EXHIBIT 4.2
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THE IMPERIAL HOME DECOR GROUP INC.
11% Senior Subordinated Notes due 2008
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INDENTURE
Dated as of March 13, 1998
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THE BANK OF NEW YORK,
Trustee
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TABLE OF CONTENTS
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Other Definitions..............................................20
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..............21
SECTION 1.04. Rules of Construction..........................................21
ARTICLE 2
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series.......................22
SECTION 2.02. Form and Dating................................................23
SECTION 2.03. Execution and Authentication...................................23
SECTION 2.04. Registrar and Paying Agent.....................................24
SECTION 2.05. Paying Agent To Hold Money in Trust............................24
SECTION 2.06. Securityholder Lists...........................................25
SECTION 2.07. Transfer and Exchange..........................................25
SECTION 2.08. Replacement Securities.........................................25
SECTION 2.09. Outstanding Securities.........................................26
SECTION 2.10. Temporary Securities...........................................26
SECTION 2.11. Cancelation....................................................27
SECTION 2.12. Defaulted Interest.............................................27
SECTION 2.13. CUSIP Numbers..................................................27
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.............................................27
SECTION 3.02. Selection of Securities To Be Redeemed.........................27
SECTION 3.03. Notice of Redemption...........................................28
SECTION 3.04. Effect of Notice of Redemption.................................28
SECTION 3.05. Deposit of Redemption Price....................................29
SECTION 3.06. Securities Redeemed in Part....................................29
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ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities..........................................29
SECTION 4.02. Reports and Other Information..................................29
SECTION 4.03. Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock.............................30
SECTION 4.04. Limitation on Restricted Payments..............................33
SECTION 4.05. Dividend and Other Payment Restrictions
Affecting Subsidiaries.....................................37
SECTION 4.06. Asset Sales....................................................38
SECTION 4.07. Transactions with Affiliates...................................40
SECTION 4.08. Change of Control..............................................41
SECTION 4.09. Compliance Certificate.........................................42
SECTION 4.10. Further Instruments and Acts...................................42
SECTION 4.11. Future Subsidiary Guarantors...................................42
SECTION 4.12. Liens..........................................................42
ARTICLE 5
Successor Company
SECTION 5.01. (a) Merger, Consolidation, or Sale of All or Substantially
All Assets.................................................43
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default..............................................45
SECTION 6.02. Acceleration...................................................47
SECTION 6.03. Other Remedies.................................................47
SECTION 6.04. Waiver of Past Defaults........................................47
SECTION 6.05. Control by Majority............................................47
SECTION 6.06. Limitation on Suits............................................48
SECTION 6.07. Rights of Holders to Receive Payment...........................48
SECTION 6.08. Collection Suit by Trustee.....................................48
SECTION 6.09. Trustee May File Proofs of Claim...............................48
SECTION 6.10. Priorities.....................................................49
SECTION 6.11. Undertaking for Costs..........................................49
SECTION 6.12. Waiver of Stay or Extension Laws...............................49
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ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee..............................................50
SECTION 7.02. Rights of Trustee..............................................51
SECTION 7.03. Individual Rights of Trustee...................................51
SECTION 7.04. Trustee's Disclaimer...........................................51
SECTION 7.05. Notice of Defaults.............................................52
SECTION 7.06. Reports by Trustee to Holders..................................52
SECTION 7.07. Compensation and Indemnity.....................................52
SECTION 7.08. Replacement of Trustee.........................................53
SECTION 7.09. Successor Trustee by Merger....................................54
SECTION 7.10. Eligibility; Disqualification..................................54
SECTION 7.11. Preferential Collection of Claims Against Company..............54
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance...............54
SECTION 8.02. Conditions to Defeasance.......................................55
SECTION 8.03. Application of Trust Money.....................................56
SECTION 8.04. Repayment to Company...........................................56
SECTION 8.05. Indemnity for Government Obligations...........................57
SECTION 8.06. Reinstatement..................................................57
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders.....................................57
SECTION 9.02. With Consent of Holders........................................58
SECTION 9.03. Compliance with Trust Indenture Act............................59
SECTION 9.04. Revocation and Effect of Consents and Waivers..................59
SECTION 9.05. Notation on or Exchange of Securities..........................59
SECTION 9.06. Trustee To Sign Amendments.....................................60
SECTION 9.07. Payment for Consent............................................60
ARTICLE 10
Subordination
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SECTION 10.01. Agreement To Subordinate......................................60
SECTION 10.02. Liquidation, Dissolution, Bankruptcy..........................60
SECTION 10.03. Default on Senior Indebtedness................................61
SECTION 10.04. Acceleration of Payment of Securities.........................62
SECTION 10.05. When Distribution Must Be Paid Over...........................62
SECTION 10.06. Subrogation...................................................62
SECTION 10.07. Relative Rights...............................................62
SECTION 10.08. Subordination May Not Be Impaired by Company..................62
SECTION 10.09. Rights of Trustee and Paying Agent............................63
SECTION 10.10. Distribution or Notice to Representative......................63
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate .................................63
SECTION 10.12. Trust Moneys Not Subordinated.................................63
SECTION 10.13. Trustee Entitled To Rely......................................63
SECTION 10.14. Trustee To Effectuate Subordination...........................64
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness...............................................64
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions...................................64
SECTION 10.17. Trustee's Compensation Not Prejudiced.........................64
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ARTICLE 11
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees.........................................64
SECTION 11.02. Limitation on Liability.......................................67
SECTION 11.03. Successors and Assigns........................................67
SECTION 11.04. No Waiver.....................................................67
SECTION 11.05. Modification..................................................67
SECTION 11.06. Execution of Supplemental Indenture for Future
Subsidiary Guarantors......................................68
ARTICLE 12
Subordination of the Subsidiary Guarantees
SECTION 12.01. Agreement To Subordinate......................................68
SECTION 12.02. Liquidation, Dissolution, Bankruptcy..........................68
SECTION 12.03. Default on Designated Senior Indebtedness of a
Subsidiary Guarantor.......................................68
SECTION 12.04. Demand for Payment............................................69
SECTION 12.05. When Distribution Must Be Paid Over...........................69
SECTION 12.06. Subrogation...................................................70
SECTION 12.07. Relative Rights...............................................70
SECTION 12.08. Subordination May Not Be Impaired by a Subsidiary
Guarantor..................................................70
SECTION 12.09. Rights of Trustee and Paying Agent............................71
SECTION 12.10. Distribution or Notice to Representative......................71
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit
Right To Accelerate........................................71
SECTION 12.12. Trustee Entitled To Rely......................................71
SECTION 12.13. Trustee To Effectuate Subordination...........................71
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Subsidiary Guarantor.....................71
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Subsidiary Guarantor on Subordination Provisions...........72
SECTION 12.16. Defeasance....................................................72
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls..................................72
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SECTION 13.02. Notices.......................................................72
SECTION 13.03. Communication by Holders with Other Holders...................73
SECTION 13.04. Certificate and Opinion as to Conditions Precedent............73
SECTION 13.05. Statements Required in Certificate or Opinion.................73
SECTION 13.06. When Securities Disregarded...................................73
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar..................74
SECTION 13.08. Legal Holidays................................................74
SECTION 13.09. GOVERNING LAW.................................................74
SECTION 13.10. No Recourse Against Others....................................74
SECTION 13.11. Successors....................................................74
SECTION 13.12. Multiple Originals............................................74
SECTION 13.13. Table of Contents; Headings...................................74
Appendix A - Provisions Relating to Original Securities, Additional
Securities, Private Exchange Securities and Exchange
Securities
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Supplemental Indenture
Exhibit D - Form of Letter of Representation
INDENTURE dated as of March 13, 1998, among THE IMPERIAL HOME
DECOR GROUP INC., a Delaware corporation (the "Company"), each
Subsidiary of the Company listed on the signature pages hereto
(collectively, the "Subsidiary Guarantors") and THE BANK OF NEW YORK,
a New York banking corporation as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of (i) the Company's 11% Senior
Subordinated Notes due 2008 issued on the date hereof (the "Original
Securities"), (ii) any Additional Securities (as defined herein) that may be
issued on any Issue Date (all such Securities in clauses (i) and (ii) being
referred to collectively as the "Initial Securities"), (iii) if and when issued
as provided in a Registration Agreement (as defined in Appendix A hereto (the
"Appendix"), the Company's 11% Senior Subordinated Notes due 2008 issued in a
Registered Exchange Offer (as defined in the Appendix) in exchange for any
Initial Securities (the "Exchange Securities") and (iv) if and when issued as
provided in a Registration Agreement, the Private Exchange Securities (as
defined in the Appendix) issued in a Private Exchange (as defined in the
Appendix, and together with the Initial Securities and any Exchange Securities
issued hereunder, the "Securities"). Except as otherwise provided herein, the
Securities shall be limited to $275,000,000 in aggregate principal amount
outstanding, of which $125,000,000 in aggregate principal amount shall be
initially issued on the date hereof. Subject to the conditions set forth herein,
the Company may issue up to $150,000,000 aggregate principal amount of
Additional Securities.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Additional Securities" means up to $150,000,000 aggregate principal amount
of 11% Senior Subordinated Notes due 2008 issued under the terms of this
Indenture subsequent to the Closing Date.
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"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Applicable Premium" means with respect to a Security at any redemption
date, the greater of (i) 1.0% of the principal amount of such Security or (ii)
the excess of (A) the present value of (1) the redemption price of such Security
at March 15, 2003 (such redemption price being set forth in paragraph 5 of the
Security) plus (2) all required interest payments due on such Security through
March 15, 2003, computed using a discount rate equal to the Treasury Rate plus
50 basis points, over (B) the then-outstanding principal amount of such
Security.
"Asset Sale" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary (each referred to in this definition as a
"disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case other than: (a) a disposition of Cash Equivalents or
obsolete or worn out equipment in the ordinary course of business; (b) the
disposition of all or substantially all of the assets of the Company in a manner
permitted pursuant to Section 5.01 or any disposition that constitutes a Change
of Control; (c) any Restricted Payment that is permitted to be made, and is
made, under Section 4.04; (d) any disposition of assets with an aggregate Fair
Market Value of less than $1,000,000; (e) any disposition of property or assets
by a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; (f) any exchange of like property
pursuant to Section 1031 of the Code, as amended, for use in a Similar Business;
(g) any financing transaction with respect to property built or acquired by the
Company or any Restricted Subsidiary after the Closing Date, including
sale-leasebacks and asset securitizations; (h) sales of assets received by the
Company upon the foreclosure on a Lien; and (i) any sale of Equity Interests in,
or Indebtedness or other securities of, an Unrestricted Subsidiary.
"Bank Indebtedness" means any and all amounts payable under or in respect
of the Credit Agreement, the other Senior Credit Documents and any Refinancing
Indebtedness with respect thereto, as amended from time to time, including
principal, premium (if any), interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses,
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reimbursement obligations, guarantees and all other amounts payable thereunder
or in respect thereof.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its Affiliates.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which banking institutions in New York State are authorized or required by law
to close.
"Capitalized Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited), and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Contribution Amount" means the aggregate amount of cash contributions
made to the capital of the Company described in the definition of "Contribution
Indebtedness".
"Cash Equivalents" means (i) U.S. dollars, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof, (iii) certificates of deposit, time deposits
and eurodollar time deposits with maturities of one year or less from the date
of acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500,000,000 and whose long-term debt is rated "A" or
the equivalent thereof by Xxxxx'x or S&P, (iv) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clauses (ii) and (iii) above entered into with any financial institution
meeting the qualifications specified in clause (iii) above, (v) commercial paper
issued by a corporation (other than an Affiliate of the Company) rated A-1 or
the equivalent thereof of Xxxxx'x or S&P and in each case maturing within 90
days after the date of acquisition, (vi) investment funds investing at least 95%
of their assets in securities of the types described in clauses (i) through (v)
above, (vii) readily marketable
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direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Xxxxx'x or S&P, and (viii) Indebtedness or preferred
stock that is registered under the Exchange Act and is issued by Persons with a
rating of "A" or higher from S&P or "A2" or higher from Xxxxx'x.
"Change of Control" means the occurrence of any of the following events:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all the assets of the Company and its
Subsidiaries, taken as a whole, to a Person other than the Permitted
Holders; or
(ii) (A) the Company becomes aware (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) of the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in a
single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act, or any successor provision), of 35% or more of the total voting power
of the Voting Stock of the Company and (B) the Permitted Holders
beneficially own (as defined above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting Stock
of the Company than such other Person or group and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense (excluding amortization of sample book and design and engraving costs,
and including amortization of cylinder bases) of such Person and its Restricted
Subsidiaries
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for such period on a consolidated basis and otherwise determined in accordance
with GAAP.
"Consolidated Interest Expense" means, with respect to any period, the sum,
without duplication, of: (i) consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, to the extent such expense was
deducted in computing Consolidated Net Income (including amortization of
original issue discount, the interest component of Capitalized Lease Obligations
(or any financing lease which has substantially the same economic effect as a
Capitalized Lease Obligation), net payments and receipts (if any) pursuant to
Hedging Obligations and amortization of deferred financing fees Incurred after
the Closing Date and excluding amortization of deferred financing fees Incurred
on or prior to the Closing Date), (ii) consolidated capitalized interest of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued,
and (iii) the earned discount or yield with respect to the sale of receivables.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis; provided, however, that (i) any net
after-tax extraordinary gains or losses shall be excluded, (ii) the Net Income
for such period shall not include the cumulative effect of a change in
accounting principles during such period, (iii) any net after-tax income or loss
from discontinued operations and any net after-tax gains or losses on disposal
of discontinued operations shall be excluded, (iv) any net after-tax gains or
losses attributable to asset dispositions other than in the ordinary course of
business (as determined in good faith by the Board of Directors) shall be
excluded, (v) the Net Income for such period of any Person that is not a
Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period but the referent
Person's equity in a net loss of such Person shall be included to the extent of
the aggregate Investment of the referent Person in such Person, (vi) the Net
Income of any Person acquired in a pooling of interests transaction shall not be
included for any period prior to the date of such acquisition, and (vii) the Net
Income for such period of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary of its Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, unless
such restrictions with respect to the payment of dividends or in similar
distributions has been legally waived; provided that the net loss of any such
Restricted Subsidiary shall be included. Notwithstanding the foregoing, for the
purposes of Section 4.04 only, there
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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 under Section
4.04 pursuant to clauses (a)(3)(D) and (a)(3)(E) thereof.
"Contingent Obligations" means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
"Contribution Indebtedness" means Subordinated Indebtedness of the Company
in an aggregate principal amount not greater than twice the aggregate amount of
cash contributions made to the capital of the Company, provided that such
Contribution Indebtedness (i) has a Stated Maturity later than the Stated
Maturity of the Securities, (ii) is Incurred substantially concurrently with
such cash contributions, and (iii) is so designated as Contribution
Indebtedness, pursuant to an Officers' Certificate, on the Incurrence date
thereof.
"Credit Agreement" means the credit agreement to be dated as of March 13,
1998, as amended, restated, supplemented, waived, replaced, refunded, refinanced
or otherwise modified from time to time, including any agreement extending the
maturity thereof or otherwise restructuring all or any portion of the
Indebtedness under such agreement (except to the extent that any such amendment,
restatement, supplement, waiver, replacement, refunding, refinancing or other
modification thereto would be prohibited by the terms of this Indenture, unless
otherwise agreed to by the Holders of at least a majority in aggregate principal
amount of Securities at the time outstanding), among the Company, certain of its
subsidiaries and The Chase Manhattan Bank, as Administrative Agent.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Noncash Consideration" means the Fair Market Value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
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connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of Cash Equivalents received in connection with
a subsequent sale of such Designated Noncash Consideration.
"Designated Preferred Stock" means Preferred Stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Subsidiary of
the Company or an employee stock ownership plan or trust established by the
Company or any of its Subsidiaries to the extent such issuance was financed by
loans from or guarantees by the Company or any of its Subsidiaries) and is so
designated as Designated Preferred Stock, pursuant to an Officers' Certificate,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth Section 4.04(a)(3).
"Designated Senior Indebtedness" means with respect to the Company or any
Subsidiary Guarantor (i) the Bank Indebtedness and (ii) any other Senior
Indebtedness of the Company or such Subsidiary Guarantor which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof, are committed to lend up to,
at least $25,000,000 and is specifically designated by the Company or such
Subsidiary Guarantor in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is redeemable or exchangeable), or upon the
happening of any event, (i) matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock, or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case prior to the first anniversary
of the maturity date of the Securities; provided, however, that only the portion
of Capital Stock which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such first anniversary shall be deemed to be Disqualified
Stock; provided further, however, that if such Capital Stock is issued to any
employee or to any plan for the benefit of employees of the Company or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period plus, without duplication,
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(i) provision for taxes based on income or profits of such Person for such
period deducted in computing Consolidated Net Income, plus (ii) Consolidated
Interest Expense of such Person for such period to the extent the same was
deducted in calculating such Consolidated Net Income, plus (iii) Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such Consolidated Depreciation and Amortization Expense was deducted in
computing Consolidated Net Income, plus (iv) any non-recurring fees, expenses or
charges related to any Equity Offering or acquisition (whether or not
successful) and fees, expenses or charges related to the transactions
consummated pursuant to the Recapitalization Agreement (including fees to
Blackstone), plus (v) any other noncash charges reducing Consolidated Net Income
for such period (excluding any such charge which requires an accrual of, or cash
reserve for, anticipated cash charges for any future period), plus (vi) the
amount of monitoring fees paid during such period not to exceed $2,000,000
during any four-quarter period, plus (vii) for any period ending on or prior to
December 31, 1999, severance, relocation and other non-recurring fees, expenses
or charges related to the Integration Plan (the "Integration Plan Charges") in
an aggregate amount not to exceed during 1998 and 1999 the excess of (a)
$25,000,000 over (b) the amount of such Integration Plan Charges that do not
reduce Consolidated Net Income in 1998 or 1999, less, without duplication,
(viii) noncash items increasing Consolidated Net Income of such Person for such
period (excluding any items which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges in any prior period). Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization of, a Subsidiary of the Company 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 Subsidiary was included in calculating
Consolidated Net Income.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of common stock or
Preferred Stock of the Company (other than Disqualified Stock), other than (i)
public offerings with respect to the Company's Common Stock registered on Form
S-8, (ii) any such public or private sale that constitutes an Excluded
Contribution, and (iii) any sale to a Permitted Holder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Excluded Contributions" means the net cash proceeds received by the
Company after the Closing Date from (i) contributions to its common equity
capital and (ii) the sale (other than to a Subsidiary or to any Company or
Subsidiary management equity plan or stock option plan or any other management
or employee benefit plan or
9
agreement) of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Company, in each case designated as Excluded
Contributions pursuant to an Officers' Certificate executed by an Officer of the
Company, the cash proceeds of which are excluded from the calculation set forth
in Section 4.04(a)(3).
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of EBITDA of such Person for such period to the Fixed Charges
of such Person for such period. In the event that the Company or any of its
Restricted Subsidiaries Incurs or redeems any Indebtedness (other than in the
case of revolving credit borrowings, in which case interest expense shall be
computed based upon the average daily balance of such Indebtedness during the
applicable period) or issues or redeems Preferred Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such Incurrence or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable four-quarter
period. For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, that have been made by the Company or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, discontinued operations, mergers and
consolidations (and the reduction of any associated fixed charge obligations and
the change in EBITDA resulting therefrom) had occurred on the first day of the
four-quarter reference period. If since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Investment, acquisition, disposition, discontinued operation,
merger or consolidation, in each case with respect to an operating unit of a
business, that would have required adjustment pursuant to this definition, then
the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition,
discontinued operation, merger or consolidation had occurred at the beginning of
the applicable four-quarter period. For purposes of this definition, whenever
pro forma effect is to be given to a transaction, including without limitation
the Transactions (as defined in the Offering Memorandum), the pro forma
calculations shall be made in good faith by a responsible financial or
accounting officer of the Company. If
10
any Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such
Indebtedness if such Hedging Obligation has a remaining term in excess of 12
months). Interest on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by a responsible financial or accounting
officer of the Company to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP. For purposes of making the computation
referred to above, interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period. Interest on
Indebtedness that may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate actually chosen,
or, if none, then based upon such optional rate chosen as the Company may
designate. Any such pro forma calculation may include adjustments appropriate,
in the reasonable determination of the Company as set forth in an Officers'
Certificate, to reflect operating expense reductions reasonably expected to
result from any acquisition, disposition, merger, consolidation or discontinued
operation, including without limitation the Recapitalization and the Imperial
Acquisition (each as defined in the Offering Memorandum).
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) Consolidated Interest Expense of such Person for such period and (ii) all
cash dividend payments (excluding items eliminated in consolidation) on any
series of Preferred Stock of such Person and its Subsidiaries.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia or any territory thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of this
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary, but the interest of such Person in an Unrestricted
Subsidiary shall be accounted for as an Investment.
"Government Securities" means securities that are (i) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency
11
or instrumentality of the United States of America the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in each case, are not callable or redeemable at
the option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as
custodian with respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Securities or
the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange,
interest rates or commodity prices.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
person at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person, (i) the principal and
premium (if any) of any indebtedness of such person, whether or not contingent,
(a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or
similar instruments or letters of credit or bankers' acceptances (or, without
duplication, reimbursement agreements in respect thereof), (c) representing the
deferred and unpaid purchase price of any property, except any such balance that
constitutes a trade payable or similar obligation to a trade creditor due within
six months from the date on which it is Incurred, in each case Incurred in the
ordinary course of business, which purchase price is due more than six months
after the date of placing the property in service or taking delivery and title
thereto, (d) in respect of Capitalized Lease Obligations, or
12
(e) representing any Hedging Obligations, if and to the extent of any of the
foregoing Indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet (excluding the footnotes
thereto) of such Person prepared in accordance with GAAP, (ii) to the extent not
otherwise included, any obligation of such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), and (iii) to the extent not otherwise included,
Indebtedness of another Person secured by a Lien on any asset owned by such
Person (whether or not such Indebtedness is assumed by such Person); provided,
however, that Contingent Obligations Incurred in the ordinary course of business
shall be deemed not to constitute Indebtedness.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Integration Plan" has the meaning ascribed to it in the Offering
Memorandum.
"Investment Grade Securities" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit and advances to customers and commission, travel and similar
advances to officers, employees and consultants made in the ordinary course of
business), purchases or other acquisition for consideration (including
agreements providing for the adjustment of purchase price) of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet of the Company
in the same manner as the other investments included in this definition to the
extent such transactions involve the transfer of cash or other property. For
purposes of the definition of "Unrestricted Subsidiary" and Section 4.04, (i)
"Investments" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets of a
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a
13
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Securities are originally issued.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code or equivalent statutes of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
"Management Group" means the group consisting of the directors and
executive officers of the Company.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received in respect of or upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale
and any cash payments received by way of deferred payment of principal pursuant
to a note or installment receivable or otherwise, but only as and when received,
but excluding the assumption by the acquiring person of Indebtedness relating to
the disposed assets or other considerations received in any other noncash form),
net of the direct costs relating to such Asset Sale and the sale or disposition
of such Designated Noncash Consideration (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
and any relocation expenses Incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), and any deduction
of appropriate amounts to be provided by the Company as a reserve in
14
accordance with GAAP against any liabilities associated with the asset disposed
of in such transaction and retained by the Company after such sale or other
disposition thereof, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction. Notwithstanding the foregoing, for purposes of Section 4.06, the
Net Proceeds received by the Company or any of its Restricted Subsidiaries from
the sale of Xxxxxx Plastics shall be reduced by an amount equal to 50% of the
amount by which such Net Proceeds exceed $30,000,000, provided that for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of such sale and the payment of any
dividend permitted under Section 4.04(b)(x), the Company has a Fixed Charge
Coverage Ratio (after giving effect to such sale) of at least 2.50 to 1.00.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit and bankers' acceptances), damages
and other liabilities payable under the documentation governing any
Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated March 11, 1998
for the Company's 11% Senior Subordinated Notes due 2008.
"Officer" means the Chairman of the Board, the President, any Executive
Vice President, Senior Vice President or Vice President, the Treasurer or the
Secretary of the Company.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in this
Indenture.
"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.
"Pari Passu Indebtedness" means (i) with respect to the Company, the
Securities and any Indebtedness which ranks pari passu in right of payment to
the Securities and (ii) with respect to any Subsidiary Guarantor, its Subsidiary
Guarantee and any Indebtedness which ranks pari passu in right of payment to
such Subsidiary Guarantor's Subsidiary Guarantee.
"Permitted Holders" means Blackstone and the Management Group.
15
"Permitted Investments" means (i) any Investment in the Company or any
Restricted Subsidiary; (ii) any Investment in Cash Equivalents or Investment
Grade Securities; (iii) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person that is primarily engaged in a Similar
Business if as a result of such Investment (a) such Person becomes a Restricted
Subsidiary or (b) such Person, in one transaction or a series of related
transactions, is merged, consolidated or amalgamated with or into, or transfers
or conveys substantially all of its assets to, or is liquidated into, the
Company or a Restricted Subsidiary; (iv) any Investment in securities or other
assets not constituting Cash Equivalents and received in connection with an
Asset Sale made pursuant to Section 4.06 or any other disposition of assets not
constituting an Asset Sale; (v) any Investment existing on the Closing Date;
(vi) advances to employees (other than those described in clause (ix) below) not
in excess of $5,000,000 outstanding at any one time in the aggregate; (vii) any
Investment acquired by the Company or any of its Restricted Subsidiaries (a) in
exchange for any other Investment or accounts receivable held by the Company or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or accounts receivable or (b) as a result of a foreclosure by
the Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default; (viii) Hedging Obligations permitted under Section 4.03(b)(x); (ix)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
Incurred in the ordinary course of business; (x) any Investment in a Similar
Business (other than an Investment in an Unrestricted Subsidiary) having an
aggregate Fair Market Value, taken together with all other Investments made
pursuant to this clause (x) that are at that time outstanding, not to exceed the
greater of 2.5% of Total Tangible Assets or $10,000,000 at the time of such
Investment (with the Fair Market Value of each Investment being measured at the
time made and without giving effect to subsequent changes in value); (xi)
Investments the payment for which consists of Equity Interests of the Company
(other than Disqualified Stock); provided, however, that such Equity Interests
shall not increase the amount available for Restricted Payments under Section
4.04(a)(3); (xii) additional Investments having an aggregate Fair Market Value,
taken together with all other Investments made pursuant to this clause (xii)
that are at that time outstanding, not to exceed the greater of 2.5% of Total
Tangible Assets or $10,000,000 at the time of such Investment (with the Fair
Market Value of each Investment being measured at the time made and without
giving effect to subsequent changes in value); (xiii) any transaction to the
extent it constitutes an Investment that is permitted by and made in accordance
with the provisions of Section 4.07(b) (except transactions described in Section
4.07(b)(ii)); (xiv) any Investment by Restricted Subsidiaries in other
Restricted Subsidiaries and Investments by Subsidiaries that are not Restricted
Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries; and
(xv) Investments consisting of purchases and acquisitions of inventory,
supplies, materials and equipment or licenses or leases of intellectual
property, in each case in the ordinary course of business.
16
"Permitted Junior Securities" shall mean debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the same extent
that the Securities are subordinated to the payment of all Senior Indebtedness
of the Company on the Closing Date, so long as to the extent that any Senior
Indebtedness of the Company outstanding on the date of consummation of any such
plan of reorganization or readjustment is not paid in full in Cash Equivalents
on such date, the holders of any such Senior Indebtedness not so paid in full
have consented to the terms of such plan of reorganization or readjustment.
"Permitted Liens" means, with respect to any Person, (i) pledges or
deposits by such Person under workmen's compensation laws, unemployment
insurance laws, social security or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of business or
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements in respect of such obligations; (ii) Liens imposed
by law, such as carriers', warehousemen's and mechanics' Liens, in each case for
sums not yet due or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments or awards not in excess of $1,000,000
(except to the extent not covered by insurance) against such Person; (iii) Liens
for taxes, assessments or other governmental charges or levies not yet
delinquent, or which are for less than $1,000,000 in the aggregate, or are being
contested in good faith by appropriate proceedings or for property taxes on
property that the Company or one of its subsidiaries has determined to abandon
if the sole recourse for such tax assessment, charge, levy or claim is to such
property; (iv) Liens in favor of issuers of surety bonds and appeal bonds,
performance bonds and other obligations of a like nature Incurred in the
ordinary course of business or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of its business;
(v) survey exceptions, encumbrances, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person; (vi) Liens securing Purchase Money
Indebtedness; (vii) Liens to secure Indebtedness permitted pursuant to Section
4.03(b)(i); (viii) Liens existing on the Closing Date; (ix) Liens on property or
shares of stock of a Person at the time such Person becomes a Subsidiary;
provided, however, such Liens are not created or Incurred in connection with, or
in contemplation of, such other
17
Person becoming such a Subsidiary; provided further, however, that such Liens
may not extend to any other property owned by the Company or any Restricted
Subsidiary; (x) Liens on property at the time the Company or a Restricted
Subsidiary acquired the property, including any acquisition by means of a merger
or consolidation with or into the Company or any Restricted Subsidiary; provided
further, however, that such Liens are not created or Incurred in connection
with, or in contemplation of, such acquisition; provided further, however, that
the Liens may not extend to any other property owned by the Company or any
Restricted Subsidiary; (xi) Liens securing Indebtedness or other obligations of
a Restricted Subsidiary owing to the Company or a Wholly Owned Restricted
Subsidiary; (xii) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture, secured by a Lien
on the same property securing such Hedging Obligations; (xiii) any Lien arising
by operation of law pursuant to Section 107(1) of the Comprehensive
Environmental Response, Compensation and Liability Act, 41 U.S.C. Section
9607(1), or pursuant to analogous state law, for costs or damages which are not
yet due (by virtue of a written demand for payment by a governmental agency) or
which are being contested in good faith by appropriate proceedings, or on
property that the Company or a Subsidiary has determined to abandon if the sole
recourse for such costs or damages is to such property, provided that the
liability of the Company and the Subsidiaries with respect to the matter giving
rise to all such Liens shall not, in the reasonable estimate of the Company (in
light of all attendant circumstances, including the likelihood of contribution
by third parties), exceed $1,000,000; (xiv) construction liens arising in the
ordinary course of business, including liens for work performed for which
payment has not been made, securing obligations that are not due and payable or
are being contested in good faith by appropriate proceedings and in respect of
which, if applicable, the Company or the relevant Subsidiary shall have set
aside on its books reserves in accordance with GAAP; and (xv) Liens to secure
any refinancing, refunding, extension, renewal or replacement (or successive
refinancings, refundings, extensions renewals or replacements) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in the foregoing
clauses (vi), (viii), (ix) and (x); provided, however, that (A) such new Lien
shall be limited to all or part of the same property that secured the original
Lien (plus improvements on such property) and (B) the Indebtedness secured by
such Lien at such time is not increased to any amount greater than the sum of
(x) the outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (vi), (viii), (ix) or (x) at the time the
original Lien became a Permitted Lien under this Indenture and (y) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
18
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or with preferential right to the distribution of assets
upon liquidation, dissolution, or winding up.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security that is due or overdue or is to become
due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of the
deferred purchase price of property, conditional sale obligations, obligations
under any title retention agreement and other purchase money obligations, in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the asset being financed, and (ii) Incurred to
finance the acquisition by the Company or one of its Restricted Subsidiaries of
such asset, including additions and improvements; provided, however, that any
Lien arising in connection with any such Indebtedness shall be limited to the
specific asset being financed or, in the case of real property or fixtures,
including additions and improvements, the real property on which such asset is
attached; provided further, however, that such Indebtedness is Incurred within
270 days after such acquisition by the Company or one of its Restricted
Subsidiaries of such asset.
"Recapitalization Agreement" means the Recapitalization Agreement dated
October 14, 1997, among Xxxxxx Decorative Products Holdings, Inc., BDPI Holdings
Corporation and Xxxxxx, Inc.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. "Secured Indebtedness" of a Subsidiary Guarantor has a correlative
meaning.
"Securities" means the Securities issued under this Indenture.
19
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Credit Documents" means the collective reference to the Credit
Agreement, the notes issued pursuant thereto and the guarantees thereof, and the
collateral documents relating thereto.
"Senior Indebtedness" means with respect to the Company or any Subsidiary
Guarantor all Indebtedness of the Company or such Subsidiary Guarantor,
including interest thereon (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company or
any Subsidiary whether or not a claim for post-filing interest is allowed in
such proceeding) and other amounts (including fees, expenses, reimbursement
obligations under letters of credit and indemnities) owing in respect thereof,
whether outstanding on the Closing Date or thereafter Incurred, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are not superior in right of
payment to the Securities or such Subsidiary Guarantor's Subsidiary Guarantee,
as applicable; provided, however, that Senior Indebtedness shall not include, as
applicable, (i) any obligation of the Company to any Subsidiary of the Company,
or of such Subsidiary Guarantor to the Company or any other Subsidiary of the
Company, (ii) any liability for Federal, state, local or other taxes owed or
owing by the Company or such Subsidiary Guarantor, (iii) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), (iv)
any Indebtedness or obligation of the Company or such Subsidiary Guarantor which
is subordinate or junior in any respect to any other Indebtedness or obligation
of the Company or such Subsidiary Guarantor, as applicable, including any Pari
Passu Indebtedness and any Subordinated Indebtedness, (v) any obligations with
respect to any Capital Stock, or (vi) any Indebtedness Incurred in violation of
this Indenture. If any Senior Indebtedness is disallowed, avoided or
subordinated pursuant to the provisions of Section 548 of Title 11 of the United
States Code or any applicable state fraudulent conveyance law, such Senior
Indebtedness nevertheless shall constitute Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Similar Business" means a business, the majority of whose revenues are
derived from the decorative products business or any business or activity that
is reasonably similar thereto or a reasonable extension, development or
expansion thereof or ancillary thereto.
20
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Indebtedness" means (a) with respect to the Company, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Securities and (b) with respect to any Subsidiary Guarantor, any
Indebtedness of such Subsidiary Guarantor which is by its terms subordinated in
right of payment to its Subsidiary Guarantee.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity (other than a partnership, joint venture or
limited liability company) of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time of determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a
combination thereof and (ii) any partnership, joint venture or limited liability
company of which (x) more than 50% of the capital accounts, distribution rights,
total equity and voting interests or general and limited partnership interests,
as applicable, are owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of that Person or a combination
thereof, whether in the form of membership, general, special or limited
partnership interests or otherwise and (y) such Person or any Wholly Owned
Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.
"Subsidiary Guarantee" means any guarantee of the obligations of the
Company under this Indenture and the Securities by any Person in accordance with
the provisions of this Indenture.
"Subsidiary Guarantor" means any Person that Incurs a Subsidiary Guarantee;
provided that upon the release or discharge of such Person from its Subsidiary
Guarantee in accordance with this Indenture, such Person ceases to be a
Subsidiary Guarantor.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. xx.xx. 77aaa-
77bbbb) as in effect on the date of this Indenture.
"Total Tangible Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as shown on the most recent balance sheet of
the Company, except (a) goodwill (whether representing the excess of cost over
book
21
value of assets acquired or otherwise), patents, trade names, trademarks, trade
secrets, copyrights, licenses, franchises, customer lists, capitalized sample
book costs, research and development expense, organization expense, unamortized
debt discount and expense, deferred charges or assets other than prepaid
insurance, prepaid taxes and deferred taxes, the excess of cost of shares
acquired over book value of related assets and such other assets as are properly
classified as "intangible assets" in accordance with generally accepted
accounting principles, (b) treasury stock of such person, (c) cash set apart and
held in any sinking fund or similar or analogous fund for the purpose of
redeeming or otherwise retiring stock of such person, and (d) any write-up of
the book value of any assets of such person resulting from revaluation thereof
subsequent to the Closing Date.
"Transactions" has the meaning ascribed it in the Offering Memorandum.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H. 15(519)
which 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 or similar market data) most nearly equal to the
period from the redemption date to March 15, 2003 provided, however, that if the
period from the redemption date to March 15, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the redemption date to March 15, 2003 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.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means (i) any officer within the corporate trust department
of the Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and (ii) who shall have direct
responsibility for the administration of this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
22
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Subsidiary of the Company that
is not a Subsidiary of the Subsidiary to be so designated; provided, however,
that the Subsidiary to be so designated and its Subsidiaries do not at the time
of designation have and do not thereafter Incur any Indebtedness pursuant to
which the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries; provided further, however, that either (a) the
Subsidiary to be so designated has total consolidated assets of $1,000 or less
or (b) if such Subsidiary has consolidated assets greater than $1,000, then such
designation would be permitted under Section 4.04. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) (1) the
Company could Incur $1.00 of additional Indebtedness pursuant to Section 4.03(a)
or (2) the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries would be greater than such ratio for the Company and its Restricted
Subsidiaries immediately prior to such designation, in each case on a pro forma
basis taking into account such designation and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"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.
"Xxxxxx Plastics" means Xxxxxx Plastics, Inc., a Delaware corporation and a
wholly owned subsidiary of the Company.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
23
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ------------
"Additional Amounts" ...................................... 10.01
"Affiliate Transaction" ................................... 4.07(a)
"Asset Sale Offer" ........................................ 4.06(b)
"Bankruptcy Law" .......................................... 6.01
"Blockage Notice" ......................................... 10.03
"Change of Control Offer" ................................. 4.08(b)
"covenant defeasance option" .............................. 8.01(b)
"Custodian" ............................................... 6.01
"Event of Default" ........................................ 6.01
"Excess Proceeds" ......................................... 4.06(b)
"Guaranteed Obligations" .................................. 11.01
"legal defeasance option" ................................. 8.01(b)
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"Legal Holiday" ........................................... 13.08
"pay the Securities" ...................................... 10.03
"Paying Agent" ............................................ 2.04
"Payment Blockage Period" ................................. 10.03
"protected purchaser" ..................................... 2.08
"Refinancing Indebtedness" ................................ 4.03(b)
"Refunding Capital Stock" ................................. 4.04(b)
"Registrar" ............................................... 2.04
"Restricted Payments" ..................................... 4.04(a)
"Retired Capital Stock" ................................... 4.04(b)
"Successor Company" ....................................... 5.01(a)
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 and the Subsidiary Guarantees.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Subsidiary
Guarantors 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.
25
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) 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;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE 2
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 $275,000,000. The Securities may be issued in one or more
series. All Securities of any one series shall be substantially identical except
as to denomination.
With respect to any Additional Securities issued after the Closing Date
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
2.07, 2.08, 2.09 or 3.06 or the Appendix), there shall be (i) established in or
pursuant to a resolution of the Board of
26
Directors and (ii), (A) set forth or determined in the manner provided in an
Officer's Certificate or (B) established in one or more indentures supplemental
hereto, prior to the issuance of such Additional Securities:
(1) whether such Additional Securities shall be issued as part of a
new or existing series of Securities and the title of such Additional
Securities (which shall distinguish the Additional Securities of the series
from Securities of any other series);
(2) the aggregate principal amount of such Additional Securities which
may be authenticated and delivered under this Indenture, which shall be in
an aggregate principal amount not to exceed $150,000,000 (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 the Appendix and except for
Securities which, pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder);
(3) the issue price and issuance date of such Additional Securities,
including the date from which interest on such Additional Securities shall
accrue; provided; however, that no Additional Securities may be issued at a
price that would cause such Additional Securities to have "original issue
discount" within the meaning of Section 1273 of the Code.
(4) if applicable, that such Additional Securities shall be issuable
in whole or in part in the form of one or more Global Securities (as
defined in the Appendix) and, in such case, the respective depositaries for
such Global Securities, the form of any legend or legends which shall be
borne by such Global Securities in addition to or in lieu of those set
forth in Exhibit A hereto and any circumstances in addition to or in lieu
of those set forth in Section 2.3 of the Appendix in which any such Global
Security may be exchanged in whole or in part for Additional Securities
registered, or any transfer of such Global Security in whole or in part may
be registered, in the name or names of Persons other than the depositary
for such Global Security or a nominee thereof; and
(5) if applicable, that such Additional Securities shall not be issued
in the form of Initial Securities as set forth in Exhibit A, but shall be
issued in the form of Exchange Securities as set forth in Exhibit B.
Concurrently with the execution and delivery of any Additional Securities,
the Company shall deliver to the Trustee an Opinion of Counsel and an Officers'
Certificate to the effect that such Additional Securities have been duly
authorized by the Company and, when executed, authenticated, issued and
delivered, will be validly issued and outstanding and will constitute valid and
legally binding obligations of the Company
27
and the Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with their terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws relating
to creditors' rights generally and by general equitable principles (whether
considered in a proceeding at law or in equity). If any of the terms of any
Additional Securities are established by action taken pursuant to a resolution
of the Board of Directors, a copy of an appropriate record of such action shall
be certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the indenture supplemental hereto setting forth the terms of the
Additional Securities.
SECTION 2.02. Form and Dating. Provisions relating to the Original
Securities, the Additional Securities, the Private Exchange Securities and the
Exchange Securities are set forth in the Appendix, which is hereby incorporated
in and expressly made a part of this Indenture. The (i) Initial Securities and
the Trustee's certificate of authentication, (ii) Private Exchange Securities
and the Trustee's certificate of authentication and (iii) any Additional
Securities (if issued as Transfer Restricted Securities (as defined in the
Appendix)) and the Trustee's certificate of authentication shall each be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Exchange Securities and any
Additional Securities issued other than as Transfer Restricted Securities and
the Trustee's certificate of authentication shall each be substantially in the
form of Exhibit B hereto, which is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company or any Subsidiary Guarantor is subject, if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Company). Each Security shall be dated the date of its authentication.
SECTION 2.03. Execution and Authentication. One or more Officers 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.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate and make available for delivery Securities
as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Any such appointment shall be
evidenced by
28
an instrument signed by a Trust Officer, a copy of which shall be furnished to
the Company. 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 where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co- registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent, and the term
"Registrar" includes any co-registrars. The Company initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian (as defined in the Appendix) with respect to the
Global Securities.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent 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 organized Wholly Owned Subsidiaries may act as Paying Agent
or Registrar.
The Company may remove any Registrar or Paying Agent upon written notice to
such Registrar or Paying Agent and to the Trustee; provided, however, that no
such removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (2) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance
with clause (1) above. The Registrar or Paying Agent may resign at any time upon
written notice; provided, however, that the Trustee may resign as Paying Agent
or Registrar only if the Trustee also resigns as Trustee in accordance with
Section 7.08.
SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to 10:00 a.m. on
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent (or if the Company or a Subsidiary of the Company
is acting as Paying Agent, segregate and hold in trust for the benefit of the
Persons entitled thereto) a sum sufficient to pay such principal and interest
when so becoming due. The
29
Company shall require each Paying Agent (other than the Trustee, the Company or
a Subsidiary of the Company) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary of the Company 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, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar with
a request to register a transfer, the Registrar shall register the transfer as
requested if the requirements of Section 8-401(a)(l) of the Uniform Commercial
Code are met. When Securities are presented to the Registrar with a request to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or transfers or exchanges of
Securities for a period of 15 days before a selection of Securities to be
redeemed.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Subsidiary Guarantors, the Trustee, the Paying Agent and the
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, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
any Subsidiary Guarantor, the Trustee, the Paying Agent or the Registrar shall
be affected by notice to the contrary.
30
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
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.
SECTION 2.08. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (iii) 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 Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
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. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.09. 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 cancelation and those described in this Section as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.
31
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.10. Temporary Securities. In the event that Definitive Securities
(as defined in the Appendix) are to be issued under the terms of this Indenture,
until such Definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities upon a written order of
the Company signed by two Officers. Such order shall specify the amount of the
temporary Securities to be authenticated and the date on which such temporary
Securities are to be authenticated. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee (upon a written order of the Company
signed by two Officers) shall authenticate Definitive Securities and deliver
them in exchange for temporary Securities upon surrender of such temporary
Securities at the office or agency of the Company, without charge to the Holder.
SECTION 2.11. Cancelation. The Company at any time may deliver Securities
to the Trustee for cancelation. 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 all Securities
surrendered for registration of transfer, exchange, payment or cancelation and
deliver canceled Securities to the Company pursuant to written direction by an
Officer. The Company may not issue new Securities to replace Securities it has
redeemed, paid or delivered to the Trustee for cancelation. The Trustee shall
not authenticate Securities in place of canceled Securities other than pursuant
to the terms of this Indenture.
SECTION 2.12. 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
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or
32
cause to be mailed to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.13. 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 any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company, upon
becoming aware of any change in such "CUSIP" numbers, shall promptly notify the
Trustee of such change.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
shall occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption shall comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not fewer than 15 days after the date of notice to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. In the case of any
partial redemption, selection of the Securities for redemption shall be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which such Securities are listed, or if such
Securities are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee shall deem fair and appropriate (and in such manner as
complies with applicable legal requirements); provided that no Securities of
$1,000 or less shall be redeemed in part. 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.
33
SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60
days before a date for redemption of Securities, the Company shall mail or cause
to be mailed a notice of redemption by first-class mail to each Holder of
Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) 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 written 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.
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;
provided, however, that if the
34
redemption date is after a regular record date and on or prior to the interest
payment date, the accrued interest shall be payable to the Securityholder of the
redeemed Securities registered on the relevant record date. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption that have been delivered by the Company to the
Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay or
cause to be paid the principal of and interest on the Securities on the dates
and in the manner provided in the Securities and in this Indenture. Principal
and interest shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Indenture money
sufficient to pay all principal and interest then due and the Trustee or the
Paying Agent, as the case may be, is not prohibited from paying such money to
the Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02. Reports and Other Information. Notwithstanding that the
Company may not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act or otherwise report on an annual and quarterly basis on
forms provided for such annual and quarterly reporting pursuant to rules and
regulations promulgated by the SEC, the Company shall file with the SEC (and
provide the Trustee and Holders with copies thereof, without cost to each
Holder, within 15 days after it files them with the SEC), (i) within 90 days
after the end of each fiscal year, annual reports on Form 10- K (or any
successor or comparable form) containing the information required to be
contained therein (or required in such successor or comparable form), (ii)
within 45 days after the
35
end of each of the first three fiscal quarters of each fiscal year, reports on
Form 10-Q (or any successor or comparable form), (iii) promptly from time to
time after the occurrence of an event required to be therein reported, such
other reports on Form 8-K (or any successor or comparable form), and (iv) any
other information, documents and other reports that the Company would be
required to file with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act; provided, however, the Company shall not be so obligated to file
such reports with the SEC if the SEC does not permit such filing, in which event
the Company shall make available such information to prospective purchasers of
Securities, in addition to providing such information to the Trustee and the
Holders, in each case within 15 days after the time the Company would be
required to file such information with the SEC if it were subject to Section 13
or 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
SECTION 4.03. Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock. (a) The Company (i) shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) or issue any shares of Disqualified Stock and
(ii) shall not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Company and any Subsidiary
Guarantor may Incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock and the Subsidiary Guarantors may issue shares of
preferred stock if the Fixed Charge Coverage Ratio of the Company for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is Incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been Incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of such four-quarter period.
(b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) the Incurrence by the Company or its Restricted Subsidiaries of
Indebtedness under the Credit Agreement and the issuance and creation of
letters of credit and bankers' acceptances thereunder (with letters of
credit and bankers' acceptances being deemed to have a principal amount
equal to the face amount thereof) up to an aggregate principal amount of
$330,000,000 outstanding at any one time;
(ii) the Incurrence by the Company and the Subsidiary Guarantors of
Indebtedness represented by the Securities and the Subsidiary Guarantees,
as applicable;
36
(iii) Indebtedness existing on the Closing Date (other than
Indebtedness described in clauses (i) and (ii));
(iv) Purchase Money Indebtedness and Capitalized Lease Obligations
Incurred by the Company or any of its Restricted Subsidiaries, and any
Refinancing Indebtedness (as defined in clause (xiv) below relating
thereto, in an aggregate principal amount which, when aggregated with the
principal amount of all other Purchase Money Indebtedness, Capitalized
Lease Obligations and related Refinancing Indebtedness then outstanding and
Incurred pursuant to this clause (iv), does not exceed the greater of 3.5%
of Total Tangible Assets at the time of Incurrence or $15,000,000;
(v) Indebtedness Incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit or the Incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or Incurrence;
(vi) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, Incurred in connection with the
disposition of any business, assets or a Subsidiary of the Company in
accordance with the terms of this Indenture, other than guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such
acquisition;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company; provided that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any such
Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary of the Company or any other subsequent transfer of any such
Indebtedness (except to the Company or another Wholly Owned Restricted
Subsidiary) shall be deemed, in each case to be an Incurrence of such
Indebtedness;
(viii) shares of preferred stock of a Subsidiary Guarantor issued to
the Company or a Wholly Owned Restricted Subsidiary of the Company;
provided that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any such Subsidiary Guarantor ceasing to
be a Subsidiary Guarantor or any other subsequent transfer of any such
shares of preferred stock (except to the Company or another Wholly Owned
Restricted Subsidiary of the
37
Company) shall be deemed, in each case, to be an issuance of shares of
preferred stock;
(ix) Indebtedness of a Restricted Subsidiary to the Company or a
Wholly Owned Restricted Subsidiary of the Company; provided that any
subsequent transfer of any such Indebtedness (except to the Company or
another Wholly Owned Restricted Subsidiary of the Company) shall be deemed,
in each case, to be an Incurrence of such Indebtedness;
(x) Hedging Obligations that are Incurred in the ordinary course of
business (A) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of this
Indenture to be outstanding, (B) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges, or (C)
for the purpose of fixing or hedging commodity price risk with respect to
any commodity purchases;
(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(xii) Indebtedness of the Company and any Restricted Subsidiary not
otherwise permitted hereunder in an aggregate principal amount, which when
aggregated with the principal amount of all other Indebtedness then
outstanding and Incurred pursuant to this clause (xii), does not exceed
$10,000,000 at any one time outstanding; provided, however, that
Indebtedness of Foreign Subsidiaries, which when aggregated with the
principal amount of all other Indebtedness of Foreign Subsidiaries then
outstanding and Incurred pursuant to this clause (xii), does not exceed
$5,000,000 (or the equivalent thereof in any other currency) at any one
time outstanding;
(xiii) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the Incurrence
of such Indebtedness Incurred by such Restricted Subsidiary is permitted
under the terms of this Indenture;
(xiv) the Incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness which serves to refinance any Indebtedness
Incurred as permitted under Section 4.03(a) and clauses (ii) and (iii)
above or clause (xv) below of this Section 4.03(b), or any Indebtedness
issued to so refund or refinance such Indebtedness (subject to the
following proviso, "Refinancing Indebtedness") prior to its respective
maturity; provided, however, that such Refinancing Indebtedness (A) has a
Weighted Average
38
Life to Maturity at the time such Refinancing Indebtedness is Incurred
which is not less than the remaining Weighted Average Life to Maturity of
the Indebtedness being refunded or refinanced, (B) to the extent such
Refinancing Indebtedness refinances Indebtedness pari passu with the
Securities, is pari passu with the Securities, (C) is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced plus
premium and fees Incurred in connection with such refinancing, and (D)
shall not include (x) Indebtedness of a Subsidiary that refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary; provided further, however, that subclauses (A) and (B) of this
clause (xiv) shall not apply to any refunding or refinancing of any Senior
Indebtedness; and
(xv) Indebtedness or Disqualified Stock of Persons that are acquired
by the Company or any of its Restricted Subsidiaries or merged into a
Restricted Subsidiary in accordance with the terms of this Indenture;
provided, however, that such Indebtedness or Disqualified Stock is not
Incurred in contemplation of such acquisition or merger or to provide all
or a portion of the funds or credit support required to consummate such
acquisition or merger; provided further, however, that after giving effect
to such acquisition and the Incurrence of such Indebtedness either (A) the
Company would be permitted to Incur at least $1.00 of additional
Indebtedness pursuant to Section 4.03(a) or (B) the Fixed Charge Coverage
Ratio is greater than immediately prior to such acquisition; and
(xvi) Contribution Indebtedness.
(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness pursuant to Section 4.03(b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Indebtedness unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Indebtedness. For purposes of determining compliance with this Section 4.03, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of permitted Indebtedness described in clauses (i) through (xvi)
above or is entitled to be Incurred pursuant to Section 4.03(a), the Company
shall, in its sole discretion, classify such item of Indebtedness in any manner
that complies with this Section 4.03 and such item of Indebtedness shall be
treated as having been Incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness shall
not be deemed to be an Incurrence of Indebtedness for purposes of this Section
4.03.
(d) The Company shall not, and shall not permit any Subsidiary Guarantor
to, directly or indirectly, Incur any Indebtedness (including Acquired
39
Indebtedness) that is subordinate in right of payment to any Indebtedness of the
Company or any Indebtedness of any Subsidiary Guarantor, as the case may be,
unless such Indebtedness is either (i) pari passu in right of payment with the
Securities or such Subsidiary Guarantor's Subsidiary Guarantee, as the case may
be, or (ii) subordinate in right of payment to the Securities or such Subsidiary
Guarantor's Subsidiary Guarantee, as the case may be.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests,
including any payment made in connection with any merger or consolidation
involving the Company (other than (A) dividends or distributions by the Company
payable in Equity Interests (other than Disqualified Stock) of the Company or
(B) dividends or distributions by a Restricted Subsidiary so long as, in the
case of any dividend or distribution payable on or in respect of any class or
series of securities issued by a Restricted Subsidiary other than a Wholly Owned
Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least
its pro rata share of such dividend or distribution in accordance with its
Equity Interests in such class or series of securities); (ii) purchase or
otherwise acquire or retire for value any Equity Interests of the Company or any
Restricted Subsidiary (other than the purchase or other acquisition for value of
such Equity Interests held by the Company or another Restricted Subsidiary (and,
if such Restricted Subsidiary has stockholders other than the Company or other
Restricted Subsidiaries, Equity Interests held by such other stockholders on a
pro rata basis)); (iii) make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value, in each case prior to any
scheduled repayment or scheduled maturity, any Subordinated Indebtedness (other
than the payment, redemption, repurchase, defeasance, acquisition or retirement
of Subordinated Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of such payment, redemption, repurchase, defeasance,
acquisition or retirement); or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on a pro forma
basis, the Company could Incur $1.00 of additional Indebtedness under
Section 4.03(a); and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries
40
after the Closing Date (including Restricted Payments permitted by clauses
(i), (iv), (v), (vi), (vii), (viii) and (xiv) of Section 4.04(b), but
excluding all other Restricted Payments permitted by Section 4.04(b), is
less than the sum of, without duplication, (A) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from
the fiscal quarter that first begins after the Closing Date to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, in the case such Consolidated Net Income for such period is a deficit,
minus 100% of such deficit), plus (B) 100% of the aggregate net proceeds,
including cash and the fair market value (as determined in accordance with
the next succeeding sentence) of property other than cash, received by the
Company since the Closing Date from the issue or sale of Equity Interests
of the Company (excluding Refunding Capital Stock (as defined below),
Designated Preferred Stock, Excluded Contributions and Disqualified Stock),
including Equity Interests issued upon conversion of Indebtedness or upon
exercise of warrants or options (other than an issuance or sale to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any of its Subsidiaries to the extent such
issuance or sale was financed by loans from or guarantees by the Company or
one of its Subsidiaries), plus (C) 100% of the aggregate amount of
contributions to the capital of the Company received in cash and the fair
market value (as determined in accordance with the next succeeding
sentence) of property other than cash since the Closing Date (other than
Excluded Contributions), plus (D) 100% of the aggregate amount received in
cash and the fair market value (as determined in accordance with the next
succeeding sentence) of property other than cash received from (x) the sale
or other disposition (other than to the Company or a Restricted Subsidiary)
of Restricted Investments made by the Company and its Restricted
Subsidiaries or (y) the sale (other than to the Company or a Restricted
Subsidiary) of the Capital Stock of an Unrestricted Subsidiary, plus (E) in
the event any Unrestricted Subsidiary has been redesignated a Restricted
Subsidiary or has been merged, consolidated or amalgamated with or into, or
transfers or conveys its assets to, or is liquidated into, the Company or a
Restricted Subsidiary, the fair market value (as determined in good faith
by the Board of Directors) of such Investment in such Unrestricted
Subsidiary at the time of such redesignation, combination or transfer (or
of the assets transferred or conveyed, as applicable), after deducting any
Indebtedness associated with the Unrestricted Subsidiary so designated or
combined or any Indebtedness associated with the assets so transferred or
conveyed, not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included in
the calculation of the amount of Restricted Payments, less (F) the
aggregate principal amount of any outstanding Contribution Indebtedness or,
if less, the Cash Contribution Amount. The fair market value of property
other than cash covered by clauses (B), (C) and (D)
41
above shall be determined in good faith by the Company and (x) in the event
of property with a fair market value in excess of $1,000,000, shall be set
forth in an Officers' Certificate or (y) in the event of property with a
fair market value in excess of $10,000,000, shall be set forth in a
resolution approved by at least a majority of the Board of Directors.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) (A) the repurchase, retirement or other acquisition of any Equity
Interests ("Retired Capital Stock") or Subordinated Indebtedness of the
Company in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, Equity
Interests of the Company (other than any Disqualified Stock or any Equity
Interests sold to an employee stock ownership plan or any trust established
by the Company or any of its Subsidiaries to the extent such sale was
financed by loans from or guarantees by the Company or one of its
Subsidiaries) ("Refunding Capital Stock") and (B) the declaration and
payment of accrued dividends on the Retired Capital Stock out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of Refunding Capital Stock;
(iii) the redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, new Indebtedness of
the Company that is Incurred in accordance with Section 4.03 so long as (A)
the principal amount of such new Indebtedness does not exceed the principal
amount of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired for value (plus the amount of any premium required to
be paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired), (B) such
Indebtedness is subordinated to Senior Indebtedness and the Securities at
least to the same extent as such Subordinated Indebtedness so purchased,
exchanged, redeemed, repurchased, acquired or retired for value, (C) such
Indebtedness has a final scheduled maturity date equal to or later than the
final scheduled maturity date of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired, and (D) such Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
42
(iv) the repurchase, retirement or other acquisition for value of
Equity Interests of the Company held by any future, present or former
employee, director or consultant of the Company or any Subsidiary of the
Company pursuant to any management equity plan or stock option plan or any
other management or employee benefit plan or agreement; provided, however,
that the aggregate amounts paid under this clause (iv) does not exceed (A)
$5,000,000 in any calendar year and (B) $10,000,000 in the aggregate;
provided further, however, that such aggregate amount (but not annual
amount) may be increased by an amount not to exceed (I) the cash proceeds
from the sale of Equity Interests of the Company to members of management
or directors of the Company and its Subsidiaries that occurs after the
Closing Date plus (II) the cash proceeds of key man life insurance policies
received by the Company and its Restricted Subsidiaries after the Closing
Date;
(v) the declaration and payment of dividends to holders of any class
or series of Designated Preferred Stock issued after the Closing Date;
provided, however, that (A) for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of issuance of such Designated Preferred Stock, after
giving effect to such issuance on a pro forma basis, the Company would have
had a Fixed Charge Coverage Ratio of at least 2.50 to 1.00 and (B) the
aggregate amount of dividends declared and paid pursuant to this clause (v)
does not exceed the net cash proceeds received by the Company from the sale
of Designated Preferred Stock issued after the Closing Date;
(vi) Investments in Unrestricted Subsidiaries having an aggregate Fair
Market Value, taken together with all other Investments made pursuant to
this clause (vi) that are at that time outstanding, not to exceed
$5,000,000 at the time of such Investment (with the Fair Market Value of
each Investment being measured at the time made and without giving effect
to subsequent changes in value);
(vii) the payment of dividends on the Company's Common Stock,
following the first public offering of the Company's Common Stock after the
Closing Date, of up to 6% per annum of the net proceeds received by the
Company in such public offering;
(viii) the repurchase, retirement or other acquisition for value of
Equity Interests of the Company in existence on the Closing Date and which
are not held by Blackstone or the Management Group on the Closing Date
(including any Equity Interests issued in respect of such Equity Interests
as a result of a stock split, recapitalization, merger, combination,
consolidation or otherwise, but excluding any management equity plan or
stock option plan or similar agreement),
43
provided that (A) the aggregate amounts paid under this clause (viii) shall
not exceed $10,000,000 and (B) after giving effect thereto the Company
would be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to Section 4.03(a);
(ix) Investments that are made with Excluded Contributions;
(x) the payment of dividends in an amount not to exceed 50% of the Net
Proceeds in excess of $30,000,000 received by the Company or any of its
Restricted Subsidiaries from the sale of Xxxxxx Plastics; provided,
however, that for the most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the
date of such sale and the date of payment of any such dividends the Company
has a Fixed Charge Coverage Ratio (after giving effect to such sale) of at
least 2.50 to 1.00;
(xi) the declaration and payment of dividends to holders of any class
or series of Disqualified Stock of the Company issued in accordance with
Section 4.03;
(xii) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(xiii) Restricted Payments made on the Closing Date contemplated by
the Recapitalization Agreement; and
(xiv) other Restricted Payments in an aggregate amount not to exceed
$2,000,000; provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (v), (vi), (vii),
(viii), (ix), (x) and (xiv) of this Section 4.04(b), no Default or Event of
Default shall have occurred and be continuing or would occur as a
consequence thereof; provided further, however, that for purposes of
determining the aggregate amount expended for Restricted Payments in
accordance with clause (3) of Section 4.04(a), only the amounts expended
under clauses (i), (iv), (v), (vi), (vii), (viii) and (xiv) of this Section
4.04(b) shall be included.
SECTION 4.05. Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary to: (a)(i) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (ii) pay any
44
Indebtedness owed to the Company or any of its Restricted Subsidiaries; (b) make
loans or advances to the Company or any of its Restricted Subsidiaries; or (c)
sell, lease or transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries except in each case for such encumbrances or
restrictions existing under or by reason of:
(1) contractual encumbrances or restrictions in effect on the Closing
Date, including pursuant to the Credit Agreement and the other Senior
Credit Documents;
(2) this Indenture and the Securities;
(3) applicable law or any applicable rule, regulation or order;
(4) any agreement or other instrument relating to Indebtedness of a
Person acquired by the Company or any Restricted Subsidiary which was in
existence at the time of such acquisition (but not created in contemplation
thereof or to provide all or any portion of the funds or credit support
utilized to consummate such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired;
(5) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition;
(6) Secured Indebtedness otherwise permitted to be Incurred pursuant
to Sections 4.03 and 4.12 that limit the right of the debtor to dispose of
the assets securing such Indebtedness;
(7) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(8) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business;
(9) customary provisions contained in leases and other similar
agreements entered into in the ordinary course of business that impose
restrictions of the type described in clause (c) above;
(10) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired; or
45
(11) any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (1) through (10) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board
of Directors, no more restrictive with respect to such dividend and other
payment restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing.
SECTION 4.06. Asset Sales. (a) The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless (x)
the Company, or its Restricted Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (y) at least 75% of the
consideration therefor received by the Company, or such Restricted Subsidiary,
as the case may be, is in the form of Cash Equivalents; provided that the amount
of (i) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the Company
or any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Securities) that are assumed by the transferee of any such
assets, (ii) any notes or other obligations received by the Company or such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash within 60 days of the receipt thereof (to
the extent of the cash received), and (iii) any Designated Noncash Consideration
received by the Company or any of its Restricted Subsidiaries in such Asset Sale
having an aggregate Fair Market Value, taken together with all other Designated
Noncash Consideration received pursuant to this clause (iii) that is at that
time outstanding, not to exceed the greater of 3.5% of Total Tangible Assets or
$15,000,000 at the time of the receipt of such Designated Noncash Consideration
(with the Fair Market Value of each item of Designated Noncash Consideration
being measured at the time received and without giving effect to subsequent
changes in value) shall be deemed to be Cash Equivalents for the purposes of
this provision.
(b) Within 365 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i)
permanently to reduce Obligations under the Credit Agreement (and, in the case
of revolving Obligations, to correspondingly reduce commitments with respect
thereto) or other Senior Indebtedness or Pari Passu Indebtedness (provided that
if the Company shall so reduce Obligations under Pari Passu Indebtedness, it
shall equally and ratably reduce Obligations under the Securities by making an
offer (in accordance with the procedures set forth below for an Asset Sale
Offer) to all Holders to purchase at a purchase price equal to 100% of the
46
principal amount thereof, plus accrued and unpaid interest, if any, the pro rata
principal amount of Securities) or Indebtedness of a Restricted Subsidiary, in
each case other than Indebtedness owed to the Company or an Affiliate of the
Company, (ii) to an investment in any one or more businesses, capital
expenditures or acquisitions of other assets in each case used or useful in a
Similar Business, and/or (iii) to make an investment in properties or assets
that replace the properties and assets that are the subject of such Asset Sale.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. Any Net Proceeds from any Asset Sale
that are not invested as provided and within the time period set forth in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds". When the aggregate amount of Excess Proceeds exceeds $15,000,000, the
Company shall make an offer to all Holders of Securities (an "Asset Sale Offer")
to purchase the maximum principal amount of Securities, that is an integral
multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in this Indenture. The
Company shall commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business days after the date that Excess Proceeds exceeds $15,000,000
by mailing the notice required pursuant to the terms of this Indenture, with a
copy to the Trustee. To the extent that the aggregate amount of Securities
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Securities surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Securities
to be purchased in the manner described below. Upon completion of any such Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Company
may apply as a credit in satisfaction of all or any part of the Company's
obligation to make an Asset Sale Offer the aggregate principal amount of
Securities purchased by the Company in open-market transactions (excluding
Securities optionally redeemed, or required to be purchased by the Company,
pursuant to the terms of this Indenture) within the previous 24 consecutive
months.
(c) The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Securities pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Indenture by virtue thereof.
If more Securities are tendered pursuant to an Asset Sale Offer than the
Company is required to purchase, selection of such Securities for purchase shall
be made by the Trustee in compliance with the requirements of the principal
national securities
47
exchange, if any, on which such Securities are listed, or if such Securities are
not so listed, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements); provided that no Securities of $1,000 or less
shall be purchased in part.
Notices of an Asset Sale Offer shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the purchase date to each
Holder of Securities at such Holder's registered address.
A new Security in principal amount equal to the unpurchased portion of any
Security purchased in part shall be issued in the name of the Holder thereof
upon cancelation of the original Security. On and after the purchase date unless
the Company defaults in payment of the purchase price, interest shall cease to
accrue on Securities or portions thereof purchased.
SECTION 4.07. Transactions with Affiliates. (a) The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction") involving aggregate consideration in
excess of $5,000,000, unless (i) such Affiliate Transaction is on terms that are
not materially less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person and (ii)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10,000,000, the
Company delivers to the Trustee a resolution adopted by the majority of the
Board of Directors of the Company, approving such Affiliate Transaction and set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above.
(b) The provisions of Section 4.07(a) shall not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Permitted Investments and Restricted Payments permitted by
Section 4.04; (iii) the payment of annual monitoring fees to Blackstone in an
amount not to exceed $1,500,000 in any calendar year and any related
out-of-pocket expenses; (iv) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary; (v) payments by the
Company or any of its Restricted Subsidiaries to Blackstone made for any
financial advisory, financing, underwriting or placement services or in respect
of other investment banking activities, including, without limitation, in
connection with acquisitions or divestitures, which payments are approved by a
majority of the Board of Directors of the Company in good faith; (vi)
transactions in which the Company or any of
48
its Restricted Subsidiaries, as the case may be, delivers to the Trustee a
letter from a nationally recognized investment banking firm stating that such
transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view or meets the requirements of clause (i) of Section
4.07(a); (vii) payments or loans to employees in the ordinary course of business
in accordance with past practices which are approved by a majority of the Board
of Directors of the Company in good faith; (viii) any agreement as in effect as
of the Closing Date or any amendment thereto (so long as any such amendment is
not disadvantageous to the Holders of the Securities in any material respect) or
any transaction contemplated thereby; and (ix) the payment of all fees and
expenses related to the Transactions.
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each Holder
shall have the right to require that the Company repurchase all or any part of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.08(b); provided, however,
that notwithstanding the occurrence of a Change in Control, the Company shall
not be obligated to purchase the Securities pursuant to this Section 4.08 in the
event that it has exercised its right to redeem all the Securities under
paragraph 5 of the Securities. In the event that at the time of such Change of
Control the terms of the Bank Indebtedness restrict or prohibit the repurchase
of Securities pursuant to this Section 4.08, then prior to the mailing of the
notice to Holders provided for in Section 4.08(b) below but in any event within
60 days following any Change of Control, the Company shall (i) repay in full all
Bank Indebtedness or (ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness to permit the repurchase of the Securities as
provided for in Section 4.08(b).
(b) Within 30 days following any Change of Control (except as provided in
Section 4.08(a)), the Company shall mail a notice to each Holder with a copy to
the Trustee (the "Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof, 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);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
49
(3) the repurchase date (which shall be no earlier than 60 days nor
later than 90 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under
this Section shall be delivered to the Trustee for cancelation, and the Company
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the Company
shall not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in Section 4.08(b)
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 4.08, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with Section 314(a)(4) of
the TIA.
50
SECTION 4.10. 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 4.11. Future Subsidiary Guarantors. The Company shall cause each
Domestic Subsidiary that Incurs Indebtedness or that is a guarantor of
Indebtedness Incurred pursuant to Sections 4.03(b)(i) and 4.03(b)(xii) to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary shall guarantee payment of the Securities. Each Subsidiary
Guarantee shall be limited to an amount not to exceed the maximum amount that
can be guaranteed by that Subsidiary without rendering the Subsidiary Guarantee,
as it relates to such Subsidiary, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
SECTION 4.12. Liens. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to
exist any Lien on any asset or property of the Company or such Restricted
Subsidiary, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, that secures any obligations of the Company or any of
its Subsidiaries (other than Senior Indebtedness) unless the Securities are
equally and ratably secured with (or on a senior basis to, in the case of
obligations subordinated in right of payment to the Securities) the obligations
so secured until such time as such obligations are no longer secured by a Lien.
The preceding sentence shall not require the Company or any Restricted
Subsidiary to secure the Securities if the Lien consists of a Permitted Lien.
No Subsidiary Guarantor shall directly or indirectly create, Incur or
suffer to exist any Lien on any asset or property of such Subsidiary Guarantor
or any income or profits therefrom, or assign or convey any right to receive
income therefrom, that secures any obligation of such Subsidiary Guarantor
(other than Senior Indebtedness of such Subsidiary Guarantor) unless the
Subsidiary Guarantee of such Subsidiary Guarantor is equally and ratably secured
with (or on a senior basis to, in the case of obligations subordinated on right
of payment to such Subsidiary Guarantor's Subsidiary Guarantee) the obligations
so secured. The preceding sentence shall not require any Subsidiary Guarantor to
secure its Subsidiary Guarantee if the Lien consists of a Permitted Lien.
ARTICLE 5
Successor Company
SECTION 5.01. (a) Merger, Consolidation, or Sale of All or Substantially
All Assets. The Company shall not consolidate with or merge with or into,
51
or wind up into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to any Person unless:
(i) the Company is the surviving corporation or the Person formed by
or surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (the Company or such Person, as the case
may be, being herein called the "Successor Company");
(ii) the Successor Company (if other than the Company) expressly
assumes all the obligations of the Company under this Indenture and the
Securities pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any of
its Restricted Subsidiaries as a result of such transaction as having been
Incurred by the Successor Company or such Restricted Subsidiary at the time
of such transaction) no Default or Event of Default shall have occurred and
be continuing;
(iv) immediately after giving pro forma effect to such transaction, as
if such transaction had occurred at the beginning of the applicable
four-quarter period, the Successor Company would be permitted to Incur at
least $1.00 of additional Indebtedness pursuant to Section 4.03(a) or the
Fixed Charge Coverage Ratio for the Successor Company and its Restricted
Subsidiaries would be greater than such ratio for the Company and its
Restricted Subsidiaries immediately prior to such transaction;
(v) each Subsidiary Guarantor, unless it is the other party to the
transaction described above, shall have by supplemental indenture confirmed
that its Subsidiary Guarantee shall apply to such Person's obligations
under this Indenture and the Securities; and
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, the Company
under this Indenture and the Securities.
52
(b) Each Subsidiary Guarantor shall not, and the Company shall not permit a
Subsidiary Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Subsidiary Guarantor is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, any Person unless:
(i) such Subsidiary Guarantor is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if other
than such Subsidiary Guarantor) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof, the District of Columbia, or any territory thereof (such
Subsidiary Guarantor or such Person, as the case may be, being herein
called the 'successor Guarantor");
(ii) the Successor Guarantor (if other than such Subsidiary Guarantor)
expressly assumes all the obligations of such Subsidiary Guarantor under
this Indenture and such Subsidiary Guarantors's Subsidiary Guarantee
pursuant to a supplemental indenture or other documents or instruments in
form reasonably satisfactory to the Trustee;
(iii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Guarantor or any of its Subsidiaries as a result of such transaction as
having been Incurred by the Successor Guarantor or such Subsidiary at the
time of such transaction) no Default or Event of Default shall have
occurred and be continuing; and
(iv) the Subsidiary Guarantor shall have delivered or caused to be
delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture.
The Successor Guarantor shall succeed to, and be substituted for, such
Subsidiary Guarantor under this Indenture and such Subsidiary Guarantor's
Subsidiary Guarantee.
Notwithstanding anything to the contrary stated above, (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or to another Restricted Subsidiary and (b)
the Company may merge with an Affiliate incorporated solely for the purposes of
reincorporating the Company in another state of the United States so long as the
amount of Indebtedness of the Company and its Restricted Subsidiaries is not
increased thereby.
53
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohib ited by Article 10, and such default continues for a period of 30
days;
(2) the Company defaults in the payment of the principal or premium,
if any, of any Security when due at its Stated Maturity, upon optional
redemption, upon required repurchase, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article 10;
(3) the Company fails to comply with Section 5.01 and such failure
continues for 30 days;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11 or 4.12 (other than a failure to purchase Securities
when required under Section 4.06 or 4.08) and such failure continues for 30
days after the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2), (3)
or (4) above) and such failure continues for 60 days after the notice
specified below;
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or the
acceleration by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $15,000,000 or
its foreign currency equivalent;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
54
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 consecutive days;
(9) any judgment or decree for the payment of money in excess of
$15,000,000 or its foreign currency equivalent is entered against the
Company or any Significant Subsidiary and is not discharged, waived or
stayed and either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there is a period of 60 days
following the entry of such judgment or decree during which such judgment
or decree is not discharged, waived or the execution thereof stayed; or
(10) any Subsidiary Guarantee shall cease to be in full force and
effect (except as contemplated by the terms thereof) or any Subsidiary
Guarantor shall deny or disaffirm its obligations under this Indenture or
any Subsidiary Guarantee and such Default continues for 10 days after the
notice specified below.
The foregoing shall constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
55
A Default under clause (4) or (5) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in clause (4) or (5), as the case may be,
after receipt of such notice. Such notice must specify the Default, demand that
it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the outstanding Securities by notice to the
Company, may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquies cence 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
principal amount of the Securities by notice to the Trustee may waive an
existing Default
56
and its consequences except (i) a Default in the payment of the principal
of or interest on a Security (ii) a Default arising from the failure to
redeem or purchase any Security when required pursuant to the terms of this
Indenture or (iii) a Default under Section 9.02 that cannot be amended
without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemni fication
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to receive
payment of principal or interest when due, no Securityholder may pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
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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 liquidated damages 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 speci fied
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, any Subsidiary or Subsidiary
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disburse ments and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, and any liquidated damages without
preference or priority of any kind, according to the amounts due and
payable on the Securi ties for principal, any liquidated damages and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the
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Trustee shall mail to each Securityholder and the Company 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 does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company nor any
Subsidiary Guarantor (to the extent it may lawfully do so) shall at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company and each Subsidiary Guarantor (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.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in their exercise as
a prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to
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the requirements of this Indenture. However, in the case of any such
certificates or opinions which any provisions hereof specifically require
to be furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(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;
(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.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the
TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
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(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, 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 Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at the
time outstanding, but the Trustee, in its discretion, may 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 and at the sole cost of the Company.
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-paying agent may
do the same with like rights. However, the Trustee must comply with Sections
7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in this Indenture or in any document issued in connection with
the sale of the Securities or in the Securities other than the Trustee's
certificate of authentication.
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SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the Default within the earlier of 90 days after it occurs or 30 days
after it is known to a Trust Officer or written notice of it, referencing the
Securities and this Indenture, is received by the Trustee at its address
specified pursuant to Section 13.02. Except in the case of a Default in payment
of principal of or interest on any Security (including payments pursuant to the
mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as practicable
after each March 1 beginning with the March 1 following the date of this
Indenture, and in any event prior to May 1 in each year, the Trustee shall mail
to each Securityholder a brief report dated as of March 1 that complies with
Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of
the TIA.
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. 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 such compensation for its services as the Trustee and the Company shall
from time to time agree in writing. 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 (except any such expenses as may be
attributable to the Trustee's negligence or bad faith). Such expenses shall
include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company and each
Subsidiary Guarantor, jointly and severally shall indemnify the Trustee against
any and all loss, liability or expense (including reasonable attorneys' fees and
expenses) incurred by or in connection with the administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Company of
any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; provided, however, that any failure so to notify the Company
shall not relieve the Company or any Subsidiary Guarantor of its indemnity
obligations hereunder. The Company shall defend the claim and the indemnified
party shall provide reasonable cooperation at the Company's expense in the
defense. Such indemnified parties may have separate counsel and the Company and
the Subsidiary Guarantors, as applicable shall pay the reasonable fees and
expenses of such counsel; provided, however, that the Company shall not be
required to pay such fees and expenses if it assumes such indemnified parties'
defense with counsel reasonably acceptable to the indemnified party and, in such
indemnified parties' reasonable
62
judgment, there is no conflict of interest between the Company and the
Subsidiary Guarantors, as applicable, and such parties in connection with such
defense. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by an indemnified party through such party's
own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, 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 and any liquidated damages on particular Securities.
The Company's payment obligations pursuant to this Section shall survive
the satisfaction or discharge of this Indenture, any rejection or termination of
this Indenture under any bankruptcy law or the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer
63
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 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined
capital and surplus of at least $100,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b); 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
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ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA
ss. 311(a) to the extent indicated.
ARTICLE 8
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 2.08) for cancelation 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 3 hereof and
the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due shall be
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 2.08), 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
acknow ledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.12 and the operation of
Section 5.01(a)(iv), 6.01(4), 6.01(6), 6.01(7) (with respect to Significant
Subsidiaries of the Company only), 6.01(8) (with respect to Significant
Subsidiaries of the Company only), 6.01(9) and 6.01(10) ("covenant defeasance
option"). In the event that the Company terminates all of its obligations under
the Securities and this Indenture by exercising either its legal defeasance
option or its covenant defeasance option, the obligations under the Subsidiary
Guarantees shall each be terminated simultaneously with the termination of such
obligations.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Securities may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the Securities may not be accelerated
because of an Event of Default specified in Section 6.01(4), 6.01(6), 6.01(7)
(with respect to Significant Subsidiaries of the Company only), 6.01(8) (with
respect to Significant Subsidiaries of the Company only) 6.01(9), and 6.01(10)
or because of the failure of the Company to comply with clause (iv) of Section
5.01(a).
65
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, 2.08, 2.09, 7.07, 7.08 and in this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the pay ments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment shall provide cash at such times and in
such amounts as shall be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) 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;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders shall not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and shall be subject to
Federal income tax on the same amounts, in the
66
same manner and at the same times as would have been the case if such
defeasance had not occurred;
(7) 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
Security holders shall not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and shall 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
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article 8
by
67
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 or Article 12 that would limit or
terminate the benefits available to any holder of Senior Indebtedness (or
Representatives therefor) under Article 10 or Article 12;
(5) to add additional Guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
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(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to provide for the issuance of the Exchange Securities, Private
Exchange Securities or Additional Securities, which shall have terms
substantially identical in all material respects to the Original Securities
(except that the transfer restrictions contained in the Original Securities
shall be modified or eliminated, as appropriate), and which shall be
treated, together with any outstanding Original Securities, as a single
issue of securities.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or Article 12 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Securities). However, without the consent of each Securityholder affected,
an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) 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 3;
(5) make any Security payable in money other than that stated in the
Security;
69
(6) make any change in Article 10 or Article 12 that adversely affects
the rights of any Securityholder under Article 10 or Article 12;
(7) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02; or
(8) modify or affect in any manner adverse to the Holders the terms
and conditions of the obligation of any Subsidiary Guarantor for the due
and punctual payment of the principal of or any liquidated damages or
interest on the Securities.
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.
An amendment under this Section 9.02 may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
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 Securityholder. An amendment or
waiver becomes effective once both (i) the requisite number of consents have
been received by the Company or the Trustee and (ii) such amendment or waiver
has been executed by the Company and the Trustee.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those
70
Persons who were Securityholders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company so determines, the Company in exchange for
the Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company and the Subsidiary
Guarantors enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03).
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 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner
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provided in this Article 10, to the prior payment in full of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. The Securities shall in
all respects rank pari passu with all other Pari Passu Indebtedness of the
Company and only Indebtedness of the Company that is Senior Indebtedness of the
Company shall rank senior to the Securities in accordance with the provisions
set forth herein. For purposes of this Article 10, the Indebtedness evidenced by
the Securities shall be deemed to include the liquidated damages payable
pursuant to the provisions set forth in the Securities and the Registration
Agreement (the "Additional Amounts"). All provisions of this Article 10 shall be
subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Company upon a total or partial liquidation or
dissolution or reorganization of or similar proceeding relating to the Company
or its property, the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of the Senior Indebtedness before
the Securityholders are entitled to receive any payment and until the Senior
Indebtedness is paid in full in Cash Equivalents, any payment or distribution to
which Securityholders would be entitled but for this Article 10 shall be made to
holders of the Senior Indebtedness as their interest may appear (except that
Holders of Securities may receive and retain (i) Permitted Junior Securities,
and (ii) payments made from the trust described under Section 8.01 so long as,
on the date or dates the respective amounts were paid into the trust, such
payments were made with respect to the Securities without violating this Article
10. If a distribution is made to Securityholders that due to this Article 10
should not have been made to them, such Securityholders are required to hold it
in trust for the holders of Senior Indebtedness and pay it over to them as their
interests may appear.
SECTION 10.03. Default on Senior Indebtedness. The Company may not pay
principal of or interest on (or Additional Amounts in respect of), the
Securities or make any deposit pursuant to Section 8.01 and may not otherwise
purchase, redeem or otherwise retire any Securities (except that Holders may
receive and retain (a) Permitted Junior Securities and (b) payments made from
the trust described in Section 8.01) (collectively, "pay the Securities") if (i)
a default in the payment of the principal of or interest on any Designated
Senior Indebtedness of the Company occurs and is continuing or any other amount
owing in respect of any Designated Senior Indebtedness of the Company is not
paid when due, or (ii) any other default on Designated Senior Indebtedness of
the Company occurs and the maturity of such Designated Senior Indebtedness of
the Company is accelerated in accordance with its terms unless, in either case,
the default has been cured or waived and any such acceleration has been
rescinded or such Designated Senior Indebtedness of the Company has been paid in
full in Cash Equivalents. However, the Company may pay the Securities without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representative of the Designated Senior
Indebtedness of the Company with
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respect to which either of the events set forth in clause (i) or (ii) of the
immediately preceding sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the second preceding sentence) with respect to any Designated Senior
Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of the Designated Senior Indebtedness of the Company specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full in Cash Equivalents of such Designated Senior
Indebtedness of the Company or (iii) because the default giving rise to such
Blockage Notice is no longer continuing). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this paragraph and in Section 10.02), unless
the holders of such Designated Senior Indebtedness of the Company or the
Representative of such holders have accelerated the maturity of such Designated
Senior Indebtedness of the Company, the Company may resume payments on the
Securities after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness of the
Company during such period. However, if any Blockage Notice within such 360-day
period is given by or on behalf of any holders of Designated Senior Indebtedness
of the Company other than the Bank Indebtedness, the Representative of the Bank
Indebtedness may give one additional Blockage Notice within such period. In no
event, however, may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this Section 10.03, no default or event
of default that existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness of
the Company initiating such Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Payment Blockage Period by the
Representative of such Designated Senior Indebtedness of the Company, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If payment of the
Securities is accelerated because of an Event of Default, the Company or the
Trustee (at the written direction of the Company) shall promptly notify the
holders of the Designated Senior Indebtedness of the Company (or their
Representative) of the acceleration. If any Designated Senior Indebtedness of
the Company is outstanding, the Company may not pay the Securities until five
Business Days after such holders or the
73
Representative of the Designated Senior Indebtedness of the Company receive
notice of such acceleration and, thereafter, may pay the Securities only if this
Article 10 otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a distribution is
made to Securityholders that because of this Article 10 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Company and pay it over to them
as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the Company is
paid in full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article 10 to holders of such Senior Indebtedness which otherwise would have
been made to Securityholders is not, as between the Company and Securityholders,
a payment by the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the relative rights
of Securityholders and holders of Senior Indebtedness of the Company. Nothing in
this Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of
and interest on and liquidated damages in respect of, the Securities in
accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of the Company to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding Section
10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than three
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that payments may not be made under
this Article 10. The Company, the Registrar, the Paying Agent, a Representative
or a holder of Senior Indebtedness of the
74
Company may give the notice; provided, however, that, if an issue of Senior
Indebtedness of the Company has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and the Paying Agent may do the same with like rights.
The Trustee shall be entitled to all the rights set forth in this Article 10
with respect to any Senior Indebtedness of the Company which may at any time be
held by it, to the same extent as any other holder of such Senior Indebtedness;
and nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right
To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Secu rityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article 8 by the Trustee for the
payment of principal of and interest on the Securities shall not be subordinated
to the prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article 10, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 10, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that
75
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of the Company as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness of the Company and shall not be liable to any such holders
if it shall mistakenly pay over or distribute to Securityholders or the Company
or any other Person, money or assets to which any holders of Senior Indebtedness
of the Company shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of the
Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in this
Article shall apply to amounts due to the Trustee pursuant to other sections of
this Indenture.
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ARTICLE 11
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees. Each Subsidiary Guarantor hereby
jointly and severally unconditionally and irrevocably guarantees, as a primary
obligor and not merely as a surety, to each Holder and to the Trustee and its
successors and assigns (a) the full and punctual payment of principal of and
interest on and liquidated damages in respect of the Securities when due,
whether at Stated Maturity, by acceleration, by redemption or otherwise, and all
other monetary obligations of the Company under this Indenture (including
obligations to the Trustee) and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company whether for expenses, indemnification or otherwise under this Indenture
and the Securities (all the foregoing being hereinafter collectively called the
"Guaranteed Obligations"). Each Subsidiary Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from each such Subsidiary Guarantor, and that each such
Subsidiary Guarantor shall remain bound under this Article 11 notwithstanding
any extension or renewal of any Guaranteed Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Securities or the Guaranteed Obligations. The obligations of
each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of
any Holder or the Trustee to assert any claim or demand or to enforce any right
or remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee
to exercise any right or remedy against any other guarantor of the Guaranteed
Obligations; or (f) any change in the ownership of such Subsidiary Guarantor,
except as provided in Section 11.02(b).
Each Subsidiary Guarantor hereby waives any right to which it may be
entitled to have its obligations hereunder divided among the Subsidiary
Guarantors, such that such Subsidiary Guarantor's obligations would be less than
the full amount claimed. Each Subsidiary Guarantor hereby waives any right to
which it may be entitled to have the assets of the Company first be used and
depleted as payment of the Company's or such Subsidiary Guarantor's obligations
hereunder prior to any amounts being claimed from or paid by such Subsidiary
Guarantor hereunder. Each Subsidiary Guarantor hereby
77
waives any right to which it may be entitled to require that the Company be sued
prior to an action being initiated against such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
The Subsidiary Guarantee of each Subsidiary Guarantor is, to the extent and
in the manner set forth in Article 12, subordinated and subject in right of
payment to the prior payment in full of the of and premium, if any, and interest
on all Senior Indebtedness of the relevant Subsidiary Guarantor and is made
subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the
obligations of each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Securities or any other agreement, by any waiver or modification
of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of any Subsidiary Guarantor or would otherwise operate as a
discharge of any Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor agrees that its Subsidiary Guarantee shall remain
in full force and effect until payment in full of all the Guaranteed
Obligations. Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of or interest
on any Guaranteed Obligation is rescinded or must otherwise be restored by any
Holder or the Trustee upon the bankruptcy or reorganization of the Company or
otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other
78
Guaranteed Obligation, each Subsidiary Guarantor hereby promises to and shall,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i)
the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and
unpaid interest on such Guaranteed Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary obligations of the Company to
the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations and all obligations to which the Guaranteed Obligations are
subordinated as provided in Article 12. Each Subsidiary Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may
be accelerated as provided in Article 6 for the purposes of any Subsidiary
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations guaranteed
hereby, and (y) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purposes of this Section 11.01.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section 11.01.
Upon request of the Trustee, each Subsidiary Guarantor 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 11.02. Limitation on Liability. (a) Any term or provision of this
Indenture to the contrary notwithstanding, the maximum, aggregate amount of the
Guaranteed Obligations guaranteed hereunder by any Subsidiary Guarantor shall
not exceed the maximum amount that can be hereby guaranteed without rendering
this Indenture, as it relates to such Subsidiary Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
(b) A Subsidiary Guarantee shall be automatically released upon the sale
(including through merger or consolidation) of the Capital Stock, or all or
substantially all the assets, of the applicable Subsidiary Guarantor if (i) such
sale is made in compliance with Section 4.06 and (ii) such Subsidiary Guarantor
is released from its guarantees of, and all pledges and security granted in
connection with, the Credit Agreement and any other Indebtedness of the Company
or any Subsidiary Guarantor. A Subsidiary Guarantee
79
also shall be automatically released upon the applicable Subsidiary Guarantor
ceasing to be a Subsidiary of the Company as a result of any foreclosure of any
pledge or security interest securing Bank Indebtedness or other exercise of
remedies in respect thereof if such Subsidiary Guarantor is released from its
guarantees of, and all pledges and security interests granted in connection
with, the Credit Agreement. At the request of the Company, the Trustee shall
execute and deliver an appropriate instrument evidencing such release.
SECTION 11.03. Successors and Assigns. This Article 11 shall be binding
upon each Subsidiary Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of any
provision of this Article 11, nor the consent to any departure by any Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future Subsidiary
Guarantors. Each Subsidiary which is required to become a Subsidiary Guarantor
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which such
Subsidiary shall become a Subsidiary Guarantor under this Article 11 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether
80
considered in a proceeding at law or in equity, the Subsidiary Guarantee of such
Subsidiary Guarantor is a legal, valid and binding obligation of such Subsidiary
Guarantor, enforceable against such Subsidiary Guarantor in accordance with its
terms.
ARTICLE 12
Subordination of the Subsidiary Guarantees
SECTION 12.01. Agreement To Subordinate. Each Subsidiary Guarantor agrees,
and each Securityholder by accepting a Security agrees, that the obligations of
a Subsidiary Guarantor hereunder are subordinated in right of payment, to the
extent and in the manner provided in this Article 12, to the prior payment in
full of all Senior Indebtedness of such Subsidiary Guarantor and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness of such Subsidiary Guarantor. The obligations hereunder with
respect to a Subsidiary Guarantor shall in all respects rank pari passu with all
other Pari Passu Indebtedness of such Subsidiary Guarantor and shall rank senior
to all existing and future Subordinated Indebtedness of such Subsidiary
Guarantor; and only Indebtedness of such Subsidiary Guarantor that is Senior
Indebtedness of such Subsidiary Guarantor shall rank senior to the obligations
of such Subsidiary Guarantor in accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of a Subsidiary Guarantor upon a total or partial
liquidation or dissolution or in a bankruptcy, reorganization or similar
proceeding relating to such Subsidiary Guarantor and its properties, the holders
of Senior Indebtedness shall be entitled to receive payment in full in cash or
Cash Equivalents of the Senior Indebtedness before the Securityholders are
entitled to receive any payment and until the Senior Indebtedness is paid in
full in Cash Equivalents, any payment or distribution to which Securityholders
would be entitled but for this Article 12 shall be made to holders of the Senior
Indebtedness as their interest may appear. If a distribution is made to
Securityholders that due to this Article 12 should not have been made to them,
such Securityholders are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them as their interests may appear.
SECTION 12.03. Default on Designated Senior Indebtedness of a Subsidiary
Guarantor. A Subsidiary Guarantor may not make any payment pursuant to any of
the Guaranteed Obligations or repurchase, redeem or otherwise retire any
Securities (collectively, "pay its Guarantee") if (i) any amount owing in
respect of any Designated Senior Indebtedness of such Subsidiary Guarantor is
not paid when due or (ii) any other default on Senior Indebtedness of such
Subsidiary Guarantor occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
the default has been cured or waived and any such
81
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full in Cash Equivalents. However, such Subsidiary Guarantor may pay its
Guarantee without regard to the foregoing if such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representative of
the holders of such Designated Senior Indebtedness with respect to which either
of the events set forth in clause (i) or (ii) of the immediately preceding
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the second preceding
sentence) with respect to any Designated Senior Indebtedness of a Subsidiary
Guarantor pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Subsidiary
Guarantor may not pay its Guarantee for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to such Subsidiary
Guarantor and the Company) of written notice (a "Blockage Notice") of such
default from the Representative of the holders of the Designated Senior
Indebtedness of such Subsidiary Guarantor specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee (with
a copy to such Subsidiary Guarantor and the Company) from the Person or Persons
who gave such Blockage Notice, (ii) because such Designated Senior Indebtedness
has been repaid in full in Cash Equivalents or (iii) because the default giving
rise to such Blockage Notice is no longer continuing). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this paragraph and in Section
12.02), unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, such Subsidiary Guarantor may resume to paying
its Guarantee after the end of such Payment Blockage Period, including any
missed payments. Not more than one Blockage Notice may be given with respect to
a Subsidiary Guarantor in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness of such
Subsidiary Guarantor during such period.
SECTION 12.04. Demand for Payment. If payment of the Securities is
accelerated because of an Event of Default and a demand for payment is made on a
Subsidiary Guarantor pursuant to Article 11, the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness of such Subsidiary Guarantor
(or the Representative of such holders) of such demand. If any Designated Senior
Indebtedness of such Subsidiary Guarantor is outstanding, such Subsidiary
Guarantor may not pay its Guarantee until five Business Days after such holders
or the Representative of the holders of the Designated Senior Indebtedness of
such Subsidiary Guarantor receive notice of such demand and, thereafter, may pay
its Guarantee only if this Article 12 otherwise permits payment at that time.
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SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the relevant Subsidiary Guarantor and pay it over to them
as their respective interests may appear.
SECTION 12.06. Subrogation. After all Designated Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the Securities are paid in full
in cash, Securityholders shall be subrogated to the rights of holders of
Designated Senior Indebtedness of such Subsidiary Guarantor to receive
distributions applicable to Designated Senior Indebtedness of such Subsidiary
Guarantor. A distribution made under this Article 12 to holders of Designated
Senior Indebtedness of such Subsidiary Guarantor which otherwise would have been
made to Securityholders is not, as between such Subsidiary Guarantor and
Securityholders, a payment by such Subsidiary Guarantor on Designated Senior
Indebtedness of such Subsidiary Guarantor.
SECTION 12.07. Relative Rights. This Article 12 defines the relative rights
of Securityholders and holders of Designated Senior Indebtedness of a Subsidiary
Guarantor. Nothing in this Indenture shall:
(1) impair, as between a Subsidiary Guarantor and Securityholders, the
obligation of a Subsidiary Guarantor which is absolute and unconditional,
to make payments with respect to the Guaranteed Obligations to the extent
set forth in Article 11; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by a Subsidiary Guarantor under its
obligations with respect to the Guaranteed Obligations, subject to the
rights of holders of Designated Senior Indebtedness of such Subsidiary
Guarantor to receive distributions otherwise payable to Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by a Subsidiary Guarantor.
No right of any holder of Designated Senior Indebtedness of a Subsidiary
Guarantor to enforce the subordination of the obligations of such Subsidiary
Guarantor hereunder shall be impaired by any act or failure to act by such
Subsidiary Guarantor or by its failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding Section
12.03, the Trustee or the Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than three
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice
83
satisfactory to it that payments may not be made under this Article 12. A
Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Designated Senior Indebtedness of a Subsidiary
Guarantor may give the notice; provided, however, that if an issue of Designated
Senior Indebtedness of a Subsidiary Guarantor has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of a Subsidiary Guarantor with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set forth
in this Article 12 with respect to any Senior Indebtedness of a Subsidiary
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Subsidiary Guarantor; and nothing in
Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing
in this Article 12 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Subsidiary Guarantor, the distribution may be made and the notice given to
their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit Right
To Accelerate. The failure of a Subsidiary Guarantor to make a payment on any of
its obligations by reason of any provision in this Article 12 shall not be
construed as preventing the occurrence of a default by such Subsidiary Guarantor
under such obligations. Nothing in this Article 12 shall have any effect on the
right of the Securityholders or the Trustee to make a demand for payment on a
Subsidiary Guarantor pursuant to Article 11.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 12, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Designated
Senior Indebtedness of a Subsidiary Guarantor for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the holders
of the Designated Senior Indebtedness such Subsidiary Guarantor and other
Indebtedness of a Subsidiary Guarantor, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 12. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Designated Senior Indebtedness of a Subsidiary Guarantor to
participate in any payment or distribution
84
pursuant to this Article 12, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Designated Senior Indebtedness of such Subsidiary Guarantor held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 12, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his or her behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Securityholders and the holders of Senior
Indebtedness of each of the Subsidiary Guarantors as provided in this Article 12
and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of
a Subsidiary Guarantor. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness of a Subsidiary Guarantor and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the relevant Subsidiary Guarantor or any other Person,
money or assets to which any holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Subsidiary
Guarantor on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of a Subsidiary Guarantor, whether such Senior
Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
SECTION 12.16. Defeasance. The terms of this Article 12 shall not apply to
payments from money or the proceeds of U.S. Government Obligations held in trust
by the Trustee for the payment of principal of and interest on the Securities
pursuant to the provisions described in Section 8.03.
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ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
if to the Company:
The Imperial Home Decor Group Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention of: Chief Financial Officer
if to the Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention of:
Corporate Trust Trustee Administration
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 Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
86
SECTION 13.03. Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA ss. 312(b) with other Securityholders 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 13.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) except with respect to the Original Securities, an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent
have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direc tion, waiver or consent, Securities owned by the Company, any Subsidiary
Guarantor or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any Subsidiary
Guarantor shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the
87
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.
Subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director, officer, employee 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 Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company and each
Subsidiary Guarantor in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have
88
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.
89
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE IMPERIAL HOME DECOR GROUP
INC.,
by ______________________
Name:
Title:
THE IMPERIAL HOME DECOR GROUP
(US) LLC,
by ______________________
Name:
Title:
MARKETING SERVICE, INC.,
by ______________________
Name:
Title:
XXXXXX PLASTICS, INC.,
by ______________________
Name:
Title:
WDP INVESTMENTS, INC.,
by ______________________
Name:
Title:
IMPERIAL HOME DECOR GROUP
HOLDINGS I LIMITED,
by ______________________
Name:
Title:
00
XXX XXXX XX XXX XXXX, as Trustee
by ______________________
Name:
Title:
APPENDIX A
PROVISIONS RELATING TO ORIGINAL SECURITIES,
ADDITIONAL SECURITIES, PRIVATE EXCHANGE 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:
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Temporary Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Definitive Security" means a certificated Initial Security or Exchange
Security (bearing the Restricted Securities Legend if the transfer of such
Security is restricted by applicable law) that does not include the Global
Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that caption in
Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Chase Securities Inc. and Bear, Xxxxxxx & Co.
Inc.
"Private Exchange" means an offer by the Company, pursuant to a
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.
2
"Private Exchange Securities" means the Securities of the Company issued in
exchange for Initial Securities pursuant to this Indenture in connection with a
Private Exchange pursuant to a Registration Agreement.
"Purchase Agreement" means (i) the Purchase Agreement dated March 11, 1998,
among BDPI Holdings Corporation, a Delaware corporation that was merged with and
into the Company prior to the issuance of the Original Securities, the
Subsidiary Guarantors and the Initial Purchasers and (ii) any other similar
Purchase Agreement relating to Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means an 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 their Initial Securities, a like
aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means (i) the Exchange and Registration Rights
Agreement dated March 13, 1998, among the Company, the Subsidiary Guarantors and
the Initial Purchasers and (ii) any other similar Exchange and Registration
Rights Agreement relating to Additional Securities.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and sold
outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
such Securities are first offered to persons other than distributors (as defined
in Regulation S under the Securities Act) in reliance on Regulation S and (ii)
the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and sold to
QIBs in reliance on Rule 144A.
3
"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 Depositary) or any successor person thereto, who
shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement filed by the
Company in connection with the offer and sale of Initial Securities pursuant to
a Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any other
Securities that bear or are required to bear the Restricted Securities Legend.
1.2 Other Definitions
Term: Defined in Section:
----- -------------------
"Agent Members" ....................................................... 2.1(b)
"IAI Global Security .................................................. 2.1(a)
"Global Security" ..................................................... 2.1(a)
"Rule 144A Global Security" ........................................... 2.1(a)
2. The Securities
2.1 Form and Dating
The Initial Securities issued on the date hereof shall be (i) offered and
sold by the Company pursuant to a Purchase Agreement and (ii) resold, initially
only to (A) QIBs in reliance on Rule 144A and (B) Persons other than U.S.
Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial
Securities may thereafter be transferred to, among others, QIBs, purchasers in
reliance on Regulation S and, except as set forth below, IAIs in accordance with
Rule 501. Additional Securities offered after the date hereof may be offered and
sold by the Company from time to time pursuant to one or more Purchase
Agreements in accordance with applicable law.
(a) Global Securities. Rule 144A Securities 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") and Regulation S
Securities shall be issued initially in the form of one or more global
Securities (collectively, the "Regulation S Global Security"), in each case
without interest coupons and bearing the Global Securities Legend and Restricted
Securities Legend, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities Custodian, and registered in
the name of
4
the Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. One or more global
securities in definitive, fully registered form without interest coupons and
bearing the Global Securities Legend and the Restricted Securities Legend
(collectively, the "IAI Global Security") shall also be issued on the Closing
Date, deposited with the Securities Custodian, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture to accommodate
transfers of beneficial interests in the Securities to IAIs subsequent to the
initial distribution. Beneficial ownership interests in the Regulation S Global
Security shall not be exchangeable for interests in the Rule 144A Global
Security, the IAI Global Security or any other Security without a Restricted
Securities Legend until the expiration of the Restricted Period. The Rule 144A
Global Security, the IAI Global Security and the Regulation S Global Security
are each referred to herein as a "Global Security" and 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 Depositary 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 Depositary.
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 Depositary for such Global Security or Global Securities or the nominee
of such Depositary and (b) shall be delivered by the Trustee to such Depositary
or pursuant to such Depositary's instructions or held by the Trustee as
Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as Securities Custodian or under such
Global Security, and the Depositary 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 any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
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 shall not be entitled to receive
physical delivery of certificated Securities.
5
2.2 Authentication. The Trustee shall authenticate and make available for
delivery upon a written order of the Company signed by two Officers (1) Original
Securities for original issue on the date hereof in an aggregate principal
amount of $125,000,000 (2) subject to the terms of this Indenture, Additional
Securities in an aggregate principal amount of up to $150,000,000 and (3) the
(A) Exchange Securities for issue only in a Registered Exchange Offer and (B)
Private Exchange Securities for issue only in a Private Exchange, in the case of
each of (A) and (B) pursuant to a Registration Agreement and for a like
principal amount of Initial Securities exchanged pursuant thereto. Such order
shall specify the amount of the Securities to be authenticated, the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities, Exchange Securities or Private Exchange
Securities. The aggregate principal amount of Securities outstanding at any time
may not exceed $275,000,000 except as provided in Section 2.08 of this
Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the 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 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,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) 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 (in
the form set forth on the reverse side of the Initial Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse side of the Initial Security); or
6
(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 side of the
Initial Security) and (ii) if the Company so requests, an opinion of
counsel or other evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the legend set forth in
Section 2.3(d)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Registrar, together with:
(i) certification (in the form set forth on the reverse side of the
Initial Security) that such Definitive Security is being transferred (A) to
a QIB in accordance with Rule 144A, (B) to an IAI that has furnished to the
Trustee a signed letter substantially in the form of Exhibit D or (C)
outside the United States in an offshore transaction within the meaning of
Regulation S and in compliance with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Security
equal to the principal amount of the Definitive Security so canceled. If no
Global Securities are then outstanding and the Global Security has not been
previously exchanged for certificated securities pursuant to Section 2.4, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the
7
Depositary, in accordance with this Indenture (including applicable restrictions
on transfer set forth herein, if any) and the procedures of the Depositary
therefor. A transferor of a beneficial interest in a Global Security shall
deliver a written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary to be
credited with a beneficial interest in such Global Security or another Global
Security and such account shall be credited in accordance with such order with a
beneficial interest in the applicable 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. Transfers by an owner of a
beneficial interest in the Rule 144A Global Security or the IAI Global Security
to a transferee who takes delivery of such interest through the Regulation S
Global Security, whether before or after the expiration of the Restricted
Period, shall be made only upon receipt by the Trustee of a certification from
the transferor to the effect that such transfer is being made in accordance with
Regulation S or (if available) Rule 144 under the Securities Act and that, if
such transfer is being made prior to the expiration of the Restricted Period,
the interest transferred shall be held immediately thereafter through Euroclear
or Cedel. In the case of a transfer of a beneficial interest in either the
Regulation S Global Security or the Rule 144A Global Security for an interest in
the IAI Global Security, the transferee must furnish a signed letter
substantially in the form of Exhibit D to the Trustee.
(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 Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be exchanged
only in accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Securities intended to
ensure that such transfers comply with Rule 144A, Regulation S or such
other
8
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.
(d) Restrictions on Transfer of Regulation S Global Security. (i) Prior to
the expiration of the Restricted Period, interests in the Regulation S Global
Security may only be held through Euroclear or Cedel. During the Restricted
Period, beneficial ownership interests in the Regulation S Global Security may
only be sold, pledged or transferred through Euroclear or Cedel in accordance
with the Applicable Procedures and only (A) to the Company, (B) so long as such
security is eligible for resale pursuant to Rule 144A, to a person whom the
selling Holder reasonably believes is a QIB that purchases for its own account
or for the account of a QIB to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, (C) in an offshore transaction
in accordance with Regulation S, (D) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act, (E) to an IAI purchasing for its own account, or for the account
of such an IAI, in a minimum principal amount of Securities of $250,000 or (F)
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. Prior to the expiration of the Restricted Period, transfers by an
owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Security to the effect that such transfer is being made
to (i) a person whom the transferor reasonably believes is a QIB within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or
(ii) an IAI purchasing for its own account, or for the account of such an IAI,
in a minimum principal amount of the Securities of $250,000. Such written
certification shall no longer be required after the expiration of the Restricted
Period. In the case of a transfer of a beneficial interest in the Regulation S
Global Security for an interest in the IAI Global Security, the transferee must
furnish a signed letter substantially in the form of Exhibit D to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of this
Indenture.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and
9
all Securities issued in exchange therefor or in substitution thereof)
shall bear a legend in substantially the following form (each defined term
in the legend being defined as such for purposes of the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
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
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY AND
THE TRUSTEE'S
10
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
Each Definitive Security shall also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security 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 Original or Additional Securities or
Private Exchange Securities during the period of the effectiveness of a
Shelf Registration Statement with respect to such Original or Additional
Securities or Private Exchange Securities, as the case may be, all
requirements pertaining to the Restricted Securities Legend on such
Original or Additional Securities or such Private Exchange Securities shall
cease to apply and the requirements that any such Original or Additional
Securities or such Private Exchange Securities be issued in global form
shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Original or Additional Securities pursuant to which Holders of such
Original or Additional Securities are offered Exchange Securities in
exchange for their Original or Additional Securities, all requirements
pertaining to Original or Additional Securities that Original or Additional
Securities be issued in global form shall continue to apply, and Exchange
Securities in global form without the Restricted Securities Legend shall be
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Original or Additional Securities pursuant to which Holders of such
Original or Additional
11
Securities are offered Private Exchange Securities in exchange for their
Original or Additional Securities, all requirements pertaining to such
Original or Additional Securities that Original or Additional Securities be
issued in global form shall continue to apply, and Private Exchange
Securities in global form with the Restricted Securities Legend shall be
available to Holders that exchange such Original or Additional Securities
in such Private Exchange.
(vi) Upon a sale or transfer after the expiration of the Restricted
Period of any Initial Security acquired pursuant to Regulation S, all
requirements that such Initial Security bear the Restricted Securities
Legend shall cease to apply and the requirements requiring any such Initial
Security be issued in global form shall continue to apply.
(vii) Any Additional Securities sold in a registered offering shall
not be required to bear the Restricted Securities Legend.
(f) Cancelation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, 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.
(g) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Section 3.06, 4.06, 4.08 and 9.05 of the Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the Person in whose name a Security is registered as the
absolute owner of such Security
12
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
or the Registrar shall be affected by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records
of the Depositary 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 Depositary) 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
Depositary 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 Depositary subject to the applicable rules and pro cedures of the
Depositary. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depositary 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 Inden ture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depositary 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
13
principal amount of such Global Security, in exchange for such Global Security,
only if such transfer complies with Section 2.3 and (i) the Depositary notifies
the Company that it is unwilling or unable to continue as a Depositary for such
Global Security or if at any time the Depositary ceases to be a "clearing
agency" registered under the Exchange Act, and a successor depositary is not
appointed by the Company within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated 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 Depositary 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. 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 Depositary shall direct.
Any certificated Initial Security in the form of a Definitive Security delivered
in exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), 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 which 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 shall promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
EXHIBIT 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 WILL 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 WILL 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"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER
2
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER 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 "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Definitive Security shall also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
No. [$__________]
11% Senior Subordinated Note due 2008
CUSIP No. ______
THE IMPERIAL HOME DECOR GROUP INC., a Delaware corporation, promises to pay
to Cede & Co., or registered assigns, the principal sum [of ___________ Dollars]
[listed on the Schedule of Increases or Decreases in Global Security attached
hereto]1 on March 15, 2008.
Interest Payment Dates: September 15 and March 15.
Record Dates: September 1 and March 1.
----------
1 Use the second set of bracketed language for a Global Security.
2
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.
THE IMPERIAL HOME DECOR GROUP
INC.,
by
-------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
[FORM OF REVERSE SIDE OF SECURITY]
11% Senior Subordinated Note due 2008
Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Indenture (as defined).
1. Interest
(a) THE IMPERIAL HOME DECOR GROUP INC., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
shall pay interest semiannually on September 15 and March 15 of each year.
Interest on the Securities shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 13, 1998.
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 borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
(b) Liquidated Damages. The Holder of this Security is entitled to the
benefits of an Exchange and Registration Rights Agreement, dated as of March 13,
1998, among the Company, each Subsidiary of the Company listed on the signature
pages hereto (the "Subsidiary Guarantors") 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. If (i) the Shelf Registration Statement or Exchange
Offer Registration Statement, as applicable under the Registration Agreement, is
not filed with the SEC on or prior to 120 days after the Issue Date, (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 Issue Date,
(iii) the Registered Exchange Offer is not consummated on or prior to 210 days
after the Issue Date, or (iv) the Shelf Registration Statement is filed and
declared effective within 180 days after the Issue Date but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company shall pay
liquidated damages to each Holder of Transfer Restricted Securities, during the
period of such Registration Default, in an amount equal to $0.192 per week per
$1,000 principal amount of the Securities constituting Transfer Restricted
Securities held by such Holder until the applicable Registration Statement is
filed or declared effective, the Registered Exchange Offer is consummated or the
Shelf Registration Statement again becomes effective, as the case may be. All
accrued liquidated damages shall be paid to Holders in the same manner as
interest payments on the Securities on semi-annual payment dates which
correspond to interest payment dates for the Securities.
2
Following the cure of all Registration Defaults, the accrual of liquidated
damages shall cease. The Trustee shall have no responsibility with respect to
the determination of the amount of any such liquidated damages. For purposes of
the foregoing, "Transfer Restricted Securities" means (i) each Initial Security
until the date on which such Initial Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Initial Security or Private Exchange Security until the date on which such
Initial Security or Private Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with a Shelf Registration
Statement or (iii) each Initial Security or Private Exchange Security until the
date on which such Initial Security or Private Exchange Security is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the September 1 or March 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 shall 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, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company shall make all
payments in respect of a certificated Security (including principal, premium and
interest), and the Securities may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the principal corporate trust office of the Trustee, at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000), except that, at the option of the
Company, payment of interest may be made by check mailed to the Holders at their
registered addresses; 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, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), shall 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.
3
4. Indenture
The Company issued the Securities under an Indenture dated as of March 13,
1998 (the "Indenture"), among the Company, the Subsidiary Guarantors 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"). The Securities are subject to all such terms, and Securityholders are
referred to the Indenture and the TIA for a statement of those terms.
The Securities are senior subordinated unsecured obligations of the Company
limited to $275,000,000 aggregate principal amount at any one time outstanding
(subject to Sections 2.01 and 2.08 of the Indenture), of which $125,000,000 in
aggregate principal amount shall be initially issued on the Closing Date.
Subject to the conditions set forth in the Indenture, the Company may issue up
to an additional $150,000,000 aggregate principal amount of Additional
Securities. This Security is one of the [Original Securities] [Additional
Securities] referred to in the Indenture issued in an aggregate principal amount
of $[ ]. The Securities include the Original Securities, the Additional
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture. The Original
Securities, the Additional Securities, the Exchange Securities and the Private
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 Indebtedness, 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 to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
To guarantee the due and punctual payment of the principal and interest on
the Securities and all other amounts payable by the Company under the Indenture
and the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture, the Subsidiary Guarantors have, jointly and severally,
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
4
5. Optional Redemption
The Securities shall be redeemable, at the Company's option, in whole or in
part, at any time on or after March 15, 2003, and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address, at the following redemption prices (expressed
as a percentage of principal amount), 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 relevant interest payment date), if
redeemed during the 12-month period commencing on March 15 of the years set
forth below:
Redemption
Year Price
---- -----
2003 105.500%
2004 103.667%
2005 101.833%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to March 15, 2001, the
Company may redeem in the aggregate up to 331/3% of the original aggregate
principal amount of the Securities with the net cash proceeds of one or more
Equity Offerings by the Company, at a redemption price (expressed as a
percentage of principal amount thereof) of 111.000% 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 relevant interest payment
date); provided, however, that at least 662/3% of the original aggregate
principal amount of the Securities must remain outstanding after each such
redemption; and provided further that such redemption shall occur within 360
days after the date on which any such Equity Offering is consummated.
At any time prior to March 15, 2003, the Securities may be redeemed as a
whole but not in part at the option of the Company upon the occurrence of a
Change of Control, upon not less than 30 or more than 60 days' prior notice (but
in no event may any such redemption occur more than 90 days after the occurrence
of such Change of Control) mailed by first-class mail to each Holder's
registered address, at a redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium as of, and accrued but unpaid interest, if
any, to, the redemption date, subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date.
6. Sinking Fund
The Securities are not subject to any sinking fund.
5
7. Notice of Redemption
Notice of redemption shall 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. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities shall 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.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company and each Subsidiary
Guarantor agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
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 and transfer documents and the Company may require a
Holder to pay any taxes required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Security 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
Security for a period of 15 days prior to a selection of Securities to be
redeemed.
6
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
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended without prior notice to any Securityholder 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 Holder of Securities, the Company and the Trustee may amend
the Indenture or the Securities (i) to cure any ambiguity, omission, defect or
inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide
for uncertificated Securities in addition to or in place of certificated
Securities; (iv) to add Subsidiary Guarantees with respect to the Securities;
(v) to secure the Securities; (vi) to add additional covenants or to surrender
rights and powers conferred on the Company; (vii) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (viii) to make any change that does not adversely
affect the rights of any Securityholder; (ix) to make any change in the
subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or
Representatives therefor) under Article 10 of the Indenture; or (x) to provide
for the issuance of the Exchange Securities, Private Exchange Securities, or
Additional Securities.
7
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company) and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs, the principal of and interest on all the Securities shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Securities may rescind any such
acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under
no obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder may pursue any remedy with respect to
the Indenture or the Securities unless (i) such Holder has previously given the
Trustee notice that an Event of Default is continuing, (ii) Holders of at least
25% in principal amount of the outstanding Securities have requested the Trustee
in writing to pursue the remedy, (iii) such Holders have offered the Trustee
reasonable security or indemnity against any loss, liability or expense, (iv)
the Trustee has not complied with such request within 60 days after the receipt
of the request and the offer of security or indemnity and (v) the Holders of a
majority in principal amount of the outstanding Securities have not given the
Trustee a direction inconsistent with such request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal amount
of the outstanding Securities are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
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.
8
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
any Subsidiary Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. 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 shall furnish to any Holder of Securities upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Security.
9
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
2
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, 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; or
(3) |_| inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) 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;
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; or
(5) |_| to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements; or
(6) |_| pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act.
Unless one of the boxes is checked, the Trustee shall 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 (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal
3
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
[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 in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
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 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.08 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 FACE OF EXCHANGE SECURITY]
No. [$__________]
11% Senior Subordinated Note due 2008
CUSIP No. ______
THE IMPERIAL HOME DECOR GROUP INC., a Delaware corporation, promises to pay
to Cede & Co., or registered assigns, the principal sum [of ___________ Dollars]
[listed on the Schedule of Increases or Decreases in Global Security attached
hereto]1 on March 15, 2008.
Interest Payment Dates: September 15 and March 15.
Record Dates: September 1 and March 1.
----------
1 Use the second set of bracketed language for a Global Security.
2
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.
THE IMPERIAL HOME DECOR GROUP
INC.,
by
_______________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
______________________________
Authorized Signatory
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11% Senior Subordinated Note due 2008
Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Indenture (as defined).
1. Interest
THE IMPERIAL HOME DECOR GROUP INC., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
shall pay interest semiannually on September 15 and March 15 of each year.
Interest on the Securities shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 13, 1998.
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 borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the September 1 or March 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 shall 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, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company shall make all
payments in respect of a certificated Security (including principal, premium and
interest), and the Securities may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the principal corporate trust office of the Trustee, at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000), except that, at the option of the
Company, payment of interest may be made by check mailed to the Holders at their
registered addresses; 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).
2
3. Paying Agent and Registrar
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), shall 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 March 13,
1998 (the "Indenture"), among the Company, the Subsidiary Guarantors 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"). The Securities are subject to all such terms, and Securityholders are
referred to the Indenture and the TIA for a statement of those terms.
The Securities are senior subordinated unsecured obligations of the Company
limited to $275,000,000 aggregate principal amount at any one time outstanding
(subject to Sections 2.01 and 2.08 of the Indenture), of which $125,000,000 in
aggregate principal amount was initially issued on the Closing Date. Subject to
the conditions set forth in the Indenture, the Company may issue up to an
additional $150,000,000 aggregate principal amount of Additional Securities.
This Security is one of the [Exchange Securities] [Private Exchange Securities]
referred to in the Indenture. The Securities include the Original Securities,
the Additional Securities and any Exchange Securities and Private Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture. The Original Securities, the Additional Securities, the Exchange
Securities and the Private 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 Indebtedness, 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 to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
To guarantee the due and punctual payment of the principal and interest on
the Securities and all other amounts payable by the Company under the Indenture
and the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture, the Subsidiary Guarantors have, jointly and severally,
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
3
5. Optional Redemption
The Securities shall be redeemable, at the Company's option, in whole or in
part, at any time on or after March 15, 2003, and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address, at the following redemption prices (expressed
as a percentage of principal amount), 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 relevant interest payment date), if
redeemed during the 12-month period commencing on March 15 of the years set
forth below:
Redemption
Year Price
---- -----------
2003 105.500%
2004 103.667%
2005 101.833%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to March 15, 2001, the
Company may redeem in the aggregate up to 331/3% of the original aggregate
principal amount of the Securities with the net cash proceeds of one or more
Equity Offerings by the Company, at a redemption price (expressed as a
percentage of principal amount thereof) of 111.000% 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 relevant interest payment
date); provided, however, that at least 662/3% of the original aggregate
principal amount of the Securities must remain outstanding after each such
redemption; and provided further that such redemption shall occur within 360
days after the date on which any such Equity Offering is consummated.
At any time prior to March 15, 2003, the Securities may be redeemed as a
whole but not in part at the option of the Company upon the occurrence of a
Change of Control, upon not less than 30 or more than 60 days' prior notice (but
in no event may any such redemption occur more than 90 days after the occurrence
of such Change of Control) mailed by first-class mail to each Holder's
registered address, at a redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium as of, and accrued but unpaid interest, if
any, to, the redemption date, subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date.
6. Sinking Fund
The Securities are not subject to any sinking fund.
4
7. Notice of Redemption
Notice of redemption shall 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. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities shall 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.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company and each Subsidiary
Guarantor agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
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 and transfer documents and the Company may require a
Holder to pay any taxes required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Security 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
Security for a period of 15 days prior to a selection of Securities to be
redeemed.
5
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
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended without prior notice to any Securityholder 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 Holder of Securities, the Company and the Trustee may amend
the Indenture or the Securities (i) to cure any ambiguity, omission, defect or
inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide
for uncertificated Securities in addition to or in place of certificated
Securities; (iv) to add Subsidiary Guarantees with respect to the Securities;
(v) to secure the Securities; (vi) to add additional covenants or to surrender
rights and powers conferred on the Company; (vii) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (viii) to make any change that does not adversely
affect the rights of any Securityholder; (ix) to make any change in the
subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or
Representatives therefor) under Article 10 of the Indenture; or (x) to provide
for the issuance of the Exchange Securities, Private Exchange Securities, or
Additional Securities.
6
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company) and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs, the principal of and interest on all the Securities shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Securities may rescind any such
acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under
no obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder may pursue any remedy with respect to
the Indenture or the Securities unless (i) such Holder has previously given the
Trustee notice that an Event of Default is continuing, (ii) Holders of at least
25% in principal amount of the outstanding Securities have requested the Trustee
in writing to pursue the remedy, (iii) such Holders have offered the Trustee
reasonable security or indemnity against any loss, liability or expense, (iv)
the Trustee has not complied with such request within 60 days after the receipt
of the request and the offer of security or indemnity and (v) the Holders of a
majority in principal amount of the outstanding Securities have not given the
Trustee a direction inconsistent with such request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal amount
of the outstanding Securities are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
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.
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17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
any Subsidiary Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. 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 shall furnish to any Holder of Securities upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Security.
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security. Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program or other signature guarantor acceptable to the Trustee.
[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 in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
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 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.08 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 C
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
____________, among [GUARANTOR] (the "New Guarantor"), a subsidiary of THE
IMPERIAL HOME DECOR GROUP INC. (or its successor), a Delaware corporation
(the "Company") and THE BANK OF NEW YORK, a New York banking corporation,
as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company and [OLD GUARANTORS] (the "Existing Guarantors") has
heretofore executed and delivered to the Trustee an Indenture (the "Indenture")
dated as of March 13, 1998 , providing for the issuance of an aggregate
principal amount of up to $275,000,000 of 11% Senior Notes due 2008 (the
"Securities");
WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all the Company's obligations under
the Securities pursuant to a Subsidiary Guarantee on the terms and conditions
set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company
and the Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:
1. Agreement to Guarantee. The New Guarantor hereby agrees, jointly and
severally with all the Existing Guarantors, to unconditionally guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth in Article 10 of the Indenture and to be bound by all other
applicable provisions of the Indenture and the Securities.
2. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect. This Supplemental
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Indenture shall form a part of the Indenture for all purposes, and every holder
of Securities heretofore or hereafter authenticated and delivered shall be bound
hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no representation as
to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience only
and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
by
________________________________
Name:
Title:
THE IMPERIAL HOME DECOR GROUP INC.,
by
________________________________
Name:
Title:
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[EXISTING GUARANTORS],
by
________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee,
by
________________________________
Name:
Title:
EXHIBIT D
Form of
Transferee Letter of Representation
The Imperial Home Decor Group Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $__________ principal
amount of the 11% Senior Subordinated Notes due 2008 (the "Securities") of The
Imperial Home Decor Group Inc. (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
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predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB")
that is purchasing for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d) in
an offshore transaction within the meaning of, and in compliance with,
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 $250,000, 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 shall 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 (d), (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
____________________________
