written order of the Company signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated and whether the Securities are to be Initial Securities or
Exchange Securities.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) if such Definitive Securities bear a restricted securities
legend, they are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A),
(B) or (C) below, and are accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
5
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (i) a certification
to that effect (in the form set forth on the reverse of the Initial
Security) and (ii) if the Company so requests as provided in the form
set forth on the reverse of the Initial Security, an opinion of
counsel or other evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the legend set forth in
Section 2.3(c)(i).
(b) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Security, and
such account shall be credited in accordance with such instructions with a
beneficial interest in the Global Security, and the account of the Person making
the transfer shall be debited by an amount equal to the beneficial interest in
the Global Security being transferred. In the case of a transfer of a beneficial
interest in a Global Security to an IAI, the transferee must furnish a signed
letter to the Trustee containing certain representations and agreements in the
form of Exhibit B hereto.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of the Global Security from which such interest is being
transferred.
(iii) Notwithstanding any other provisions of this Appendix A (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be exchanged
only in accordance with such procedures as are substantially consistent
with the provisions of this
6
Section 2.3 (including the certification requirements set forth on the
reverse of the Initial Securities intended to ensure that such transfers
comply with Rule 144A, Regulation S or such other applicable exemption from
registration under the Securities Act, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(c) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR
(Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144
OF THE SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION
(AS DEFINED UNDER REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY
THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY
FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH
MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE)
UNDER THE
7
SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL
ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH TO
THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY
MAY REASONABLY REQUIRE TO CONFIRM THAT TRANSFER BY IT OF THIS SECURITY
COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT
IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR
(2) PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL DISTRIBUTION
OF THIS SECURITY (OR ANY PREDECESSOR SECURITY), THAT IT IS AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING
THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION S
UNDER THE SECURITIES ACT."
Each Definitive Security will also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Security that does
not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for a
Security that does not bear the legends set forth above and rescind
any restriction on the transfer of such Transfer Restricted Security,
8
in either case, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities, as the case may be, during the period of the effectiveness of a
Shelf Registration Statement with respect to such Initial Securities or
Private Exchange Securities, all requirements pertaining to restricted
securities legends on such Initial Security or such Private Exchange
Security will cease to apply, and an Initial Security or Private Exchange
Security, as the case may be, in global form without restricted security
legends will be available to the transferee of the beneficial interests of
such Initial Securities or Private Exchange Securities. Upon the occurrence
of any of the circumstances described in this paragraph, the Company will
deliver an Officers' Certificate to the Trustee instructing the Trustee to
issue Securities without restricted security legends.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Securities pursuant to which certain Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, Exchange Securities in global form without the restricted
security legends will be available to Holders or beneficial owners that
exchange such Initial Securities (or beneficial interests therein) in such
Registered Exchange Offer. Upon the occurrence of any of the circumstances
described in this paragraph, the Company will deliver an Officers'
Certificate to the Trustee instructing the Trustee to issue Securities
without restricted security legends.
(d) Cancellation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned by the Depository to the Trustee for cancellation or retained
and canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced, and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(e) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company or the Trustee may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments
9
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.06, 4.06, 4.13 and 9.05 of this Indenture).
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of any Security for a period beginning 15 days
before the mailing of a notice of redemption or an offer to repurchase
Securities or 15 days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depository or any other Person with respect to the accuracy of the records
of the Depository or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to
the delivery to any participant, member, beneficial owner or other Person
(other than the Depository) of any notice (including any notice of
redemption or repurchase) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to
the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depository or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository 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
10
Indenture, and to examine the same to determine substantial compliance as
to form with the express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depository or with the
Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depository notifies the Company that it is
unwilling or unable to continue as a Depository for such Global Security or if
at any time the Depository ceases to be a "clearing agency" registered under the
Exchange Act, and a successor Depository is not appointed by the Company within
90 days of such notice, or (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive Securities
under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depository to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. Definitive
Securities issued in exchange for any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Definitive Security delivered in
exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.3(c), bear the restricted securities legend set forth in
Exhibit 1 hereto.
(c) The registered Holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder is
entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in definitive, fully
registered form without interest coupons.
EXHIBIT 1
To APPENDIX A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 OF THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED UNDER REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS
2
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES
THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL DISTRIBUTION OF
THIS SECURITY (OR ANY PREDECESSOR SECURITY), THAT IT IS AN INSTITUTION THAT IS
AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i)
OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
3
[FORM OF FACE OF INITIAL SECURITY]
No.:__________ [up to]**$__________
7.5% Senior Secured Note due 2015
CUSIP No. 767754 BJ 2(1)/U76659 AL 2(2)
------------------------------
ISIN No. US767754BJ26(3)/USU76659AL28(4)
-------------------------------
RITE AID CORPORATION, a Delaware corporation, promises to pay to [Cede
& Co.]**, or registered assigns, the principal sum [of [ ] Dollars]* [as set
forth on the Schedule of Increases or Decreases annexed hereto]** on January 15,
2015.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
2005.
Record Dates: January 1 and July 1.
-------------------
* Insert for Definitive Securities.
** Insert for Global Securities. If the Security is to be issued in global form,
add the Global Securities Legend from Exhibit 1 to Appendix A and the attachment
from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY".
-------------------
(1) Insert for Rule 144A Note
(2) Insert for Reg. S Note
(3) Insert for Rule 144A Note
(4) Insert for Reg. S Note
4
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
RITE AID CORPORATION,
By
----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
BNY MIDWEST TRUST COMPANY,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
------------------------
Authorized Signatory
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
7.5% Senior Secured Note due 2015
1. Interest
(a) RITE AID CORPORATION, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above. The Company will pay
interest semiannually on January 15 and July 15 of each year, commencing July
15, 2005. 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 January 11,
2005. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate per
annum borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the rate per annum borne by the Securities
to the extent lawful.
(b) Special Interest. The holder of this Security is entitled to the
benefits of a Exchange and Registration Rights Agreement, dated as of January
11, 2005, among the Company, the Subsidiary Guarantors named therein and the
Initial Purchasers named therein (the "Registration Agreement"). Capitalized
terms used in this paragraph (b) but not defined herein have the meanings
assigned to them in the Registration Agreement. In the event that (i) neither
the Exchange Offer Registration Statement nor the Shelf Registration Statement,
as the case may be, is filed with the Commission on or prior to the date which
is 90 days following the date of the original issuance of the Securities, (ii)
the Exchange Offer Registration Statement or the Shelf Registration Statement,
as the case may be, is not declared effective within 180 days after the original
issuance of the Securities, (iii) if the Exchange Offer Registration Statement
is declared effective, the Registered Exchange Offer is not consummated on or
prior to 210 days after the date of the original issuance of Securities, (iv) if
the Company and the Subsidiary Guarantors are required to file the Shelf
Registration Statement in accordance with Section 2 of the Registration
Agreement, the Company or any Subsidiary Guarantor does not so file the Shelf
Registration Statement on or prior to the 30th day after the Company's
obligation to file such Shelf Registration Statement arises, (v) the applicable
Registration Statement is filed and declared effective but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being again effective within 30 days or being
succeeded within 30 days by an additional Registration Statement filed and
declared effective, provided that such 30-day period shall toll during a
Suspension Period, or (vi) any Suspension Periods exceed, in the aggregate, 75
days during any 365-day period (each such event referred to in clauses (i)
through (vi), a "Registration Default"), the Company shall be obligated to pay
Additional Interest from and including the date on which the first such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured, at a rate of 0.25% per annum on the
applicable principal amount of Securities held by such Holder for the first
90-day period immediately following the occurrence of a Registration Default,
and such rate will increase by an additional 0.25% with respect to each
subsequent 90-day
6
period until all Registration Defaults have been cured, provided that the
maximum additional rate may in no event exceed 0.50% per annum.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders at the close of business on
the January 1 or July 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts. Payments in respect of the Securities represented
by a Global Security (including principal and interest) will be made by wire
transfer of immediately available funds to the accounts specified by the
Depository. The Company will make all payments in respect of a Definitive
Security (including principal and interest), by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on
the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder
elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, BNY Midwest Trust Company, an Illinois trust company (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
January 11, 2005 (the "Indenture"), among the Company, the Subsidiary Guarantors
named therein and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "TIA"). Terms defined in the Indenture and not defined in
the Securities have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of those terms.
The Securities are unsecured, unsubordinated obligations of the
Company. The Company's obligations under the Securities are Guaranteed, subject
to certain limitations, by the Subsidiary Guarantors pursuant to Subsidiary
Guarantees, subject to release of the Subsidiary Guarantees as provided in the
Indenture or such Subsidiary Guarantee. This Security is one of the Original
Securities referred to in the Indenture
7
issued in an aggregate principal amount of $200,000,000. The Securities include
the Original Securities, an unlimited aggregate principal amount of additional
Initial Securities that may be issued under the Indenture, and any Exchange
Securities issued in exchange for Initial Securities. The Original Securities,
such additional Initial Securities and the Exchange Securities are treated as a
single class of securities under the Indenture. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, make certain Investments and other Restricted Payments, pay
dividends and other distributions, incur Debt, enter into consensual
restrictions upon the payment of certain dividends and distributions by such
Restricted Subsidiaries, enter into or permit certain transactions with
Affiliates, create or incur Liens and make Asset Sales. The Indenture also
imposes limitations on the ability of the Company and each Subsidiary Guarantor
to consolidate or merge with or into any other Person or sell, transfer, assign,
lease, convey or otherwise dispose of all or substantially all of the Property
of the Company or such Subsidiary Guarantor.
5. Optional Redemption
The Company may choose to redeem the Securities at any time. If it
does so, it may redeem all or any portion of the Securities, at once or over
time, after giving the required notice under the Indenture.
To redeem the Securities prior to January 15, 2010, the Company must
pay a redemption price equal to 100% of the principal amount of the Securities
to be redeemed plus the Applicable Premium as of, and accrued and unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the Redemption Date). Any notice to
Holders of such a redemption shall include the appropriate calculation of the
Redemption Price, but need not include the Redemption Price itself. The actual
redemption price must be set forth in an Officers' Certificate delivered to the
Trustee no later than two Business Days prior to the Redemption Date.
"Applicable Premium" means, with respect to any Security on any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such Redemption Date of
(1) the Redemption Price of such Security at January 15, 2010 (such Redemption
Price being set forth in the table below) plus (2) all required interest
payments due on such Security through January 15, 2010 (excluding accrued but
unpaid interest), computed using a discount rate equal to the Treasury Rate on
such Redemption Date plus 75 basis points over (B) the principal amount of such
Security.
"Treasury Rate" means, as of any Redemption Date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to January 15, 2010;
provided, however, that if the period from the Redemption Date to January 15,
2010 is less than one year, the weekly average yield on
8
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
On and after January 15, 2010, the Company may redeem the Securities
in whole at any time or in part from time to time at the following Redemption
Prices (expressed in percentages of principal amount), plus accrued and unpaid
interest, if any, to the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning on January 15 of the years set forth below:
Redemption Period Price
----------------- -----
2010................................................. 103.750%
2011................................................. 102.500%
2012................................................. 101.250%
2013 and thereafter.................................. 100.000%
Notwithstanding the foregoing, at any time and from time to time prior
to January 15, 2008, the Company may redeem up to 35% of the original aggregate
principal amount of the Securities (including Securities issued after January
11, 2005, if any) with the proceeds from one or more Equity Offerings by the
Company, at a Redemption Price equal to 107.500% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date that is on or prior
to the Redemption Date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Securities (including Securities issued after January 11, 2005, if any) remains
outstanding. Any such redemption shall be made within 75 days of such Equity
Offering upon not less than 30 nor more than 60 days' prior notice.
If the optional Redemption Date is on or after a record date and on or
before the relevant Interest Payment Date, the accrued and unpaid interest, if
any, will be paid to the person or entity in whose name the Security is
registered at the close of business on that record date, and no additional
interest will be payable to Holders whose Securities shall be subject to
repurchase.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the
9
redemption date and certain other conditions are satisfied, on and after such
date interest ceases to accrue on such Securities (or such portions thereof)
called for redemption.
8. (a) Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder will have the right, subject to
certain conditions specified in the Indenture, to cause the Company to
repurchase all or any part of the Securities of such Holder at a purchase price
equal to 101% of the principal amount of the Securities to be repurchased plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
8. (b) Prepayment Offer Upon Asset Sale
When the aggregate amount of Excess Proceeds exceeds $20.0 million
(taking into account income earned on such Excess Proceeds, if any), the Company
will be required to make an offer to purchase (the "Asset Sales Prepayment
Offer") the Securities, which offer shall be in the amount of the Allocable
Excess Proceeds, on a pro rata basis according to principal amount at maturity,
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture. To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided that all Holders have been
given the opportunity to tender their Securities for purchase in accordance with
the Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.
9. Guarantees; Security
The Indenture provides that, under certain circumstances, the
Securities will be guaranteed pursuant to Subsidiary Guarantees. Subsidiary
Guarantees may be released in various circumstances, including in certain
circumstances without the consent of Holders.
The Indenture provides that, under certain circumstances, the
Securities or Subsidiary Guarantees must be secured by Liens on certain Property
of the Company or Subsidiary Guarantors. Liens securing the Securities or
Subsidiary Guarantees may be released in various circumstances, including in
certain circumstances without the consent of Holders.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or
10
transfer documents and to pay any taxes required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or to transfer
or exchange any Securities for a period of 15 days prior to a selection of
Securities to be redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver, Deemed Consents, Releases
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Second Priority Collateral Documents or the Securities may be
amended without prior notice to any Holder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holders, the Company,
when authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee
may amend the Indenture or the Securities and, subject to any other consent
required under the terms of the applicable Second Priority Collateral Documents,
the Second Priority Collateral Documents to: (i) cure any ambiguity, omission,
defect or inconsistency; (ii) provide for the assumption by a successor
corporation of the obligations of the Company or any Subsidiary Guarantor under
the Indenture or any Second Priority Collateral Documents; (iii) provide for
uncertificated Securities in addition to or in place of certificated Securities;
provided, however, that the uncertificated Securities are issued in registered
form for purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(iv) add additional Guarantees with respect to the Securities or release
Subsidiary Guarantors from Subsidiary Guarantees as provided by the terms of the
Indenture or the Subsidiary Guarantees; (v) further secure the Securities (and
if such
11
security interest includes Liens on Property of the Company, provide for
releases of such Property on terms comparable to the terms on which Collateral
constituting Property of Subsidiary Guarantors may be released), release all or
any portion of the Collateral pursuant to the terms of the Second Priority
Collateral Documents, add to the covenants of the Company or the Subsidiary
Guarantors for the benefit of the Holders or surrender any right or power
conferred upon the Company under the Indenture; (vi) in the case of the
Indenture, make any change that does not adversely affect the rights of any
Holder; (vii) make any change to the subordination provisions of a Subsidiary
Guarantee or any Second Priority Collateral Documents that would limit or
terminate the benefits available to any holder of Senior Obligations under such
provisions; or (viii) make any change to comply with any requirements of the
Commission in connection with the qualification of the Indenture under the Trust
Indenture Act.
Without limiting the foregoing, the Holders will be deemed to have
consented for purposes of the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group) to
(i) any amendment, waiver or other modification (including any consent
thereunder) of the Second Priority Collateral Documents (including any annexes,
exhibits or schedules thereto) that would not be adverse to the Holders in any
material respect, as reasonably determined by the Board of Directors (as
evidenced by a Board Resolution), and (ii) to specified Second Priority
Collateral Documents Amendments.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing such deemed consent of the
Holders. The Trustee, in its capacity as Second Priority Representative to
Holders, shall take such action under the Second Priority Collateral Documents
as may be requested by the Company to give effect to any such amendment, waiver
or modification.
In addition and without limiting the foregoing, (x) Collateral
securing a Subsidiary Guarantee of the Securities or (y) a Subsidiary Guarantee
of the Securities provided by a Subsidiary Guarantor may be released only in
respect of the Securities (i) upon request of the Company without consent of any
Holder unless, within 20 Business Days after written notice of the proposed
release of such (1) Collateral from the Liens securing Subsidiary Guarantees of
the Securities or (2) Subsidiary Guarantor, as the case may be, is mailed to the
Trustee and the Holders, Holders of 25% of the outstanding principal amount of
Securities deliver to the Company a written objection to such release; or (ii)
with the written consent of the Holders of at least a majority of the aggregate
principal amount of the Securities then outstanding.
Under the circumstances described in clauses (i) and (ii) above,
Holders shall also be deemed to have consented to such release for purposes of
any consent required under the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group),
subject to any other consent required under the Second Priority Collateral
Documents.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing the consent of the Holders
to such release. The Trustee, in its capacity as Second Priority Representative
for Holders, shall
12
take such action under the Second Priority Collateral Documents or otherwise as
may be requested by the Company to give effect to any such release.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding, subject to certain limitations, may declare all the Securities to
be immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power under the Indenture. The Holders of a majority in
aggregate principal amount of the Securities then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium or interest that has become due solely because
of the acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Successors
Subject to certain exceptions set forth in the Indenture, when a
successor assumes all the obligations of its predecessor under the Securities
and the Indenture in accordance with the terms of the Indenture, the predecessor
will be released from those obligations.
13
19. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW.
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF
THIS SECURITY.
14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint as agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
-----------------------------------------------------------
Date: Your Signature:
---------------- --------------------
-----------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer
is being made in reliance on Rule 144A, in each case pursuant to
and in compliance with Rule 144A under the Securities Act of
1933; or
(4) [ ] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or
(5) [ ] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing
certain
15
representations and agreements (the form of which letter can be
obtained from the Trustee or the Company); or
(6) [ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box
(5) or (6) is checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933.
--------------------------
Your Signature
Signature Guarantee:
Date:
---------------------- --------------------------
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
-----------------------------------------------------------
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
16
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal Amount in Principal Amount this Global Security authorized signatory
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
17
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.06 (ASSET SALE) OR 4.13 (CHANGE OF CONTROL) OF THE
INDENTURE, CHECK THE BOX:
[ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.06 OR 4.13 OF THE INDENTURE, STATE THE AMOUNT:
$
DATE: YOUR SIGNATURE:
------------------ ------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:
---------------------------------------
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY
MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.
18
[FORM OF FACE OF EXCHANGE SECURITY]
No.___________ [Up to]** $__________
7.5% Senior Secured Note due 2015
CUSIP No.
ISIN No.
RITE AID CORPORATION, a Delaware corporation, promises to pay to [Cede
& Co.]**, or registered assigns, the principal sum [of [ ] Dollars]* [as set
forth on the Schedule of Increases or Decreases annexed hereto]** on January 15,
2015.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
2005.
Record Dates: January 1 and July 1.
---------------------
* Insert for Definitive Securities.
** Insert for Global Securities. If the Security is to be issued in global form,
add the Global Securities Legend from Exhibit 1 to Appendix A and the attachment
from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY."
19
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
RITE AID CORPORATION,
By
--------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
BNY MIDWEST TRUST COMPANY,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
----------------------------------
Authorized Signatory
20
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
7.5% Senior Secured Note due 2015
1. Interest
RITE AID CORPORATION, a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on January 15 and July 15 of each year, commencing July
15, 2005. 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 January 11,
2005. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate per
annum borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the rate per annum borne by the Securities
to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders at the close of business on
the January 1 or July 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts. Payments in respect of the Securities represented
by a Global Security (including principal and interest) will be made by wire
transfer of immediately available funds to the accounts specified by the
Depository. The Company will make all payments in respect of a Definitive
Security (including principal and interest), by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on
the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder
elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, BNY Midwest Trust Company, an Illinois trust company (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
21
4. Indenture
The Company issued the Securities under an Indenture dated as of
January 11, 2005 (the "Indenture"), among the Company, the Subsidiary Guarantors
named therein and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "TIA"). Terms defined in the Indenture and not defined in
the Securities have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of those terms.
The Securities are unsecured, unsubordinated obligations of the
Company. The Company's obligations under the Securities are Guaranteed, subject
to certain limitations, by the Subsidiary Guarantors pursuant to Subsidiary
Guarantees, subject to release of the Subsidiary Guarantees as provided in the
Indenture or such Subsidiary Guarantee. This Security is one of the Original
Securities referred to in the Indenture issued in an aggregate principal amount
of $200,000,000. The Securities include the Original Securities, an unlimited
aggregate principal amount of additional Initial Securities that may be issued
under the Indenture, and any Exchange Securities issued in exchange for Initial
Securities. The Original Securities, such additional Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Debt, enter into consensual restrictions upon the payment
of certain dividends and distributions by such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates, create or incur Liens and
make Asset Sales. The Indenture also imposes limitations on the ability of the
Company and each Subsidiary Guarantor to consolidate or merge with or into any
other Person or sell, transfer, assign, lease, convey or otherwise dispose of
all or substantially all of the Property of the Company or such Subsidiary
Guarantor.
5. Optional Redemption
The Company may choose to redeem the Securities at any time. If it
does so, it may redeem all or any portion of the Securities, at once or over
time, after giving the required notice under the Indenture.
To redeem the Securities prior to January 15, 2010, the Company must
pay a redemption price equal to 100% of the principal amount of the Securities
to be redeemed plus the Applicable Premium as of, and accrued and unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the Redemption Date). Any notice to
Holders of such a redemption shall include the appropriate calculation of the
Redemption Price, but need not include the Redemption Price itself. The actual
redemption price must be set forth in an Officers' Certificate delivered to the
Trustee no later than two Business Days prior to the Redemption Date.
22
"Applicable Premium" means, with respect to any Security on any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such Redemption Date of
(1) the Redemption Price of such Security at January 15, 2010 (such Redemption
Price being set forth in the table below) plus (2) all required interest
payments due on such Security through January 15, 2010 (excluding accrued but
unpaid interest), computed using a discount rate equal to the Treasury Rate on
such Redemption Date plus 75 basis points over (B) the principal amount of such
Security.
"Treasury Rate" means, as of any Redemption Date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to January 15, 2010;
provided, however, that if the period from the Redemption Date to January 15,
2010 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
On and after January 15, 2010, the Company may redeem the Securities
in whole at any time or in part from time to time at the following Redemption
Prices (expressed in percentages of principal amount), plus accrued and unpaid
interest, if any, to the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning on January 15 of the years set forth below:
Redemption Period Price
----------------- -----
2010................................................. 103.750%
2011................................................. 102.500%
2012................................................. 101.250%
2013 and thereafter.................................. 100.000%
Notwithstanding the foregoing, at any time and from time to time prior
to January 15, 2008, the Company may redeem up to 35% of the original aggregate
principal amount of the Securities (including Securities issued after January
11, 2005, if any) with the proceeds from one or more Equity Offerings by the
Company, at a Redemption Price equal to 107.500% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date that is on or prior
to the Redemption Date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Securities (including Securities issued after January 11, 2005, if any) remains
outstanding. Any such redemption shall be made within 75 days of such Equity
Offering.
If the optional Redemption Date is on or after a record date and on or
before the relevant Interest Payment Date, the accrued and unpaid interest, if
any, will be
23
paid to the person or entity in whose name the Security is registered at the
close of business on that record date, and no additional interest will be
payable to Holders whose Securities shall be subject to repurchase.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. (a) Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. (b) Prepayment Offer Upon Asset Sale
When the aggregate amount of Excess Proceeds exceeds $20.0 million
(taking into account income earned on such Excess Proceeds, if any), the Company
will be required to make an offer to purchase (the "Asset Sale Prepayment
Offer") the Securities, which offer shall be in the amount of the Allocable
Excess Proceeds, on a pro rata basis according to principal amount at maturity,
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture. To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided that all Holders have been
given the opportunity to tender their Securities for purchase in accordance with
the Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.
24
9. Guarantees; Security
The Indenture provides that, under certain circumstances, the
Securities will be guaranteed pursuant to Subsidiary Guarantees. Subsidiary
Guarantees may be released in various circumstances, including in certain
circumstances without the consent of Holders.
The Indenture provides that, under certain circumstances, the
Securities or Subsidiary Guarantees must be secured by Liens on certain Property
of the Company or Subsidiary Guarantors. Liens securing the Securities or
Subsidiary Guarantees may be released in various circumstances, including in
certain circumstances without the consent of Holders.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest payment
date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
25
14. Amendment, Waiver, Deemed Consents, Releases
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Second Priority Collateral Documents or the Securities may be
amended without prior notice to any Holder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holders, the Company,
when authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee
may amend the Indenture or the Securities and, subject to any other consent
required under the terms of the applicable Second Priority Collateral Documents,
the Second Priority Collateral Documents to: (i) cure any ambiguity, omission,
defect or inconsistency; (ii) provide for the assumption by a successor
corporation of the obligations of the Company or any Subsidiary Guarantor under
the Indenture or any Second Priority Collateral Documents; (iii) provide for
uncertificated Securities in addition to or in place of certificated Securities;
provided, however, that the uncertificated Securities are issued in registered
form for purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(iv) add additional Guarantees with respect to the Securities or release
Subsidiary Guarantors from Subsidiary Guarantees as provided by the terms of the
Indenture or the Subsidiary Guarantees; (v) further secure the Securities (and
if such security interest includes Liens on Property of the Company, provide for
releases of such Property on terms comparable to the terms on which Collateral
constituting Property of Subsidiary Guarantors may be released), release all or
any portion of the Collateral pursuant to the terms of the Second Priority
Collateral Documents, add to the covenants of the Company or the Subsidiary
Guarantors for the benefit of the Holders or surrender any right or power
conferred upon the Company under the Indenture; (vi) in the case of the
Indenture, make any change that does not adversely affect the rights of any
Holder; (vii) make any change to the subordination provisions of a Subsidiary
Guarantee or any Second Priority Collateral Documents that would limit or
terminate the benefits available to any holder of Senior Obligations under such
provisions; or (viii) make any change to comply with any requirements of the
Commission in connection with the qualification of the Indenture under the Trust
Indenture Act.
Without limiting the foregoing, the Holders will be deemed to have
consented for purposes of the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group) to
(i) any amendment, waiver or other modification (including any consent
thereunder) of the Second Priority Collateral Documents (including any annexes,
exhibits or schedules thereto) that would not be adverse to the Holders in any
material respect, as reasonably determined by the Board of Directors (as
evidenced by a Board Resolution), and (ii) to specified Second Priority
Collateral Documents Amendments.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing such deemed consent of the
Holders. The Trustee, in its capacity as Second Priority Representative to
Holders, shall take such
26
action under the Second Priority Collateral Documents as may be requested by the
Company to give effect to any such amendment, waiver or modification.
In addition and without limiting the foregoing, (x) Collateral
securing a Subsidiary Guarantee of the Securities or (y) a Subsidiary Guarantee
of the Securities provided by a Subsidiary Guarantor may be released only in
respect of the Securities (i) upon request of the Company without consent of any
Holder unless, within 20 Business Days after written notice of the proposed
release of such (1) Collateral from the Liens securing Subsidiary Guarantees of
the Securities or (2) Subsidiary Guarantor, as the case may be, is mailed to the
Trustee and the Holders, Holders of 25% of the outstanding principal amount of
Securities deliver to the Company a written objection to such release; or (ii)
with the written consent of the Holders of at least a majority of the aggregate
principal amount of the Securities then outstanding.
Under the circumstances described in clauses (i) and (ii) above,
Holders shall also be deemed to have consented to such release for purposes of
any consent required under the Second Priority Collateral Documents (including
for purposes of determining actions of the Second Priority Instructing Group),
subject to any other consent required under the Second Priority Collateral
Documents.
At the request of the Company, the Trustee shall execute and deliver
any documents, instructions or instruments evidencing the consent of the Holders
to such release. The Trustee, in its capacity as Second Priority Representative
for Holders, shall take such action under the Second Priority Collateral
Documents or otherwise as may be requested by the Company to give effect to any
such release.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding, subject to certain limitations, may declare all the Securities to
be immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power under the Indenture. The Holders of a majority in
aggregate principal amount of the Securities then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium or interest that has become due solely because
of the acceleration.
27
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Successors
Subject to certain exceptions set forth in the Indenture, when a
successor assumes all the obligations of its predecessor under the Securities
and the Indenture in accordance with the terms of the Indenture, the predecessor
will be released from those obligations.
19. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW.
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of
28
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Security.
29
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint as agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
-----------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
-----------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
--------------------------------------------------------------------------------
Signature Guarantee:
--------------------------------------------------------------------------------
Date: _______________________ __________________________
Signature must be guaranteed by a Signature of Signature Guarantee
participant in a recognized signature
guaranty medallion program or other
signature guarantor acceptable to the
Trustee
--------------------------------------------------------------------------------
30
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal Amount in Principal Amount this Global Security authorized signatory
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
31
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.06 (ASSET SALE) OR 4.13 (CHANGE OF CONTROL) OF THE
INDENTURE, CHECK THE BOX:
[ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.06 OR 4.13 OF THE INDENTURE, STATE THE AMOUNT:
$
DATE: YOUR SIGNATURE:
------------------ ------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:
---------------------------------------
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY
MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.
EXHIBIT B
Form of
Transferee Letter of Representation
[Company]
In care of
[ ]
[ ]
[ ]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ]
principal amount of the 7.5% Senior Secured Notes due 2015 (the "Securities") of
Rite Aid Corporation (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
------------------------
Address:
---------------------
Taxpayer ID Number:
-----------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified institutional buyer under
2
Rule 144A (a "QIB") that is purchasing for its own account or for the account of
a QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is purchasing for its own account or
for the account of such an institutional "accredited investor," in each case in
a minimum principal amount of Securities of $100,000, or (f) pursuant to any
other available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter to
the Company and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Securities pursuant to clause (e) or (f)
above to require the delivery of an opinion of counsel, certifications or other
information satisfactory to the Company and the Trustee.
TRANSFEREE: ,
-----------------
by:
-----------------------
