HOLLYWOOD ENTERTAINMENT CORPORATION,
as Issuer,
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
10 5/8% Senior Subordinated Notes Due 2004
--------------------
INDENTURE
Dated as of August 13, 1997
--------------------
CROSS-REFERENCE TABLE
TIA Section Indenture Section
----------- -----------------
310 (a)(1)......................................................7.9; 7.10
(a)(2) ..........................................................7.10
(a)(3)...........................................................N.A.
(a)(4)...........................................................N.A.
(b).........................................................7.8; 7.10
(c)..............................................................N.A.
311 (a)..............................................................7.11
(b)..............................................................7.11
312 (a)...............................................................2.5
(b).........................................................2.5; 11.3
(c)..............................................................11.3
313 (a)...............................................................7.6
(b)(1)............................................................7.6
(b)(2)...........................................................N.A.
(c)..............................................................11.2
(d)...............................................................7.6
314 (a)...................................................4.2; 4.10; 11.2
(b)..............................................................N.A.
(c)(1)...........................................................11.4
(c)(2)...........................................................11.4
(c)(3)...........................................................N.A.
(d)..............................................................N.A.
(e)..............................................................11.5
(f)..............................................................4.10
315 (a)...............................................................7.1
(b).........................................................7.5; 11.2
(c)...............................................................7.1
(d)...............................................................7.1
(e)..............................................................6.11
316 (a)(last sentence)...............................................11.6
(a)(1)(A).........................................................6.5
(a)(1)(B).........................................................6.4
(a)(2)...........................................................N.A.
(b)...............................................................6.7
317 (a)(1)............................................................6.9
(a)(2)............................................................6.9
(b)...............................................................2.4
318 (a)..............................................................11.1
N.A. means Not Applicable.
i.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.......................1
SECTION 1.1. Definitions.................................................1
SECTION 1.2. Other Definitions..........................................18
SECTION 1.3. Incorporation by Reference of Trust Indenture Act..........19
SECTION 1.4. Rules of Construction......................................19
ARTICLE 2 THE SECURITIES..................................................20
SECTION 2.1. Form and Dating............................................20
SECTION 2.2. Execution and Authentication...............................21
SECTION 2.3. Registrar and Paying Agent.................................21
SECTION 2.4. Paying Agent to Hold Money in Trust........................22
SECTION 2.5. Securityholder Lists.......................................22
SECTION 2.6. Transfer and Exchange......................................22
SECTION 2.7. Replacement Securities.....................................25
SECTION 2.8. Outstanding Securities.....................................25
SECTION 2.9. Temporary Securities.......................................26
SECTION 2.10. Cancellation...............................................26
SECTION 2.11. Defaulted Interest.........................................26
SECTION 2.12. CUSIP Numbers..............................................26
SECTION 2.13. Restrictive Legends........................................27
SECTION 2.14. Special Transfer Provisions................................28
ARTICLE 3 REDEMPTION......................................................30
SECTION 3.1. Optional Redemption........................................30
SECTION 3.2. Notices to Trustee.........................................31
SECTION 3.3. Selection of Securities to Be Redeemed.....................31
SECTION 3.4. Notice of Redemption.......................................31
SECTION 3.5. Effect of Notice of Redemption.............................32
SECTION 3.6. Deposit of Redemption Price................................33
SECTION 3.7. Securities Redeemed in Part................................33
SECTION 3.8. Mandatory Redemption.......................................33
iii.
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ARTICLE 4 COVENANTS.......................................................33
SECTION 4.1. Payment of Securities......................................33
SECTION 4.2. SEC Reports................................................34
SECTION 4.3. Limitation on Indebtedness.................................34
SECTION 4.4. Limitation on Restricted Payments..........................36
SECTION 4.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries....................................38
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock.........39
SECTION 4.7. Limitation on Affiliate Transactions.......................42
SECTION 4.8. Change of Control..........................................43
SECTION 4.9. Compliance Certificate.....................................44
SECTION 4.10. Further Instruments and Acts...............................44
SECTION 4.11. Limitation on Liens........................................44
SECTION 4.12. Limitation on Issuance or Sale of Capital Stock of
Restricted Subsidiaries....................................45
SECTION 4.13. Payment of Taxes and Other Claims..........................45
SECTION 4.14. Future Guarantors..........................................45
SECTION 4.15. Maintenance of Office or Agency............................46
SECTION 4.16. Corporate Existence........................................46
ARTICLE 5 SUCCESSOR COMPANY...............................................47
SECTION 5.1. Merger, Consolidation and Sale of Assets...................47
ARTICLE 6 DEFAULTS AND REMEDIES...........................................48
SECTION 6.1. Events of Default..........................................48
SECTION 6.2. Acceleration...............................................50
SECTION 6.3. Other Remedies.............................................50
SECTION 6.4. Waiver of Past Defaults....................................51
SECTION 6.5. Control by Majority........................................51
SECTION 6.6. Limitation on Suits........................................51
SECTION 6.7. Rights of Holders to Receive Payment.......................51
SECTION 6.8. Collection Suit by Trustee.................................52
SECTION 6.9. Trustee May File Proofs of Claim...........................52
SECTION 6.10. Priorities.................................................52
SECTION 6.11. Undertaking for Costs......................................52
SECTION 6.12. Waiver of Stay or Extension Laws...........................53
iv.
Page
ARTICLE 7 TRUSTEE.........................................................53
SECTION 7.1. Duties of Trustee..........................................53
SECTION 7.2. Rights of Trustee..........................................54
SECTION 7.3. Individual Rights of Trustee...............................55
SECTION 7.4. Trustee's Disclaimer.......................................55
SECTION 7.5. Notice of Defaults.........................................55
SECTION 7.6. Reports by Trustee to Holders..............................56
SECTION 7.7. Compensation and Indemnity.................................56
SECTION 7.8. Replacement of Trustee.....................................57
SECTION 7.9. Successor Trustee by Merger................................58
SECTION 7.10. Eligibility; Disqualification..............................58
SECTION 7.11. Preferential Collection of Claims Against Company..........58
ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE..............................59
SECTION 8.1. Discharge of Liability on Securities; Defeasance...........59
SECTION 8.2. Conditions to Defeasance...................................60
SECTION 8.3. Application of Trust Money.................................61
SECTION 8.4. Repayment to Company.......................................61
SECTION 8.5. Indemnity for Government Obligations.......................62
SECTION 8.6. Reinstatement..............................................62
ARTICLE 9 AMENDMENTS......................................................62
SECTION 9.1. Without Consent of Holders.................................62
SECTION 9.2. With Consent of Holders....................................63
SECTION 9.3. Compliance with Trust Indenture Act........................64
SECTION 9.4. Revocation and Effect of Consents and Waivers..............64
SECTION 9.5. Notation on or Exchange of Securities......................64
SECTION 9.6. Trustee to Sign Amendments.................................64
ARTICLE 10 SUBORDINATION OF THE SECURITIES.................................65
SECTION 10.1. Agreement to Subordinate...................................65
SECTION 10.2. Liquidation; Dissolution; Bankruptcy.......................66
SECTION 10.3. Default on Senior Indebtedness.............................67
SECTION 10.4. Payment of Subordinated Debt Permitted if No Default.......68
SECTION 10.5. When Subordinated Debt Must Be Paid Over...................68
SECTION 10.6. Notices by the Company.....................................68
SECTION 10.7. Subrogation................................................68
SECTION 10.8. Relative Rights............................................69
SECTION 10.9. Subordination May Not Be Impaired by the Company...........69
v.
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SECTION 10.10. Distribution of Notice to Representative...................69
SECTION 10.11. Rights of Trustee and Paying Agent.........................69
SECTION 10.12. Consent of Holders of Senior Indebtedness..................70
SECTION 10.13. Contractual Subordination..................................70
ARTICLE 11 MISCELLANEOUS...................................................70
SECTION 11.1. Trust Indenture Act Controls...............................70
SECTION 11.2. Notices....................................................71
SECTION 11.3. Communication by Holders with Other Holders................72
SECTION 11.4. Certificate and Opinion as to Conditions Precedent.........72
SECTION 11.5. Statements Required in Certificate or Opinion..............72
SECTION 11.6. When Securities Disregarded................................73
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar...............73
SECTION 11.8. Legal Holidays.............................................73
SECTION 11.9. Governing Law..............................................73
SECTION 11.10. No Recourse Against Others.................................73
SECTION 11.11. Successors.................................................73
SECTION 11.12. Multiple Originals.........................................74
SECTION 11.13. Table of Contents; Headings................................74
SECTION 11.14. Severability Clause........................................74
EXHIBIT A...................................................................A-1
EXHIBIT B...................................................................B-1
EXHIBIT C...................................................................C-1
EXHIBIT D...................................................................D-1
EXHIBIT E...................................................................E-1
EXHIBIT F...................................................................F-1
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture.
vi.
INDENTURE dated as of August 13, 1997, between HOLLYWOOD ENTERTAINMENT
CORPORATION, an Oregon corporation (the "Company"), and U.S. TRUST COMPANY OF
CALIFORNIA, N.A., a national 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 the Company's 10 5/8% Senior
Subordinated Notes Due 2004 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; or (ii) the Capital Stock
of a Person that becomes a Restricted Subsidiary as a result of the acquisition
of such Capital Stock by the Company or another Restricted Subsidiary; provided,
however, that any such Restricted Subsidiary is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under Sections 4.4, 4.6 and 4.7 only,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
10% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares and,
to the extent required by local ownership laws in foreign countries, shares
owned by foreign shareholders), (ii) all or substantially all the assets of any
division, business segment or comparable line of business of the Company or any
Restricted Subsidiary or (iii) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or such
Restricted Subsidiary. Notwithstanding the foregoing, the term "Asset
Disposition" shall not include (x) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (y) for purposes of Section 4.6, a disposition that constitutes a
1.
Permitted Investment or a Restricted Payment permitted by Section 4.4, and (z) a
disposition of assets having a fair market value of less than $1 million. For
purposes hereof, "ordinary course of business" for the Company shall be deemed
to include, without limitation, (i) the sale of rental inventory, consistent
with past practice, and (ii) sales or closures of stores; provided, however,
that the Company or a Restricted Subsidiary acquires or opens another store
within 90 days thereof for each such store sold or closed.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Securities, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Credit Facility, including principal, premium, if any,
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization, whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, Guarantees and all other amounts and Obligations payable thereunder
or in respect thereof.
"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 each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following
events:
2.
(i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) (other than one or more Permitted Holders)
is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that for purposes of this clause (i) such
person or group shall be deemed to have "beneficial ownership" of all
shares that any such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the
Voting Stock of the Company; provided, however, a Change in Control shall
not be deemed to have occurred if (A) such beneficial ownership is shared
with one or more Permitted Holders who hold the sole power to vote such
Voting Stock; or (B) one or more Permitted Holders possess the right (by
contract or otherwise) to elect, or cause the election of, a majority of
the members of the Company's Board of Directors; or
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by
a vote of at least 66-2/3% of the directors of the Company then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Operating Cash Flow for the period of
the most recent four consecutive fiscal quarters ending at least 45 days (or, if
less, the number of days after the end of such fiscal quarter as the
consolidated financial statements of the Company shall be available) prior to
the date of such determination to (ii) Consolidated Interest Expense for such
four fiscal quarters; provided, however, that (1) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
is an Incurrence of Indebtedness, or both, Operating Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period and the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of such
period (except that, in the case of Indebtedness used to finance working capital
needs incurred under a revolving credit or similar arrangement, the amount
thereof shall be deemed to be the average daily balance of such Indebtedness
during such four-fiscal-quarter period), (2) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition, the Operating Cash Flow for such period shall be reduced by an
amount equal to the Operating Cash Flow (if positive) directly attributable to
the assets which are the subject of such Asset Disposition for such period, or
increased by an amount equal to the Operating Cash Flow (if negative) directly
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
directly
3.
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, defeased, assumed by a third person (to the extent the
Company and its Restricted Subsidiaries are no longer liable for such
Indebtedness) or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such Asset Disposition for
such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period the Company shall
have consummated a Public Equity Offering, Consolidated Interest Expense for
such period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its Restricted Subsidiaries in connection with such
Public Equity Offering for such period, (4) if since the beginning of such
period the Company or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person which
becomes a Restricted Subsidiary) or an acquisition of assets, which acquisition
constitutes all or substantially all of an operating unit of a business,
including any such Investment or acquisition occurring in connection with a
transaction requiring a calculation to be made hereunder, Operating Cash Flow
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Asset Disposition, any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (3) or (4) above if made by the
Company or a Restricted Subsidiary during such period, Operating Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income, earnings or expense relating thereto and the amount of Consolidated
Interest Expense associated with any Indebtedness Incurred in connection
therewith, the pro forma calculations shall be prepared in accordance with
Article 11 of Regulation S-X promulgated by the SEC as determined in good faith
by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, (i) interest
expense attributable to Capital Lease Obligations, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs associated with
Hedging Obligations (including amortization of fees),
4.
(vii) Preferred Stock dividends in respect of all Preferred Stock held by
Persons other than the Company or a Wholly Owned Subsidiary, and (viii) interest
actually paid on any Indebtedness of any other Person that is Guaranteed by the
Company or any Restricted Subsidiary.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income (or loss) of
any Person if such Person is not the Company or a Restricted Subsidiary, except
that subject to the exclusion contained in clause (iv) below, the Company's
equity in the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (iii) below); (ii) for purposes of subclause
(a)(iii)(A) of Section 4.4 only, any net income (or loss) of any Person acquired
by the Company or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition; (iii) any net income of any
Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such Restricted
Subsidiary consistent with such restriction during such period to the Company or
another Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Restricted Subsidiary for such period shall be
included in determining such Consolidated Net Income; (iv) any gain (or loss)
realized upon the sale or other disposition of any assets of the Company or its
consolidated Subsidiaries (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary course
of business and any gain (or loss) realized upon the sale or other disposition
of any Capital Stock of any Person; (v) extraordinary gains or losses; (vi) the
cumulative effect of a change in accounting principles; and (vii) with respect
to any period that includes the three months ended March 31, 1997, the
nonrecurring $18.9 million pre-tax expense related to the settlement in such
period of a securities class action lawsuit, Xxxxxx v. Hollywood Entertainment
Corporation et al., case no. X00-0000-XX, X.X. Xxxxxxxx Xxxxx for the District
of Oregon. Notwithstanding the foregoing, for the purposes of Section 4.4 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under such covenant pursuant to clause (a)(iii)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii) paid-
5.
in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 as the
Depository, its nominees and their respective successors.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and
(ii) any other Senior Indebtedness of the Company 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 $10 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) 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, at the option of the holder
thereof, for Indebtedness or Disqualified Stock or (iii) is redeemable at the
option of the holder thereof, in whole or in part, in each case on or prior to
the first anniversary of the Stated Maturity of the Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means the 10 5/8% Senior Subordinated Notes due
2004 to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement.
"Existing Credit Facility" means the Amended and Restated Revolving
Credit Agreement, made as of February 12, 1997, by and among Bank of America
National Trust & Savings Association, United National Bank of Oregon, Union Bank
of California, N.A., Key Bank of Washington, Banque Nationale de Paris, Societe
Generale and The Sumitomo Bank, Limited, as Lenders, and Bank of America
National Trust & Savings Association d/b/a "Seafirst Bank," as agent for the
Lenders, and Hollywood Entertainment Corporation, as Borrower.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in (i) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board and (iii) in such
other statements by such other entity as approved by a significant segment of
the accounting profession.
6.
"Guarantee" means any obligation, contingent or other, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or other, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary; provided, further, however, that
in the case of a discount security, neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness, but the entire face amount of such security shall be deemed
Incurred upon the issuance of such security. The term "Incurrence" when used as
a noun shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property or
services, all conditional sale obligations of such Person and all obligations of
such Person under any title retention agreement (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business and
which are not more than 90 days past due and not in dispute), which purchase
price or obligation is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services (provided that, in the case of obligations of an acquired Person
assumed in connection with an acquisition of such Person, such obligations would
constitute Indebtedness of such Person); (iv) all obligations of such Person for
the reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described
7.
in (i) through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the tenth
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit); (v) the amount of all obligations of
such Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all
obligations of the type referred to in clauses (i) through (v) of other Persons
and all dividends of other Persons for the payment of which, in either case,
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee; (vii) all
obligations of the type referred to in clauses (i) through (vi) of other Persons
secured by any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the amount of
the obligation so secured; and (viii) to the extent not otherwise included in
this definition, Hedging Obligations of such Person. The amount of Indebtedness
of any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations as described above at such date; provided, however, that the amount
outstanding at any time of any Indebtedness issued with original issue discount
shall be deemed to be the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP.
"Indenture" means this Indenture as amended or supplemented from time
to time by one or more supplemental indentures entered into pursuant to the
applicable provisions hereof or otherwise in accordance with the terms hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Initial Purchasers" means, collectively, Xxxxxxxxxx Securities,
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, Xxxxxxx, Sachs & Co. and
Societe Generale Securities Corporation.
"Initial Securities" means the 10 5/8% Senior Subordinated Notes due
2004 of the Company issued on the Issue Date, for so long as such securities
constitute Restricted Securities.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement designed
solely to protect the Company or any Restricted Subsidiary against fluctuations
in interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or
8.
any purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and Section
4.4 hereof, (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation, and (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.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York, the City of
Los Angeles, California or at a place of payment authorized by law, regulators
or executive order to remain closed.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Available Cash" from an Asset Disposition means cash payments
received by the Company or any of its Subsidiaries therefrom (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such
properties or assets or received in any other noncash form) in each case net of
(i) all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all Federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability under GAAP, as a consequence of
such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or Joint
Ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities associated with the property or other assets
disposed in such Asset Disposition and retained by the Company or any Restricted
9.
Subsidiary after such Asset Disposition including without limitation under any
indemnification obligations associated with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees
and disbursements, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"New Credit Facility" means the revolving credit facility described in
the commitment letter to the Company from the Arrangers named therein dated July
18, 1997 or, if such credit facility is not established, any credit facility or
facilities established by the Company with one or more lenders, in any case
pursuant to which the Company may borrow, in the aggregate pursuant to all such
facilities, up to $300 million.
"Non-U.S. Person" means a person who is not a U.S. Person, as defined
in Regulation S.
"Obligations" means all present and future obligations for principal,
premium, interest (including, without limitation, any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law), penalties, fees, indemnifications,
reimbursements (including, without limitation, all reimbursement and other
obligation pursuant to any letters of credit, bankers acceptances or similar
instruments or documents), damages and other liabilities payable under the
documentation at any time governing any indebtedness.
"Officer" means the Chairman of the Board, any Vice Chairman, the
Chief Executive Officer, the Treasurer or Chief Financial Officer, the Chief
Operating Officer, the President, any Vice President (or any such other officer
that performs similar duties), the Secretary or the Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers,
one of which is the Chairman of the Board, the Chief Executive Officer,
President, Chief Operating Officer or any Vice President and the other of which
is the Chief Financial Officer or Treasurer or Secretary or Assistant Secretary
(or any such other officer that performs similar duties).
"Operating Cash Flow," means, for any Person and for any period, the
sum of Consolidated Net Income plus (A) Consolidated Interest Expense, plus (B)
the following to the extent deducted in calculating such Consolidated Net
Income, without duplication: (i) income tax expense, (ii) depreciation expense,
(iii) amortization expense, (iv) all other non cash items reducing Consolidated
Net Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be made), plus (C) any cash
charges associated with the acquisition of new release videocassettes (including
any fees in connection with revenue sharing arrangements with respect to rental
inventory) and other media and game inventory purchases to the extent such cash
charges have been included in the operating expenses
10.
used to calculate Consolidated Net Income, minus (D) 30% of rental revenue for
such 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 Operating Cash
Flow only to the extent (and in the same proportion) that the net income of such
Subsidiary was included in calculating Consolidated Net Income.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, which opinion shall comply with the
provisions of Section 11.5 hereof. The counsel may be an employee of or counsel
to the Company or the Trustee; provided that any Opinion of Counsel delivered
pursuant to Section 8.2 hereof shall not be rendered by an employee of the
Company or any Subsidiary.
"Permitted Holder" means (i) Xxxx X. Xxxxxxx, (ii) an employee benefit
plan of the Company, or any of its subsidiaries or any participant therein,
(iii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries or (iv) any Permitted Transferee
of any of the foregoing persons.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) the Company; (ii) a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; provided further, that no such Investment
shall constitute assets owned by the Company as of the Issue Date (or any
substitute or replacement assets therefor); (iii) another Person if as a result
of such Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; provided, further, that no such Investment shall constitute
assets owned by the Company as of the Issue Date (or any substitute or
replacement assets therefor); (iv) Temporary Cash Investments; (v) receivables
owing to the Company or any Restricted Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; (viii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (ix) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted under Section 4.6
hereof; and (x) Persons other than the Company and Restricted Subsidiaries, in
an aggregate amount after the Issue Date of up to $15 million; provided,
however, the amount of any dividends, repayments of loans or transfers of assets
as a return on such Permitted Investments shall reduce the amount of such $15
million amount used (but not below $0).
11.
"Permitted Liens" means (i) Liens in favor of the Company or such
Restricted Subsidiary, (ii) Liens on property or assets of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided that such Liens were in existence prior to the
merger or consolidation and were not created or incurred in contemplation of
such merger or consolidation and do not extend to any assets other than those of
the Person merged into or consolidated with the Company or such Restricted
Subsidiary prior to such merger; and (iii) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted Subsidiary;
provided that the Liens were in existence prior to the acquisition and were not
created or incurred in contemplation of such acquisition.
"Permitted Transferees" means, with respect to any person, (i) any
Affiliate of such person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such person, (iii) a
trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which include only such person or
his or her spouse or lineal descendants, in each case to whom such person has
transferred the beneficial ownership of any securities of the Company, (iv) any
investment account whose investment managers and investment advisors consist
solely of such person and/or Permitted Transferees of such person, and (v) any
investment fund or investment entity that is a subsidiary of such person or
Permitted Transferee of such person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Private Placement Legend" means the legend initially set forth on the
securities in the form set forth in Section 2.13.
"Public Equity Offering" means an underwritten primary public offering
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of the
deferred purchase price of property, conditional sale obligations, obligations
under any title retention agreement, other purchase money obligations and
obligations in respect of industrial revenue bonds or similar Indebtedness, 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
12.
acquisition by the Company or a Restricted Subsidiary of such asset, including
additions and improvements; provided, however, that any Lien arising in
connection with any such Indebtedness shall be limited to the specified 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; and
provided, further, however, that such Indebtedness is Incurred within 90 days
after such acquisition of such asset by the Company or Restricted Subsidiary.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture; provided, however, that (i)
other than Refinancing Indebtedness in respect of the Senior Credit Facility
such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) other than Refinancing
Indebtedness in respect of the Senior Credit Facility, such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs, and, solely in the case of Bank Indebtedness, Obligations)
under the Indebtedness being Refinanced; provided further, however, that
Refinancing Indebtedness 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.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Issue Date among the Company and the Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means any business related, ancillary or
complementary (as determined in good faith by the Board of Directors) to the
businesses of the Company and the Restricted Subsidiaries.
"Representative" means any trustee, agent or representative (if any)
for an issue of Senior Indebtedness of the Company.
13.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust Division (or any successor group of the
Trustee), including any vice president, assistant vice president, assistant
secretary or any other officer of the Trustee to whom any corporate trust matter
is customarily referred because of his or her knowledge or familiarity with the
particular subject.
"Restricted Payment" means, with respect to any Person, (i) the
declaration or payment of any dividends or any other distributions on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the holders
of its Capital Stock, except dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and except dividends or
distributions payable solely to the Company or a Restricted Subsidiary (and, if
such Restricted Subsidiary is not wholly owned, to its other shareholders on a
pro rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary of dividends or distributions of greater value than it
would receive on a pro rata basis), (ii) the purchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company held by
any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Company (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Company that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment of any Subordinated Obligations (other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition) or (iv) the making
of any Investment in any Person (other than a Permitted Investment).
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means, at any time, any Subsidiary of the
Company that is not an Unrestricted Subsidiary; provided, however, that upon the
occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of "Restricted
Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
14.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Securities" shall mean the Initial Securities and the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means (i) until the Existing Credit Facility
is terminated and all Obligations in respect thereof due and payable thereunder
have been paid, the Existing Credit Facility or (ii) upon the termination of the
Existing Credit Facility, the payment of all Obligations thereunder and the
initial closing under the New Credit Facility, the New Credit Facility, in each
case as the same may be amended, waived, modified, Refinanced or replaced from
time to time (except to the extent that any such amendment, waiver,
modification, replacement or Refinancing would be prohibited by the terms of the
Indenture).
"Senior Indebtedness" of the Company means (i) all Bank Indebtedness
of the Company, whether outstanding on the Issue Date or thereafter Incurred,
including the Guarantees by the Company of all Bank Indebtedness, (ii) accrued
and unpaid 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 proceeding) in respect
of (A) indebtedness of the Company for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which the Company is responsible or liable unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are subordinate in right of payment to the
Securities, and (iii) all Obligations of the Company in respect of any of the
foregoing; provided, however, that Senior Indebtedness shall not include (1) any
obligation of the Company to any Subsidiary, (2) any liability for federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect
(other than as a result of the Indebtedness being unsecured) to any other
Indebtedness or other obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Obligations, (5) any obligations
with respect to any Capital Stock or (6) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of this Indenture.
"Senior Subordinated Indebtedness" of the Company means the Securities
and any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not 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.
15.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means any Subsidiary that issues a Subsidiary
Guaranty.
"Subsidiary Guaranty" means the Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities.
"S&P" means Standard and Poor's Ratings Service.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker,
dealer or mutual fund distributor, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) investments in commercial paper, maturing not more than
90 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any State thereof or the District of Columbia or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or
16.
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. xx.xx. 1
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.3.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (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) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or holds any Lien on any property of,
the Company or any other Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.4. 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) the Company could Incur $1.00 of
additional Indebtedness under Section 4.3(a) and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be notified by the Company to the Trustee by promptly filing with the Trustee a
copy of the board resolution 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 at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
17.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company and/or one or more Wholly Owned Subsidiaries.
SECTION 1.2. Other Definitions.
Term Defined in Section
---- ------------------
"Affiliate Transaction" 4.7
"Agent Members" 2.6
"Bankruptcy Law" 6.1
"Blockage Notice" 10.3(c)
"covenant defeasance option" 8.1(b)
"Custodian" 6.1
"defeasance trust" 8.2
"Event of Default" 6.1
"Excess Proceeds" 4.6(a)
"Excess Proceeds Offer" 4.6(a)
"Excess Proceeds Offer Amount" 4.6(c)
"Excess Proceeds Offer Period" 4.6(c)
"Excess Proceeds Payment" 10.3
"Global Securities" 2.1(b)
"legal defeasance option" 8.1(b)
"Notice of Default" 6.1
"Participants" 2.6(4)
"pay the Subordinated Debt" 10.3(a)
"Paying Agent" 2.3
"Payment Blockage Period" 10.3(c)
"Physical Securities" 2.1(b)
"Private Placement Legend" 2.13
"Purchase Date" 4.6(b)
"Registrar" 2.3
"Securities Register" 2.3
"Successor Company" 5.1
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
18.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the Securities means the Company and any other successor
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.4. 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) the principal amount of any non-interest-bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the Company dated such date prepared in
accordance with GAAP;
(7) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States;
(8) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision;
(9) provisions apply to successive events and transaction; and
(10) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
19.
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit B
hereto. The Securities shall have the notations, legends or endorsements
required by law, stock exchange rules, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company), all as set forth in Exhibit
A and Exhibit B. Each Security shall be dated the date of its authentication.
The Securities shall be in denominations of $1,000 and integral multiples
thereof; provided that, the Physical Securities originally purchased by
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) who are not also "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act) shall be subject to a minimum
denomination of $250,000. If required, the Securities may bear the appropriate
legend regarding any original issue discount for federal income tax purposes.
The terms and provisions contained in the Securities, annexed hereto
as Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
(b) Global Securities. The Securities offered and sold in reliance on
Rule 144A and Securities offered and sold in reliance on Regulation S shall be
issued initially in the form of one or more permanent Global Securities ("Global
Securities") in definitive, fully registered form without interest coupons, in
substantially the form of Exhibit A, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at the
Trustee's office in New York City, as custodian for the Depository, and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth in Section 2.13. The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depository or its
nominee in the limited circumstances hereinafter provided.
Securities offered and sold to institutional "accredited investors"
(as defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act) and
Securities issued in exchange for interests in Global Securities pursuant to
Section 2.6 may be issued in the form of permanent certificated Securities in
registered form in substantially the form set forth in Exhibit A (the "Physical
Securities"). All Securities offered and sold in reliance on Regulation S shall
remain in the form of a Global Security until the consummation of the Exchange
Offer pursuant to the Registration Rights Agreement; provided, however, that all
of the time periods specified in the Registration Rights Agreement to be
complied with by the Company have been so complied with.
20.
SECTION 2.2. Execution and Authentication. An Officer of the Company
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 (i) Initial Securities for original issue in an aggregate principal
amount of up to $250,000,000 and (ii) Exchange Securities from time to time for
issue only in exchange for a like principal amount of Initial Securities, in
each case, upon a written order of the Company signed by an Officer of the
Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the Securities are to be authenticated. The
aggregate principal amount of Securities outstanding at any time may not exceed
$250,000,000 except as provided in Section 2.7. The Trustee may appoint an
authenticating agent reasonably acceptable to the Company to authenticate the
Securities, upon the consent of the Company to such appointment. 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,
co-registrar or agent for service of notices and demands.
SECTION 2.3. 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, acting on behalf
of and as agent for the Company, shall keep a register (the "Securities
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 "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Securityholder. The Company shall enter
into an appropriate agency agreement with any Registrar, Paying Agent or
co-registrar not a party to this Indenture, which shall incorporate the terms of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 7.7. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar, co-Registrar or transfer agent.
The Company initially appoints The Depository Trust Company to act as
Depository with respect to the Global Notes.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities, until such time as the Trustee has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent, co-registrar or any other agent may resign upon 30 days' notice to the
Company.
21.
SECTION 2.4. Paying Agent to Hold Money in Trust. On or prior to each
due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Securities.
SECTION 2.5. 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 and shall otherwise comply with
TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee, in writing at least five Business Days before each interest
payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders and the Company shall otherwise
comply with TIA ss. 312(a); provided that as long as the Trustee is the
Registrar, no such list need be furnished.
SECTION 2.6. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Registrar shall record in the
Securities Register the transfer as requested if the requirements of Section
8-401(a) of the Uniform Commercial Code are met, and thereupon one or more new
Securities in the same aggregate principal amount shall be issued to the
designated assignee or transferee and the old Security will be returned to the
Company. When Securities are presented to the Registrar or a co-registrar with a
request to exchange them for an equal principal amount of Securities of other
authorized denominations, the Registrar shall make the exchange as requested, in
the same manner, 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 or co-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 any Securities for a period of 15 days before a selection
of Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the
22.
person in whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and interest on
such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
With respect to Global Securities:
(1) Each Global Security authenticated under this Indenture shall (i)
be registered in the name of the Depository designated for such Global
Security or a nominee thereof, (ii) be deposited with such Depository or a
nominee thereof or custodian therefor, (iii) bear legends as set forth in
Section 2.13 and (iv) constitute a single Security for all purposes of this
Indenture.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Securities, and the Depository may be treated by the Company, the Trustee
and any Agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any Agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(2) Transfers of a Global Security shall be limited to transfers in
whole but not in part to the Depository, its successors or their respective
nominees. Interests of beneficial owners in a Global Security may be
transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 2.14.
In addition, a Global Security is exchangeable for certificated Securities
if (i) the Depository notifies the Company that it is unwilling or unable
to continue as a Depository for such Global Security or if at any time the
Depository ceases to be a clearing agency registered under the Exchange
Act, (ii) the Company executes and delivers to the Trustee a notice that
such Global Security shall be so transferable, registrable, and
exchangeable, and such transfers shall be registrable or (iii) there shall
have occurred and be continuing an Event of Default or an event which, with
the giving of notice or lapse of time or both, would constitute an Event of
Default with respect to the Securities represented by such Global Security.
Any Global Security that is exchangeable for certificated Securities
pursuant to the preceding sentence will be transferred to, and registered
and exchanged for, certificated Securities in authorized denominations,
without legends applicable to a Global Security, and registered in such
names as the Depository holding such Global Security may direct. Subject to
the foregoing, a Global Security is
23.
not exchangeable, except for a Global Security of like denomination to be
registered in the name of the Depository or its nominee. In the event that
a Global Security becomes exchangeable for certificated Securities, (i)
certificated Securities will be issued only in fully registered form in
denominations of $1,000 or integral multiples thereof, (ii) payment of
principal, any repurchase price, and interest on the certificated
Securities will be payable, and the transfer of the certificated Securities
will be registrable, at the office or agency of the Company maintained for
such purposes, and (iii) no service charge will be made for any
registration or transfer or exchange of the certificated Securities,
although the Company may require payment of a sum sufficient to cover any
tax or governmental charge imposed in connection therewith.
(3) Securities issued in exchange for a Global Security or any portion
thereof shall have an aggregate principal amount equal to that of such
Global Security or portion thereof to be so exchanged, shall be registered
in such names and be in such authorized denominations as the Depository
shall designate and shall bear the applicable legends provided for herein.
Any Global Security to be exchanged in whole shall be surrendered by the
Depository to the Trustee. With respect to any Global Security to be
exchanged in part, either such Global Security shall be so surrendered for
exchange or, if the Trustee is acting as custodian for the Depository or
its nominee with respect to such Global Security, the principal amount
thereof shall be reduced, by an amount equal to the portion thereof to be
so exchanged, by means of an appropriate adjustment made on the records of
the Trustee. Upon any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon
the order of the Depository or an authorized representative thereof.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section 2.6, Section 2.7, 2.9,
2.14 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depository for such Global Security or a nominee
thereof. Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the
Depository may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the
Depository and its Participants, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a
beneficial interest in any Global Security.
SECTION 2.7. Replacement Securities. If a mutilated Security is
surrendered to the Trustee or 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
24.
authenticate a replacement Security if the requirements of Section 8-405 of the
Uniform Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee and the Company. Such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their expenses
in replacing a Security.
Every replacement Security issued pursuant to the terms of this
Section shall constitute an original additional contractual obligation of the
Company and, to the extent applicable, any Subsidiary Guarantors under this
Indenture, whether or not the destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. Subject to the provisions of Section 11.6, a
Security does not cease to be outstanding because the Company or an Affiliate of
the Company holds the security.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date or, pursuant to Section
8.1(a), within 91 days prior thereto, money sufficient to pay all principal and
interest payable on that redemption or maturity date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
then on and after such date such Securities (or portions thereof) cease to be
outstanding and on and after such redemption or maturity date interest on them
ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary securities.
SECTION 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment.
25.
The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver such
canceled Securities to the Company. The Trustee shall from time to time provide
the Company a list of all Securities that have been canceled as requested by the
Company. The Company may not issue new Securities to replace Securities it has
redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment
of interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner
in accordance with Section 4.1. The Company may pay the defaulted interest to
the persons who are Securityholders on a subsequent special record date. The
Company shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail to
each Securityholder a notice that states the special record date, the payment
date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may
use "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 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 will
promptly notify the Trustee of any change in the CUSIP numbers.
SECTION 2.13. Restrictive Legends. Each Global Security and Physical
Security that constitutes a Restricted Security or is sold in compliance with
Regulation S shall bear the following legend (the "Private Placement Legend") on
the face thereof until after the second anniversary of the later of the Issue
Date and the last date on which the Company or any Affiliate of the Company was
the owner of such Security (or any predecessor security) (or such shorter period
of time as permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder) (or such longer period of time as may be required under
the Securities Act or applicable state securities laws in the opinion of counsel
for the Company, unless otherwise agreed by the Company and the Holder thereof):
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY
26.
(1) BY THE INITIAL PURCHASER (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (d) TO THE COMPANY, (e) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (f) TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND (2) BY SUBSEQUENT PURCHASERS, AS SET FORTH IN (1)(a) THROUGH
(e) ABOVE, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY."
Each Global Security shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER 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 HEREON 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
27.
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.14 OF THE INDENTURE.
SECTION 2.14. Special Transfer Provisions. (a) Transfers to Non-QIB
Institutional Accredited Investors and Non-U.S. Persons. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Security constituting a Restricted Security to any Institutional Accredited
Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is after the second
anniversary of the Issue Date; provided, however, that neither the Company
nor any Affiliate of the Company has held any beneficial interest in such
Security, or portion thereof, at any time on or prior to the second
anniversary of the Issue Date) or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit C hereto and any legal
opinions and certifications required thereby or (2) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Security, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of such Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver, one or more Physical Securities of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the 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 QIB within the
meaning of Rule 144A, and is aware that
28.
the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it 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 its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Securities
to be transferred consist of Physical Securities which after transfer are
to be evidenced by an interest in a Global Security, upon receipt by the
Registrar of written instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of such Global
Security in an amount equal to the principal amount of the Physical
Securities to be transferred, and the Trustee shall cancel the Physical
Securities so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the requested transfer is after the
second anniversary of the Issue Date; provided, however, that neither the
Company nor any Affiliate of the Company has held any beneficial interest in
such Security, or portion thereof, at any time prior to or on the second
anniversary of the Issue Date), (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act, or (iii) such Securities are Initial Securities being exchanged for
Exchange Securities pursuant to the Registration Rights Agreement.
(d) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.6 or this Section 2.14.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(e) Transfers of Securities Held by Affiliates. Any certificate (i)
evidencing a Security that has been transferred to an Affiliate of the Company
within two years after the Issue Date, as evidenced by a notation on the
Assignment Form for such transfer or in the representation letter delivered in
respect thereof or (ii) evidencing a Security that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a chain of
transactions not involving any public offering, shall, until two years after the
last date on which either the Company or any Affiliate of the Company was an
owner of such Security, in each case, bear a
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legend in substantially the form set forth in Section 2.13 hereof, unless
otherwise agreed by the Company (with written notice thereof to the Trustee).
ARTICLE 3
REDEMPTION
SECTION 3.1. Optional Redemption.
(a) Except as set forth in the following paragraph, the Securities
will not be redeemable at the option of the Company prior to August 15, 2001.
Thereafter, the Securities will be redeemable, at the Company's option, in whole
or in part at any time or from time to time, 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 in percentages of
principal amount), plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the twelve-month period commencing on August 15 of the years set forth below:
Year Percentage
---- ----------
2001........................................105.313%
2002........................................102.656%
2003 and thereafter.........................100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.1,
at any time and from time to time, on or prior to August 15, 2000, the Company
may, at its option, on any one or more occasions, redeem in the aggregate up to
35% of the original principal mount of the Securities with the proceeds of one
or more Public Equity Offerings, at a redemption price (expressed as a
percentage of principal amount) of 110.625% plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive of interest due on the relevant interest payment
date); provided, however, that at least 65% of the original aggregate principal
amount of the Securities must remain outstanding after each such redemption; and
provided further, however, that such redemption shall occur within 60 days of
the closing date of such Public Equity Offering.
SECTION 3.2. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.1, it shall furnish the Trustee at least 45
days (or such shorter period as may be acceptable to the Trustee) but not more
than 60 days before a Redemption Date written notice of the redemption date, the
principal amount of Securities to be redeemed and the clause of the Indenture
pursuant to which the redemption will occur. Such notice shall be accompanied by
an Officers' Certificate from the Company to the effect that such redemption
will comply with the provisions herein.
SECTION 3.3. Selection of Securities to Be Redeemed. If fewer than all
the Securities are to be redeemed at any time, the Trustee shall select the
Securities to be
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redeemed pro rata or by lot or by such other method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions of them the Trustee selects shall be
in amounts of $1,000 or a whole multiple of $1,000; except that if all of the
Securities of a Holder are to be redeemed, the entire outstanding amount of
Securities held by such Holder, even if not a multiple of $1,000, shall be
redeemed. 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. In the event the Company is required to make an offer
to repurchase Securities pursuant to Sections 4.6 or 4.8 and the amount
available for such offer is not evenly divisible by $1,000, the Trustee shall
promptly refund to the Company any remaining funds, which in no event will
exceed $1,000.
SECTION 3.4. 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 the registered
address appearing in the Security Register of each Holder of Securities to be
redeemed. The notice shall identify the Securities (including CUSIP numbers, if
any) 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 any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Security;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities and/or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
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(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 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 3.5. Effect of Notice of Redemption. Once notice of redemption
is mailed in accordance with Section 3.4 hereof, 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 and
unpaid interest, if any, to the redemption date. Such notice if mailed in the
manner herein provided shall be conclusively presumed to have been given,
whether or not the Holder receives such notice. 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 3.6. Deposit of Redemption Price. Prior to 11:00 a.m. (New
York City time) on the redemption date, the Company shall deposit with the
Trustee or 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 and unpaid interest (if any) on all Securities or portions
thereof to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued and unpaid interest on, all Securities to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Securities or the portions of Securities called for redemption. If a
Security is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Security was registered at the close of
business on such record date. If any Security called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Securities and in Section 4.1 hereof.
SECTION 3.7. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the
32.
principal of the Security so surrendered, except that if a Global Security is so
surrendered, the Company shall execute, and the Trustee shall authenticate and
deliver to the Depository for such Global Security, without service charge, a
new Global Security in denomination equal to and in exchange for the unredeemed
portion of the principal of the Global Security so surrendered.
SECTION 3.8. Mandatory Redemption. Except as set forth under Sections
4.6 and 4.8 hereof, the Company shall not be required to make mandatory
redemption payments with respect to the Securities.
ARTICLE 4
COVENANTS
SECTION 4.1. 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. The Company shall pay
interest on overdue principal at the same rate per annum set forth in the
Securities, and it shall pay interest on overdue installments of interest at
such rate to the extent lawful.
SECTION 4.2. SEC Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
shall furnish to Holders (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports. In addition, whether or not required by the rules and
regulations of the SEC, the Company will file a copy of all such information and
reports with the SEC for public availability (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. For so long as any Securities remain
outstanding, the Company shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.3. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Indebtedness unless,
immediately after giving effect to such Incurrence, the Consolidated Coverage
Ratio exceeds 2.25 to 1.
(b) Notwithstanding Section 4.3(a), the Company and its Restricted
Subsidiaries may Incur any or all of the following Indebtedness:
33.
(i) Indebtedness and other Obligations Incurred pursuant to the Senior
Credit Facility, to the extent that, after giving effect to any such
Incurrence, the aggregate principal amount of such Indebtedness then
outstanding does not exceed $300,000,000;
(ii) Indebtedness represented by $200,000,000 of the Securities;
(iii) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (i) of this Section 4.3(b));
(iv) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or a Wholly Owned Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;
(v) Refinancing Indebtedness, the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund Indebtedness that was
permitted by the Indenture to be Incurred pursuant to paragraph (a) or
pursuant to clause (i), (ii), (iii) or this clause (v) of this Section
4.3(b);
(vi) Indebtedness in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds entered into by
the Company and the Restricted Subsidiaries in the ordinary course of their
business;
(vii) Hedging Obligations consisting of Interest Rate Agreements
entered into in the ordinary course of business and not for the purpose of
speculation; provided, however, that such Interest Rate Agreements do not
increase the Indebtedness of the Company outstanding at any time other than
as a result of fluctuations in interest rates or by reason of fees,
indemnities and compensation payable thereunder;
(viii) Indebtedness Incurred by the Company or any Restricted
Subsidiary in connection with the purchase or improvement of property (real
or personal) or other capital expenditures in the ordinary course of
business (including for the purchase of assets or stock of any Related
Business) or consisting of Capitalized Lease Obligations Incurred, in
either case subsequent to the Issue Date in an aggregate principal amount
which does not exceed 5% of aggregate total revenue of the Company and its
Restricted Subsidiaries during the most recently completed four fiscal
quarter period on a consolidated basis (measured at the time of
Incurrence);
(ix) Guarantees of Indebtedness Incurred pursuant to the Senior Credit
Facility; and
34.
(x) Indebtedness in an aggregate principal amount which, together with
all other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (i) through (ix) above or paragraph (a)), does not
exceed $10 million.
(c) Notwithstanding the foregoing, the Company shall not, and shall
not permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to the
foregoing Section 4.3(b) if the proceeds thereof are used, directly or
indirectly, to Refinance (i) any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations or (ii) any Senior Subordinated Indebtedness
unless such Indebtedness shall be Senior Subordinated Indebtedness or shall be
subordinated to the Securities.
(d) For purposes of determining compliance with this Section 4.3, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company, in its sole discretion,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (ii) an
item of Indebtedness may be divided and classified in more than one of the types
of Indebtedness described above.
SECTION 4.4. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment: (i) a
Default will have occurred and be continuing (or would result therefrom); (ii)
the Company is not able to Incur an additional $1.00 of Indebtedness under
Section 4.3(a); or (iii) the aggregate amount of such Restricted Payment
together with all other Restricted Payments (the amount of any payments made in
property other than cash to be valued at the fair market value of such property
as determined in good faith by the Board of Directors) declared or made since
the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter in which the Issue
Date occurs to the end of the most recent fiscal quarter prior to the
date of such Restricted Payment for which financial statements of the
Company are available (or, in case such Consolidated Net Income
accrued during such period (treated as one accounting period) shall be
a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale to
a Subsidiary of the Company);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet upon
the conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue
35.
Date, of any Indebtedness of the Company or its Restricted
Subsidiaries convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or
the fair value of any other property, distributed by the Company or
any Restricted Subsidiary upon such conversion or exchange);
(D) an amount equal to the sum of (i) the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of assets
subsequent to the Issue Date, in each case to the Company or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (ii) the
portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made (and treated as
a Restricted Payment) by the Company or any Restricted Subsidiary in
such Unrestricted Subsidiary; and
(E) $5.0 million.
(b) The provisions of Section 4.4(a) shall not prohibit, without
duplication:
(i) any acquisition of any shares of Capital Stock or the repurchase,
redemption, defeasance, or repayment of any Subordinated Obligations of the
Company or any Restricted Subsidiary made in exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of the Company); provided, however, that (A) the
Net Cash Proceeds that are utilized for any such acquisition, repurchase,
redemption, defeasance or repayment shall be excluded from the calculation
of the amount of Restricted Payments and (B) the Net Cash Proceeds from
such sale shall be excluded from the calculation of amounts under Section
4.4(a)(iii)(B);
(ii) any purchase or redemption of (A) Subordinated Obligations of the
Company made in exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company which is permitted to be
Incurred pursuant to Section 4.3(b) and (c) or (B) Subordinated Obligations
of a Restricted Subsidiary made in exchange for, or out of the proceeds of
the substantially concurrent sale of, Indebtedness of such Restricted
Subsidiary or the Company which is permitted to be Incurred pursuant to
Section 4.3(b) and (c); provided, however, that such purchase or redemption
shall be excluded from the calculation of the amount of Restricted
Payments;
(iii) any purchase or redemption of (A) Disqualified Stock of the
Company made in exchange for, or out of the proceeds of the substantially
concurrent sale of, Disqualified Stock of the Company or (B) Disqualified
Stock of a Restricted Subsidiary made in exchange for, or out of the
proceeds of the substantially concurrent sale of,
36.
Disqualified Stock of such Restricted Subsidiary or the Company; provided,
however, that (1) at the time of such exchange, no Default or Event of
Default shall have occurred and be continuing or would result therefrom and
(2) such purchase or redemption will be excluded from the calculation of
the amount of Restricted Payments; and
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.4(a); provided, however, that at the time of payment of such
dividend, no Default shall have occurred and be continuing (or would result
therefrom); provided further, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments.
SECTION 4.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary (a) to pay dividends or make any other distributions
on its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) to make any loans or advances to the
Company or (c) to transfer any of its property or assets to the Company or any
Restricted Subsidiary, except:
(i) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Issue Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary which was entered into on or prior to the
date on which such Restricted Subsidiary was acquired by the Company (other
than as consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on
such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (i) or (ii) of this Section 4.5 (or effecting a
Refinancing of such Refinancing Indebtedness pursuant to this clause (iii))
or contained in any amendment to an agreement referred to in clause (i) or
(ii) of this Section 4.5 or this clause (iii); provided, however, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such refinancing agreement or amendment are no more
restrictive in any material respect than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such agreements;
(iv) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold interests to the
extent such provisions restrict the transfer of the lease or the property
leased thereunder;
37.
(v) in the case of this Section 4.5(c), restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
(vi) 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;
(vii) any encumbrance or restriction pursuant to the Senior Credit
Facility and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings contain
encumbrances and restrictions with respect to such Restricted Subsidiary
that are no more restrictive in any material respect than the encumbrances
and restrictions with respect to such Restricted Subsidiary contained in
the Senior Credit Facility; and
(viii) any restrictions imposed by operation of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless
the Company or such Restricted Subsidiary receives consideration at the time of
such Asset Disposition at least equal to the fair market value (including as to
the value of all non-cash consideration), as determined in good faith by the
Board of Directors, of the shares and assets subject to such Asset Disposition,
and at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents.
With respect to any Asset Disposition occurring on or after the Issue
Date from which the Company or any Restricted Subsidiary receives Net Available
Cash, the Company or such Restricted Subsidiary shall: (i) within 360 days after
the date such Net Available Cash is received and to the extent the Company or
such Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness) to (A) apply an amount equal to such Net Available Cash to prepay,
repay or purchase Senior Indebtedness of the Company or such Restricted
Subsidiary, in each case owing to a Person other than the Company or any
Affiliate of the Company, or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A), in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) and (ii) apply
such excess Net Available Cash (to the extent not applied pursuant to clause
(i)) as provided in the following paragraphs of this Section 4.6; provided,
however, that in connection with any prepayment, repayment or purchase of Senior
Indebtedness pursuant to clause (A) above, the Company or such Restricted
Subsidiary shall retire such Senior Indebtedness and shall cause the
38.
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. The amount of Net
Available Cash required to be applied pursuant to clause (ii) above and not
theretofore so applied shall constitute "Excess Proceeds." Pending application
of Net Available Cash pursuant to this provision, such Net Available Cash shall
be invested in Temporary Cash Investments.
If at any time the aggregate amount of Excess Proceeds not theretofore
subject to an Excess Proceeds Offer (as defined below) totals at least $10
million, the Company shall, not later than 30 days after the end of the period
during which the Company is required to apply such Excess Proceeds pursuant to
clause (i) of the immediately preceding paragraph of this Section 4.6(a) (or, if
the Company so elects, at any time within such period), make an offer (an
"Excess Proceeds Offer") to purchase from the Holders on a pro rata basis an
aggregate principal amount of Securities equal to the Excess Proceeds (rounded
down to the nearest multiple of $1,000) on such date, at a purchase price equal
to 100% of the principal amount of such Securities, plus, in each case, accrued
interest (if any) to the date of purchase (the "Excess Proceeds Payment"). Upon
completion of an Excess Proceeds Offer the amount of Excess Proceeds remaining
after application pursuant to such Excess Proceeds Offer (including payment of
the purchase price for Securities duly tendered) may be used by the Company for
any corporate purpose (to the extent not otherwise prohibited by the Indenture)
and the amount of Excess Proceeds shall thereafter be reset at zero. Prior to
complying with the provisions of this paragraph, but in any event within 30 days
following the date on which the aggregate amount of Excess Proceeds not
theretofore subject to an Excess Proceeds Offer totals at least $10 million, the
Company will either repay all outstanding Senior Indebtedness or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Indebtedness to permit the repurchase of the Securities required by this
paragraph.
For the purposes of this Section 4.6, the following are deemed to be
cash or cash equivalents: (x) the assumption of Indebtedness of the Company or
any Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition, and (y) securities received by the Company or any Restricted
Subsidiary from the transferee that are immediately converted by the Company or
such Restricted Subsidiary into cash.
(b) Promptly, and in any event within 30 days after the Company
becomes obligated to make an Excess Proceeds Offer, the Company shall be
obligated to deliver to the Trustee and send, by first-class mail to each
Holder, at the address appearing in the Security Register, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorationing as hereinafter
described in the event the Excess Proceeds Offer is oversubscribed) in integral
multiples of $1,000 of principal amount, at the applicable purchase price. The
notice, which shall govern the terms of the Excess Proceeds Offer, shall include
such disclosures as are required by law and shall specify (i) that the Excess
Proceeds Offer is being made pursuant to this Section 4.6; (ii) the purchase
price (including the amount of accrued interest, if any) for each Security and
the purchase date not less than 30 days nor more than 60 days after the date of
such notice (the "Purchase Date"); (iii) that any Security not tendered or
accepted for payment will continue to accrue interest in accordance with the
39.
terms thereof; (iv) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Excess Proceeds Offer shall cease
to accrue interest on and after the Purchase Date; (v) that Securityholders
electing to have Securities purchased pursuant to an Excess Proceeds Offer will
be required to surrender their Securities to the Paying Agent at the address
specified in the notice at least three business days prior to the Purchase Date
and must complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent; (vi) that Securityholders will
be entitled to withdraw their election if the Paying Agent receives, not later
than one business day prior to the Purchase Date, a telex, facsimile
transmission or letter setting forth the name of the Securityholder, the
principal amount of Securities the Securityholder delivered for purchase, the
Security certificate number (if any) and a statement that such Securityholder is
withdrawing its election to have such Securities purchased; (vii) that if
Securities in a principal amount in excess of the aggregate principal amount
which the Company has offered to purchase are tendered pursuant to the Excess
Proceeds Offer, the Company shall purchase Securities on a pro rata basis among
the Securities tendered (with such adjustments as may be deemed appropriate by
the Company so that only Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired); (viii) that Securityholders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered; and
(ix) the instructions that Security holders must follow in order to tender their
Securities.
(c) Not later than the date upon which written notice of an Excess
Proceeds Offer is delivered to the Trustee as provided below, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the amount of the
Excess Proceeds Offer (the "Excess Proceeds Offer Amount"), (ii) the allocation
of the Net Available Cash from the Asset Dispositions pursuant to which such
Excess Proceeds Offer is being made and (iii) the compliance of such allocation
with the provisions of Section 4.6(a). Upon the expiration of the period for
which the Excess Proceeds Offer remains open (the "Excess Proceeds Offer
Period"), the Company shall deliver to the Trustee for cancellation the
Securities or portions thereof which have been properly tendered to and are to
be accepted by the Company. Not later than 11:00 a.m. (New York City time) on
the Purchase Date, the Company shall irrevocably deposit with the Trustee or
with a paying agent (or, if the Company is acting as Paying Agent, segregate and
hold in trust) an amount in cash sufficient to pay the Excess Proceeds Offer
Amount for all Securities properly tendered to and accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price.
(d) Holders electing to have a Security purchased will be required to
surrender the Security, together with all necessary endorsements and other
appropriate materials duly completed, to the Company at the address specified in
the notice at least three Business Days prior to the Purchase Date. Holders will
be entitled to withdraw their election in whole or in part if the Trustee or the
Company receives not later than one Business Day prior to the Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security (which shall be $1,000 or an integral multiple
thereof) which was delivered for purchase by the Holder, the aggregate principal
amount of such Security (if any) that remains subject to the original notice of
the Excess Proceeds Offer and that has been or will be delivered for purchase by
the Company and a statement that such Holder is withdrawing his election to have
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such Security purchased. If at the expiration of the Excess Proceeds Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Excess Proceeds Offer Amount, the Company shall select the
Securities to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(e) A Security shall be deemed to have been accepted for purchase at
the time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.6. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.6, 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 4.7. Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction or series of
related transactions (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any Affiliate of the Company (an "Affiliate Transaction") unless the terms
thereof: (1) are no less favorable to the Company or such Restricted Subsidiary
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (2) if such
Affiliate Transaction (or series of related Affiliate Transactions) involve
aggregate payments in an amount in excess of $1.0 million in any one year, (i)
are set forth in writing, (ii) comply with clause (1) of this Section 4.7 and
(iii) have been approved by a majority of the disinterested members of the Board
of Directors, and (3) if such Affiliate Transaction (or series of related
Affiliate Transactions) involves aggregate payments in an amount in excess of
$5.0 million in any one year, (i) comply with clause (2) and (ii) have been
determined by a nationally recognized consulting, accounting, appraisal or
investment banking firm to be fair, from a financial standpoint, to the Company
and its Restricted Subsidiaries.
(b) Section 4.7(a) shall not prohibit (i) any Restricted Payment
permitted to be paid pursuant to Section 4.4, (ii) any issuance of securities,
or other payments, awards or grants in cash, securities or otherwise, pursuant
to, or the funding of, employment arrangements, stock options and stock
ownership plans in the ordinary course of business and approved by the Board of
Directors, (iii) the grant of stock options or similar rights to employees and
directors of the Company in the ordinary course of business and pursuant to
plans approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business of the Company or its Restricted Subsidiaries,
(v) fees, compensation or employee benefit arrangements paid to and indemnity
provided for the benefit of directors, officers or employees of the Company or
any
41.
Subsidiary in the ordinary course of business, or (vi) any Affiliate Transaction
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries in the ordinary course of business (so long as the other
shareholders of any participating Restricted Subsidiaries which are not Wholly
Owned Restricted Subsidiaries are not themselves Affiliates of the Company).
SECTION 4.8. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall have
the right to require that the Company repurchase all or a portion (equal to
$1,000 or an integral multiple thereof) 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 4.8(b).
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee 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 outstanding at
the repurchase date, 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 on the relevant interest payment date);
(2) the circumstances and relevant facts and relevant financial
information regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section 4.8, that a Holder must follow in order to have its Securities
repurchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, together with all necessary endorsements and other
appropriate materials duly completed, to the Company at the address specified in
the notice at least three Business Days prior to the repurchase date. Holders
will be entitled to withdraw their election if the Trustee or the Company
receives not later than one Business Day prior to the repurchase date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security which was delivered for repurchase by the
Holder as to which such notice of withdrawal is being submitted and a statement
that such Holder is withdrawing his election to have such Security purchased.
(d) On the repurchase date, the Company shall, to the extent lawful
(i) accept for payment all Securities or portions thereof properly tendered
pursuant to the immediately
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preceding paragraph (c), (ii) deposit with the Trustee (or Paying Agent) an
amount equal to the purchase price in respect of all Securities or portions
thereof tendered and (iii) deliver or cause to be delivered to the Trustee the
Securities so accepted together with an Officer's Certificate stating the
aggregate principal amount of Securities or portions thereof being repurchased
by the Company. The Trustee (or Paying Agent) shall promptly mail to each Holder
of Securities so tendered the purchase price, plus accrued and unpaid interest,
if any, for such Securities, and the Trustee shall promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Security
equal in principal amount to any unpurchased portion of the Securities
surrendered, if any; provided, however, that each such new Security shall be in
a principal amount of $1,000 or an integral multiple thereof.
(e) Prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Indebtedness to permit
the repurchase of the Securities required by this covenant.
(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, 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.
(g) Notwithstanding the occurrence of a Change of Control, the Company
shall not be obligated to repurchase the Securities or otherwise comply with
this Section if the Company has irrevocably elected to redeem all the Securities
in accordance with Article Three; provided that the Company does not default in
its redemption obligations pursuant to such election.
SECTION 4.9. 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, one of the signers of which shall be the principal
executive, financial or accounting officer of the Company, stating that in the
course of the performance by the signers of their duties as Officers of the
Company they would normally have knowledge of any Default and whether or not the
signers know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the Company
is taking or proposes to take with respect thereto. The Company also shall
comply with TIA Section 314(a)(4).
SECTION 4.10. 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. Limitation on Liens. Except for Permitted Liens, the
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, Incur
43.
or permit to exist any Lien of any nature whatsoever on any property of the
Company or any Restricted Subsidiary (including Capital Stock of a Restricted
Subsidiary), whether owned at the Issue Date or thereafter acquired, which
secures Indebtedness that ranks pari passu with or is subordinated to the
Securities or any Subsidiary Guaranties unless
(i) if such Lien secures Indebtedness that ranks pari passu with the
Securities, the Securities are secured on an equal and ratable basis with
the obligation so secured until such time as such obligation is no longer
secured by a Lien; or
(ii) if such Lien secures Indebtedness that is subordinated to the
Securities, such Lien shall be subordinated to a Lien granted to the
Holders on the same collateral as that securing such Lien to the same
extent as such subordinated Indebtedness is subordinated to the Security.
SECTION 4.12. Limitation on Issuance or Sale of Capital Stock of
Restricted Subsidiaries. The Company shall not (i) sell, pledge, hypothecate or
otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary
(other than pledges of Capital Stock securing Senior Indebtedness), or (ii)
permit any Restricted Subsidiary, directly or indirectly, to issue or sell or
otherwise dispose of any shares of its Capital Stock other than (A) to the
Company or a Wholly Owned Subsidiary, (B) directors' qualifying shares, or (C)
if, immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary.
SECTION 4.13. Payment of Taxes and Other Claims. The Company shall,
and shall cause each of its Subsidiaries to, pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all taxes,
assessments and governmental charges levied or imposed upon its or its
Subsidiaries' income, profits or property; provided, however, that neither the
Company nor any of its Subsidiaries shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate negotiations or proceedings and for which disputed amounts adequate
reserves have been made in accordance with GAAP.
SECTION 4.14. Future Guarantors. The Company shall cause each
Restricted Subsidiary that at any time becomes an obligor or guarantor with
respect to any obligations under the Senior Credit Facility to execute and
deliver to the Trustee a supplemental indenture pursuant to which such
Restricted Subsidiary will Guarantee payment of the Securities on the same terms
and conditions as those set forth in this Indenture. Any such Guarantee shall be
subordinated in a manner similar to that of the Securities. Each Subsidiary
Guaranty will be limited in amount to an amount not to exceed the maximum amount
that can be Guaranteed by the applicable Subsidiary Guarantor without rendering
such Subsidiary Guaranty voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally. Each Subsidiary which is required to become a Subsidiary
Guarantor pursuant to this Section 4.14 shall, and the Company shall cause each
such Subsidiary to, promptly execute and deliver to the Trustee a supplemental
indenture in the form of Exhibit F hereto pursuant to which such Subsidiary
shall become a Subsidiary Guarantor and shall
44.
guarantee the Obligations. Concurrently with the execution and delivery of such
supplemental indenture, the Company shall deliver to the Trustee an Opinion of
Counsel 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 considered in a proceeding at law or in equity, the
Subsidiary Guaranty 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.
SECTION 4.15. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office or agency of the Trustee, Registrar or co-Registrar),
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee's office
in New York City as set forth in Section 11.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee's office in New
York City, currently situated at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Corporate Trust Administration, as an agency of the Company in accordance
with Section 2.3.
SECTION 4.16. Corporate Existence. Subject to Article 5 and Section
4.6, the Company shall do or cause to be done, at its own cost and expense, all
things necessary to, and will cause each of its Restricted Subsidiaries to,
preserve and keep in full force and effect the corporate or partnership
existence and rights (charter and statutory), licenses and/or franchises of the
Company and each of its Restricted Subsidiaries; provided, however, that the
Company or any of its Restricted Subsidiaries shall not be required to preserve
any such rights, licenses or franchises if the Board of Directors shall
reasonably determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and the Subsidiaries, taken as a whole.
45.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.1. Merger, Consolidation and Sale of Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease,
in one transaction or a series of related transactions, all or substantially all
its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) will expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction on a pro
forma basis (and treating any Indebtedness which becomes an obligation of
such Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at the
time of such transaction), no Default shall have occurred and be
continuing;
(iii) except in the case of a merger with or into a Wholly Owned
Subsidiary or a merger, the sole purpose of which is to change the
Company's jurisdiction of incorporation, immediately after giving effect to
such transaction on a pro forma basis, the Successor Company would be able
to Incur an additional $1.00 of Indebtedness pursuant to Section 4.3(a);
(iv) immediately after giving effect to such transaction on a pro
forma basis, the Successor Company shall have a Consolidated Net Worth in
an amount that is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction; and
(v) 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.
Opinions of Counsel required to be delivered under this Section or
elsewhere in this Indenture may have qualifications customary for opinions of
the type required and counsel delivering such Opinions of Counsel may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, including certificates certifying as to matters
of fact.
The Successor Company shall be the successor to the Company and
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this
46.
Indenture, but the predecessor Company in the case of a conveyance, transfer or
lease, shall not be released from the obligation to pay the principal of and
interest on the Securities.
Notwithstanding the foregoing clauses (ii), (iii) and (iv) of this
Section 5.1, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
To the extent applicable, the Company shall not permit any Subsidiary
Guarantor to consolidate with or merge with or into, or convey, transfer or
lease, in one transaction or a series of transactions, all or substantially all
its assets to, any Person, unless: (i) the resulting, surviving or transferee
Person (if not such Subsidiary) shall be a Person organized and existing under
the laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not such Subsidiary) shall expressly
assume, by a Guaranty Agreement, in form satisfactory to the Trustee, all the
obligations of such Subsidiary under its Subsidiary Guaranty; (ii) immediately
after giving effect to such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the resulting, surviving or
transferee Person as a result of such transaction as having been Incurred by
such Person at the time of such transaction), no Default shall have occurred and
be continuing; and (iii) 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 Guaranty Agreement comply with the
Indenture. The provisions of clauses (i) and (iii) above shall not apply to any
transactions which constitute an Asset Disposition if the Company has complied
with the applicable provisions of Section 4.6.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default. An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest on any Security
when the same becomes due and payable (whether or not such payment is
prohibited by the provisions of Article 10 hereof), and such default
continues for a period of 30 days;
(ii) the Company defaults in the payment of the principal, or premium,
if any, of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise (whether or not such payment is prohibited by the
provisions of in Article 10 hereof);
(iii) the Company fails to comply for 30 days after notice with any
obligations under Sections 4.3, 4.4, 4.6 or 5.1;
(iv) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (i), (ii), or
(iii) above) and such failure continues for 60 days after the notice
specified below;
47.
(v) the Company or any Restricted Subsidiary of the Company fails to
pay any Indebtedness within any applicable grace period after final
maturity or there occurs any acceleration of any such Indebtedness by the
holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $5.0 million and in either case,
such default is not cured or waived and such acceleration, if any,
rescinded or the Indebtedness is not paid in 30 days;
(vi) the Company or any Restricted Subsidiary of the Company 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 in which it is the debtor;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary of the Company in an involuntary case;
(B) appoints a Custodian of the Company or any Restricted
Subsidiary of the Company or for any substantial part of the property
of the Company or Restricted Subsidiary;
(C) orders the winding up or liquidation of the Company or any
Restricted Subsidiary of the Company;
(or any similar relief is granted under any foreign laws) and the order or
decree remains unstayed and in effect for 60 days; or
(viii) the rendering of any judgment or decree for the payment of
money in excess of $5.0 million against the Company or any Restricted
Subsidiary if such judgment or decree remains unpaid and outstanding for a
period of 60 days following such judgment and is not discharged, waived or
stayed within 60 days after such judgment or decree thereof.
The foregoing will constitute Events of Default whatever the reason for any such
Event of Default and whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any
48.
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, as
amended, or any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (iii) or (iv) of this Section 6.1 is not an
Event of Default until the Trustee or the Holders of at least 25% in aggregate
principal amount of the outstanding Securities notify the Company of the Default
and the Company does not cure such Default within the time specified after
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
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 (v) of this Section 6.1 and any event which
with the giving of notice or the lapse of time would become an Event of Default
under clause (iii), (iv) or (viii) of this Section 6.1, its status and what
action the Company is taking or proposes to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in aggregate principal amount of the outstanding Securities by notice to the
Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.1(vi) or (vii) with respect to the Company occurs
and is continuing, the principal of and interest on all the Securities will 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 aggregate principal amount of the outstanding 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 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are, to the extent
permitted by law, cumulative.
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SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive any past or existing Default and its consequences except (i) a
Default in the payment of the principal of or interest on a Security or (ii) a
Default in respect of a provision that under Section 9.2 cannot be amended
without the consent of each Securityholder affected. When a Default is waived,
it is deemed cured, and any Event of Default arising therefrom shall be deemed
to have been cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
aggregate principal amount of the Securities then outstanding may direct the
time, method and place of conducting 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 7.1, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification from the Securityholders satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 6.6. Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding 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 aggregate principal amount of the
Securities then outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal,
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premium (if any) or 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 6.8. Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(i) or (ii) 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
7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.7.
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, subject to applicable law:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal (including any premium) and interest, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Securities for principal (including any premium) and
interest, respectively; and
THIRD: to the Company.
The Trustee may, upon prior written notice to the Company, 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 Company shall mail to
each Securityholder and the Trustee a notice that states the record date, the
payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture (except any suit brought by the
Trustee as provided in the immediately succeeding sentence) 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 attorneys' fees and expenses, against any
party litigant in the suit,
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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 6.7 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.1. 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 expressly and specifically set forth in this Indenture and no
implied covenants or obligations whatsoever shall be read into this
Indenture against the Trustee; and
(2) the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are specifically
required 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.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
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(2) the Trustee shall not be liable for any error of judgment made in
good faith by it or 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 6.5 hereof.
(d) 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 believe that repayment of such funds or adequate indemnity
against such risk or liability is not assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section and to
the provisions of the TIA.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) The Trustee shall have no responsibility whatsoever to examine or
review and shall have no liability for the contents of any documents submitted
to or delivered to any Holder of Securities by the Company in the nature of a
solicitation or an official statement or offering circular, whether preliminary
or final; provided, however, that should the Trustee request further
information, no implied duty on the part of the Trustee shall be imposed on the
Trustee therefrom.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. Subject to Section 7.1,
(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; provided, however, that
should the Trustee request further information, no implied duty on the part of
the Trustee shall be imposed on the Trustee therefrom.
(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 reliance on the Officers'
Certificate or Opinion of Counsel. The Trustee's counsel shall not be deemed to
be counsel to the Holders under any circumstances unless such counsel, the
Trustee and the respective Holders otherwise agree in writing.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
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(d) The Trustee shall not be liable for any action it takes or omits
to take which it believes to be authorized or within its rights or powers;
provided, however, that the Trustee's conduct does not constitute willful
misconduct or negligence.
(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 accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(g) Except with respect to Section 4.1, the Trustee shall have no duty
to inquire as to the performance of the Company's covenants in Article 4. In
addition, the Trustee shall not be deemed to have knowledge of any Default of
Event of Default except (i) any Default or Event of Default occurring pursuant
to Sections 6.1(i), 6.1(ii) and 4.1 or (ii) any Default or Event of Default of
which a Responsible Officer of the Trustee shall have received written
notification or obtained actual knowledge.
SECTION 7.3. 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 respective Affiliates with the
same rights it would have if it were not Trustee. However, upon the terms stated
in Section 310 of the TIA, in the event that the Trustee acquires any
conflicting interest (as defined in Section 310(b) of the TIA), it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as Trustee or resign. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. 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.
SECTION 7.5. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 30 days after it is known by a Trust Officer or written
notice is received by the Trustee. Except in the case of a Default or Event of
Default in payment of principal of or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may
54.
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as practicable
after each May 15 beginning with the May 15 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of such reporting date that
complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
Prior to delivery to the Holders, the Trustee shall deliver to the Company a
copy of any report it delivers to Holders pursuant to this Section 7.6.
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 7.7. Compensation and Indemnity. Except as otherwise agreed,
the Company shall pay to the Trustee from time to time such reasonable
compensation for acceptance of this Indenture and its services hereunder as the
Company and the Trustee 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 such compensation for its services, except any such
expense, disbursement or advance as may arise from its negligence, willful
misconduct or bad faith. Such expenses shall include the compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Trustee shall provide the Company reasonable notice
of any expenditure not in the ordinary course of business. The Company shall
indemnify each of the Trustee and any predecessor Trustees against any and all
loss, damage, claim, liability or expense (including attorneys' fees and
expenses) (other than taxes applicable to the Trustee's compensation hereunder)
incurred by it in connection with the acceptance or administration of this trust
and the performance of its duties hereunder. The Trustee shall defend the claim.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own willful
misconduct or negligence. The Company need not pay for any settlement made
without its written consent, which shall not be unreasonably withheld.
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 on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(vi) or (vii) with respect
to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law. The Trustee shall comply with the
provisions of TIA Section 313(b)(2) to the extent applicable.
55.
SECTION 7.8. Replacement of Trustee. No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Article 7
shall become effective until the acceptance of appointment by the successor
Trustee under this Section 7.8.
The Trustee may resign at any time upon 30 days written notice to the
Company. The Holders of a majority in principal amount of the Securities then
outstanding may remove the Trustee by so notifying the Trustee and Company in
writing. The Company shall remove the Trustee if:
(1) the Trustee fails to satisfy the provisions of Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or any
Holder who has been a bona fide Holder for at least six months may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If, after written request by any Holder who has been a bona fide
Holder for at least six months, the Trustee fails to satisfy the provisions of
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 7.7 shall continue for the
benefit of the retiring Trustee.
56.
SECTION 7.9. 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, provided that such corporation shall
be eligible under this Article 7 and TIA ss. 3.10(a).
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. There shall at all times
be a Trustee hereunder which shall be a financial institution, commercial bank
with trust powers or a trust company, which shall have (or, in the care of a
financial institution, commercial bank with trust powers or a trust company
included in a bank holding company system, the related bank holding company
shall have) a combined capital and surplus of at least $50,000,000, be subject
to supervision or examination by a federal or state authority so long as any
Notes are outstanding, be eligible pursuant to the TIA to act as such and
maintain (or, in the case of a financial institution, commercial bank with trust
powers or a trust company included in a bank holding company system, the related
bank holding company or other financial institution, bank or trust company
included in such bank holding company system shall maintain) an office or access
within its corporate structure to an office in the Borough of Manhattan, The
City of New York. If such financial institution, commercial bank or trust
company publishes reports of condition at least annually pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall case to be
eligible in accordance with the provision of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
57.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. 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 2.7) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof, and, in each case of this clause (ii), the Company
irrevocably deposits or causes to be deposited with the Trustee United States
dollars or U.S. Government Obligations sufficient to pay and discharge the
entire indebtedness on the Securities not heretofore delivered to the Trustee
for cancellation, for the principal of, premium, if any, and interest to the
date of deposit (other than Securities replaced pursuant to Section 2.7), and if
in either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Section 8.1(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate from
the Company that all conditions precedent provided for herein relating to
satisfaction and discharge of this Indenture have been complied with and at the
cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, 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 Article 4 and the
operation of Sections 6.1(iii), 6.1(iv), 6.1(v), 6.1(vi) and 6.1(vii) (but only
with respect to a Restricted Subsidiary), or 6.1(viii) and 5.1(iii) and 5.1(iv)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated due to a failure to comply with Article 4 or
the operation of Sections 6.1(iii) (but, only with respect to a failure to
comply with Sections 4.3, 4.4, 4.6, 5.1(iii) and 5.1(iv)), 6.1(iv), 6.1(v),
6.1(vi) and 6.1(vii) (but only with respect to a Restricted Subsidiary), or
6.1(viii) or because of the failure of the Company to comply with 5.1(iii) and
5.1(iv). If the Company exercises its legal defeasance option or its covenant
defeasance option, each Subsidiary Guarantor, to the extent applicable, will be
released from all of its obligations under any Supplemental Indenture entered
into pursuant to Section 4.14.
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.
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(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.3, 8.4, 8.5 and 8.6
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits or causes to be deposited in
trust (the "defeasance trust") with the Trustee money or U.S. Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide cash at such
times and in such amounts as will be sufficient to pay principal and
interest when due on all outstanding Securities (except Securities replaced
pursuant to Section 2.7) to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all outstanding Securities (except Securities replaced pursuant to
Section 2.7) to maturity or redemption, as the case may be;
(3) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 6.1(vi) or (vii) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not result in a breach of, or otherwise
constitute a default under any other agreement or investment with respect
to any Senior Indebtedness and no default exists under any Indebtedness;
(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) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that the Securityholders will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such deposit and 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
Securityholders will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the
59.
same manner and at the same times as would have been the case if such
deposit and covenant defeasance had not occurred;
(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; and
(9) the Company shall have paid or duly provided for payment under
terms mutually satisfactory to the Company and the Trustee all amounts then
due to the Trustee pursuant to Section 7.7 hereof.
Opinions of Counsel required to be delivered under this Section may
have qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact.
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 8.3. 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 either directly or through the Paying Agent (including the Company
acting as its own Paying Agent as the Trustee may determine) and in accordance
with this Indenture to the payment of principal of and interest on the
Securities.
Anything in Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or U.S. Government Obligations held by it as provided in
Section 8.2 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.2(1) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect and equivalent legal defeasance or covenant
defeasance.
SECTION 8.4. Repayment to Company. The Trustee and the Paying Agent
shall notify the Company of any excess money or Securities held by them at any
time and shall promptly turn over to the Company upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon 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.
60.
SECTION 8.5. 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 other than any such
tax, fee or other charge which by law is for the account of the Holders of the
defeased Securities; provided that the Trustee shall be entitled to charge any
such tax, fee or other charge to such Holder's account.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, (a) if
the Company has made any payment of interest on or principal of any Securities
following the reinstatement of their 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 and (b) unless otherwise required by any legal proceeding or any
order or judgment of any court or governmental authority, the Trustee or Paying
Agent shall return all such money and U.S. Government Obligations to the Company
promptly after receiving a written request therefor at any time, if such
reinstatement of the Company's obligations has occurred and continues to be in
effect.
ARTICLE 9
AMENDMENTS
SECTION 9.1. 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 the issuance of additional Securities up to an
aggregate principal amount of $250,000,000 issuable hereunder;
(4) 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 as described in Section 163(f)(2)(B) of the Code;
(5) to add Guarantees with respect to the Securities;
61.
(6) to secure the Securities;
(7) 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;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA.
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 9.2. With Consent of Holders. The Company 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. 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 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;
(6) impair the right of any Holder to institute suit for the
enforcement of any payment on or with respect to such Holder's Securities
or, if applicable, any Subsidiary Guaranty;
(7) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions; or
(8) make any change to the subordination provisions of this Indenture
that would adversely affect the securityholders.
62.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to 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 9.3. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.4. 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. An amendment or waiver
becomes effective once the requisite number of consents are received by the
Company or the Trustee. After an amendment or waiver becomes effective, it shall
bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.5. 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 or the Trustee so determine, 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 9.6. 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 7.1) shall be fully protected in relying
63.
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment complies with the provisions of Article 9 of this Indenture.
ARTICLE 10
SUBORDINATION OF THE SECURITIES
SECTION 10.1. Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Indenture, the Company covenants and agrees,
and each Holder by accepting a Security covenants and agrees, that the payment
of principal of, premium (if any) and interest on and all other Obligations
under or in connection with the Indebtedness now or hereafter evidenced by the
Securities, any Subsidiary Guaranties, this Indenture and/or related agreements,
documents or instruments is subordinate in right of payment, to the extent and
in the manner provided in this Article, to the prior payment in full of all
Senior Indebtedness of the Company or the relevant Subsidiary Guarantor, if
applicable, whether outstanding on the Issue Date or thereafter incurred,
including all Obligations of the Company and any such Subsidiary Guarantor under
the Senior Credit Facility. The subordination provisions set forth in this
Article are for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
Each Holder authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate, in the sole discretion
of the Trustee, to acknowledge or effectuate the subordination between the
Holders and the holders of Senior Indebtedness of the Company as provided in
this Article and appoints the Trustee as such Holder's attorney-in-fact for any
and all such purposes, including, in the event of any voluntary or involuntary
liquidation or dissolution of the Company, whether total or partial, or in a
bankruptcy, reorganization, insolvency, receivership, dissolution, assignment
for the benefit of creditors, marshalling of assets or similar proceeding
relating to the Company or its property, the timely filing of a claim for the
unpaid balance of such Holder's Securities in the form required in said
proceeding and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
20 days before the expiration of the time to file such claim or claims, then the
Representative is hereby authorized to have the right to file and is hereby
authorized to file an appropriate claim for and on behalf of the Holders;
provided, however, that any such claim filed by the Representative shall be
superseded by the claim, if any, subsequently filed by the Trustee.
Each Holder by accepting a Security acknowledges and agrees that the
subordination provisions set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness of the
Company, whether such Senior Indebtedness was created 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 upon such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness, and such holder is made an obligee hereunder and may enforce
directly such subordination provisions.
64.
SECTION 10.2. Liquidation; Dissolution; Bankruptcy. Upon any payment
or distribution of the assets of the Company of any kind or character, whether
in cash, property or securities, to creditors upon a total or partial
liquidation or dissolution or reorganization of or similar proceeding relating
to the Company or its property or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding:
(a) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Senior Indebtedness before Holders
are entitled to receive any payment; and
(b) until the Senior Indebtedness of the Company is paid in full any
payment or distribution to which Holders would be entitled but for this Article
shall be made to holders of such Senior Indebtedness, as their interests may
appear.
Upon any prepayment, payment or distribution referred to in this
Article, the Trustee and the Holders shall be entitled to rely upon any order or
decree of a court of competent jurisdiction in which such proceedings are
pending for the purpose of ascertaining the identity of Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness,
the amount thereof or payable thereon and all other facts pertinent thereto or
to this Article, and the Trustee and the Holders shall be entitled to rely upon
a certificate of the liquidating trustee or agent or other Person (including any
Representative of holders of Senior Indebtedness of the Company) making any
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the identity of Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person, as a holder of Senior Indebtedness, to participate in any payment or
distribution pursuant to this Section, the Trustee may require such Person (at
the expense of the Holders) to furnish evidence to the reasonable satisfaction
of the Trustee, acting in good faith, as to the amount of such Senior
Indebtedness held by such Person, as to the extent to which such Person is
entitled to participate in such payment or distribution, and as to other facts
pertinent to the rights of such Person under this Section, 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 payment.
The consolidation or merger of the Company with or into any Person, or
the sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Company's assets to any Person, upon the terms and
conditions set forth in Article 5, shall not be deemed to be liquidation,
dissolution or reorganization or similar proceeding relating to the Company for
purposes of this Section if the Person formed by or surviving such consolidation
or merger, or to which such sale, assignment, transfer, lease, conveyance or
other disposition is made, shall, as a part of such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition, comply with the
conditions set forth in Article 5.
65.
If a payment or distribution is made to Holders that, due to the
subordination provisions, should not have been made to them, such Holders are
required to hold it in trust for the holders of Senior Indebtedness of the
Company and pay it over to them as their interests may appear.
SECTION 10.3. Default on Senior Indebtedness.
(a) If any Senior Indebtedness of the Company is not paid when due,
the Company may not: (i) pay, directly or indirectly, principal of, premium (if
any) or interest on the Securities or any other Obligations under or in
connection with the Securities, this Indenture and/or any related agreements,
documents or instruments; (ii) make any deposit pursuant to Article 8; or (iii)
repurchase, redeem or otherwise retire any Securities (collectively "pay the
Subordinated Debt") unless the default shall have been cured or waived or such
Senior Indebtedness has been paid in full in cash.
(b) If any default on any Senior Indebtedness of the Company (other
than as set forth in Section 10.3(a)) occurs and such Senior Indebtedness is
accelerated in accordance with its terms, the Company may not pay the
Subordinated Debt, unless the default shall have been cured or waived and any
such acceleration has been rescinded or such Senior Indebtedness has been paid
in full in cash.
(c) Notwithstanding Sections 10.3(a) and (b), the Company may pay the
Subordinated Debt without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of the
Senior Indebtedness with respect to which either of the events set forth in
Sections 10.3(a) and (b) has occurred and is continuing. During the continuance
of any default (other than a default described in Sections 10.3(a) and (b)) 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
Subordinated Debt 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 holders of
such Designated Senior Indebtedness 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) because
the default giving rise to such Blockage Notice has been waived in writing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders has accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Securities after the end of
such Payment Blockage Period. The Securities shall not be subject to more than
one Payment Blockage Period in any consecutive 365-day period, irrespective of
the number of such nonpayment defaults with respect to Designated Senior
Indebtedness during such period.
66.
(d) The Company covenants that it will, upon request of the Trustee,
deliver an Officers' Certificate (with copies thereof to the Representative of
each class of Senior Indebtedness of the Company) showing in reasonable detail
the Senior Indebtedness outstanding as of the date of such Officers' Certificate
and the Representative of each class of Senior Indebtedness. The Trustee may
conclusively rely thereon except to the extent that it shall have received, from
the Representative of any class of Senior Indebtedness, notice in writing
controverting any of the statements made therein. Not less than 10 days prior to
making any distribution in respect of Senior Indebtedness pursuant to this
Section, the Trustee shall deliver to each Representative of any class of Senior
Indebtedness copies of the most recent Officers' Certificate filed with it by
the Company pursuant to this subsection (d).
(e) In the event that the Securities are declared due and payable
before their Stated Maturity in accordance with Article 6, then and in such
event the holders of Senior Indebtedness outstanding at the time the Securities
so become due and payable shall be entitled to receive payment in full in cash
of all amounts due or to become due on or in respect of such Senior Indebtedness
(whether or not an event of default has occurred thereunder or such Senior
Indebtedness is, or has been declared to be, due and payable prior to the date
on which it otherwise would have become due and payable) before the Holders
shall be entitled to receive any payment in respect of the Securities.
SECTION 10.4. Payment of Subordinated Debt Permitted if No Default.
Nothing contained in this Article or elsewhere in this Indenture, or in any of
the Securities, shall prevent the Company or any Person acting on behalf of the
Company at any time, except as otherwise provided in Sections 10.2 and 10.3 from
paying the Subordinated Debt.
SECTION 10.5. When Subordinated Debt Must Be Paid Over. In the event
that any payment on the Subordinated Debt is made to the Trustee or the Holders
that, because of this Article, should not have been so made or may not be paid
over to the Holders, such payment shall be held by the Trustee or the Holders
who receive such payment, as the case may be, for the benefit of, and shall
forthwith be paid over or delivered to, the holders of the Senior Indebtedness
of the Company remaining unpaid or their Representatives, as their interests may
appear, to the extent necessary to irrevocably and indefeasibly pay such Senior
Indebtedness in full in cash in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
SECTION 10.6. Notices by the Company. The Company shall promptly
notify the Trustee, each Paying Agent and the Representative of any facts known
to the Company that would cause a payment on the Subordinated Debt to violate
this Article, but failure to give such notice shall not affect the subordination
provided in this Article of the Securities to Senior Indebtedness. Without
limiting the foregoing, if payment of the Securities is accelerated because of
an Event of Default, the Company shall promptly notify the Representative of the
acceleration.
SECTION 10.7. Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until the Securities are
paid in full, Holders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to
67.
Senior Indebtedness to the extent that distributions otherwise payable to
Holders have been applied to the payment of Senior Indebtedness. A distribution
made under this Article to holders of Senior Indebtedness which otherwise would
have been made to Holders is not, as between the Company and the Holders,
payment by the Company on the Securities.
SECTION 10.8. Relative Rights. This Article defines the relative
rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(a) impair, as between the Company and the Holders, the obligation of
the Company, which is absolute and unconditional, to pay the principal of,
premium (if any) and interest on the Securities in accordance with their terms;
(b) affect the relative rights of Holders and creditors of the Company
other than holders of Senior Indebtedness; or
(c) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of holders of
Senior Indebtedness to receive prepayment, payments and distributions otherwise
payable to Holders.
If the Company fails because of this Article to pay the principal of,
premium (if any) or interest on a Security on the due date or upon the
acceleration thereof, the failure is still a Default or Event of Default.
SECTION 10.9. Subordination May Not Be Impaired by the 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 (a) any act or failure to act by the Company or by its failure to comply with
this Indenture, (b) any release of any collateral or any guarantor or any Person
of the Company's obligations under the Senior Indebtedness, (c) any amendment,
supplement, extension, renewal, restatement or other modification of the Senior
Indebtedness, (d) any settlement or compromise of any Senior Indebtedness, (e)
the unenforceability of any of the Senior Indebtedness or (f) the failure of any
holder of Senior Indebtedness to pursue claims against the Company. The terms of
the subordination provisions contained in this Article 10 will 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 and in accordance with the provisions described in Article 8.
SECTION 10.10. Distribution of 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. Rights of Trustee and Paying Agent. The Trustee or any
Payment Agent may continue to make payments in respect of the Securities and
shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payment unless, not less than three Business
Days prior to the date of any such payment, a Responsible Officer of the Trustee
receives written notice reasonably satisfactory to it that
68.
payments in respect of the Securities may not be made under this Article. Only
the Company, a Representative (satisfactorily identified to the Trustee) or a
holder of a class of Senior Indebtedness that has no Representative
(satisfactorily identified to the Trustee) may give the notice. Prior to the
receipt of such notice, the Trustee and any Paying Agent shall be entitled in
all respects to assume that no such facts exist. In any case, the Trustee shall
have no responsibility to the holders of Senior Indebtedness for payments made
to Holders by the Company or any Paying Agent unless cash payments are made at
the direction of the Trustee after receipt of such notice referred to above.
Neither the Trustee nor any Payment Agent shall be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants and obligations as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Indebtedness shall be read into this Indenture against
the Trustee. The Trustee shall not be liable to any holder of Senior
Indebtedness if it shall mistakenly pay over or deliver to Holders, the Company
or any other Person moneys or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.12. Consent of Holders of Senior Indebtedness. The
provisions of this Article (including the definitions contained in this Article
and references to this Article contained in this Indenture) shall not be
amended, waived or modified in a manner that would adversely affect the rights
of the holders of any Senior Indebtedness of the Company, and no such amendment,
waiver or modification shall become effective, unless the holders of such Senior
Indebtedness shall have consented in writing (in accordance with the provisions
of the agreement governing such Senior Indebtedness) to such amendment, waiver
or modification.
SECTION 10.13. Contractual Subordination. This Article 10 represents a
bona fide agreement of contractual subordination pursuant to Section 510(b) of
the United States Bankruptcy Code.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. 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. If this Indenture excludes any provision of the TIA that is
required to be included, such provision shall be deemed included herein.
69.
SECTION 11.2. Notices. Any notice or communication shall be in writing
and delivered in person, by overnight courier or facsimile (if to the Company,
with receipt confirmed by an Officer) or mailed by first-class mail addressed as
follows:
If to the Company:
Hollywood Entertainment Corporation
00000 XX Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
With copies to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx, Esq.
Stoel Rivers LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
If to the Trustee:
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to
Securityholders) shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication mailed or sent by overnight courier or
facsimile to a Securityholder shall be sent to the Securityholder at the
Securityholder's address as it appears on
70.
the registration books of the Registrar and shall be sufficiently given if so
sent within the time prescribed.
Failure to send 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 sent in the manner provided
above, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.
SECTION 11.3. 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 11.4. 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
to the extent required by the TIA or this Indenture:
(1) an Officers' Certificate (which in connection with the original
issuance of the Securities need only be executed by one Officer for the
Company) in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.5. 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
71.
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with; provided,
that an Opinion of Counsel can rely as to matters of fact on an Officers'
Certificate or a certificate of a public official.
SECTION 11.6. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Trustee shall provide the Company reasonable notice of such rules. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.8. Legal Holidays. 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 11.9. Governing Law. This Indenture and the Securities shall
be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to applicable principles of conflict of laws to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 11.10. No Recourse Against Others. No recourse for the payment
of the principal of, premium, if any, or interest or other Obligations on any of
the Securities or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any Obligation, covenant or agreement of the
Company in this Indenture, or in any of the Securities or because of the
creation of any Indebtedness represented hereby and thereby, shall be had
against any incorporator, shareholder, officer, director, employee or
controlling person of the Company or any Successor Person thereof. Each Holder,
by accepting a Security, waives and releases all such liability. The waiver and
release shall be part of the consideration for the issuance of the Securities.
SECTION 11.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind the Company's successors. All agreements
of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. 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.
72.
SECTION 11.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 11.14. Severability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
73.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE COMPANY:
HOLLYWOOD ENTERTAINMENT
CORPORATION
By: XXXXXX X. XXXXX
-------------------------------------
Name:
Title:
TRUSTEE:
U.S. TRUST COMPANY OF
CALIFORNIA, N.A., a national association
organized under the laws of the United
States of America,
as Trustee
By: XXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
EXHIBIT A
FACE OF SECURITY
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1) BY THE INITIAL PURCHASER (a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (d) TO THE COMPANY, (e) PURSUANT
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TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (f) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND (2) BY SUBSEQUENT PURCHASERS, AS SET
FORTH IN (1)(a) THROUGH (e) ABOVE, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE
AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY
EVIDENCED HEREBY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER 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 HEREON 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.14 OF THE INDENTURE.
X-0
Xx.
00 5/8% Senior Subordinated Notes Due 2004
CUSIP No. 436141 AA 3
HOLLYWOOD ENTERTAINMENT CORPORATION, an Oregon corporation, promises
to pay to Cede & Co., or registered assigns, the principal sum set forth from
time to time on Schedule A hereto on August 15, 2004.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the reverse
side of this Security.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
HOLLYWOOD ENTERTAINMENT CORPORATION
By:
-------------------------------------
Name:
Title:
Dated: ____________, 1997
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee, certifies that this is one
of the Securities referred to in the within-mentioned Indenture.
By: U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
-----------------------------------------
Authorized Signatory
Date of Authentication:
____________, 1997
A-3
REVERSE OF SECURITY
10 5/8% SENIOR SUBORDINATED SECURITY DUE 2004
1. Interest
HOLLYWOOD ENTERTAINMENT CORPORATION, an Oregon corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, and each other entity which is required to become the Company pursuant to
the Indenture, and its successors and assigns under the Indenture, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on February 15 and August 15 of each year, commencing February 15,
1998. Interest on the Securities will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from August 13, 1997.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the same rate
borne by the Securities, and it shall pay interest on overdue installments of
interest at such rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the February 1 and August 1 immediately preceding the interest
payment date even if Securities are canceled on registration of transfer or
registration of exchange (including pursuant to an Exchange Offer (as defined in
the applicable Registration Rights Agreement)) after the record date. Holders
must surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
its check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, U.S. Trust Company of California, N.A., a national banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company may act as Paying Agent, Registrar, co-Registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as of
August 13, 1997 (the "Indenture"), between the Company and the Trustee. This
Security is one of a duly authorized issue of Initial Securities of the Company
designated as its 10 5/8% Senior Subordinated Notes due 2004 (the "Initial
Securities"). The Securities include the Initial Securities and the Exchange
Securities (as defined in the Indenture), issued in exchange for the
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Initial Securities pursuant to the Registration Rights Agreement. The Initial
Securities and the Exchange Securities are treated as a single class of
securities under the Indenture. 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. ss. 77aaa-77bbbb) as in effect on the date of
the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of those terms. Any conflict between this Security and the
Indenture will be governed by the Indenture.
The Securities are unsecured senior subordinated obligations of the
Company limited to $250,000,000 aggregate principal amount (subject to Section
2.7 of the Indenture). The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Company and its Restricted Subsidiaries, the
existence of liens, the payment of dividends on, and redemption of, the Capital
Stock of the Company and its Subsidiaries, restricted payments, the sale or
transfer of assets and Subsidiary stock, the issuance or sale of Capital Stock
of Restricted Subsidiaries, the investments of the Company and its Restricted
Subsidiaries, consolidations, mergers and transfers of all or substantially all
the assets of the Company, and transactions with Affiliates. In addition, the
Indenture limits the ability of the Company and certain of its Subsidiaries to
restrict distributions and dividends from Restricted Subsidiaries.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed at the option of the Company prior to August 15, 2001. Thereafter, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time or from time to time, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) if
redeemed during the 12-month period commencing on August 15 of the years set
forth below:
Period Percentage
------ ----------
2001 ........................................... 105.313%
2002 ........................................... 102.656%
2003 and thereafter ............................ 100.000%
In addition, at any time and from time to time prior to August 15,
2000, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the proceeds of one or more Public
Equity Offerings at a redemption price (expressed as a percentage of principal
amount) of 110.625% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original aggregate principal amount of the Securities
must remain outstanding after each such redemption; and provided further,
however, that such redemption shall occur within 60 days of the closing date of
such Public Equity Offering.
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6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at such Holder's registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000 (except as otherwise set forth in the Indenture). 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. If a notice or
communication is sent in the manner provided in the Indenture, it is duly given,
whether or not the addressee receives it. Failure to send a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
In addition, in the event of certain Asset Dispositions, the Company
will be required to make an offer to purchase Securities at a purchase price of
100% of their principal amount plus accrued interest to the date of purchase
(subject to the rights of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
7. Change of Control
Upon a Change of Control, each Holder of Securities will have the
right to require the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price in cash equal to 101% of the principal amount
of the Securities to be repurchased plus accrued and unpaid interest to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
8. The Registration Rights Agreement
The holder of this Security is entitled to the benefits of a
Registration Rights Agreement, dated as of August 13, 1997, among the Company
and the Initial Purchasers named therein (as such may be amended from time to
time, the "Registration Rights Agreement"). Capitalized terms used in this
subsection but not defined herein have the meanings assigned to them in the
Registration Rights Agreement.
If (i) within 30 days after the Closing Date, neither the Exchange
Offer Registration Statement nor the Shelf Registration Statement has been filed
with the Commission; (ii) within 90 days after the Closing Date, the Exchange
Offer Registration Statement has not been declared effective; (iii) within 120
days after the Closing Date, the Registered Exchange Offer has not been
consummated; (iv) within 120 days after the Closing Date, the Shelf Registration
Statement has not been declared effective if a Shelf Registration Statement is
required to be filed; or (v) after either the Exchange Offer Registration
Statement or the Shelf Registration Statement
A-6
has been declared effective, such Registration Statement thereafter ceases to be
effective or usable (subject to certain exceptions) in connection with resales
of Securities in accordance with and during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (i)
through (iv), a "Registration Default"), interest ("Additional Interest") will
accrue on the Securities (in addition to the stated interest on the Securities)
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
Additional Interest will accrue at a rate of 0.25% per annum during the 90-day
period immediately following the occurrence of any Registration Default and
shall increase by 0.25% per annum at the end of each subsequent 90-day period,
but in no event shall such increase exceed 1.00% per annum.
9. Subordination
The Securities are subordinated to Senior Indebtedness of the Company,
as defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be paid. In
addition, to the extent applicable, each Subsidiary Guaranty shall be
subordinated to Senior Indebtedness of the relevant Subsidiary Guarantor, as
defined in the Indenture (or the relevant supplement thereto). The Company and,
to the extent applicable, each Subsidiary Guarantor, agrees, and each Holder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give such provisions effect and appoints
the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture, including any transfer tax or other similar governmental charge
payable in connection therewith. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request
A-7
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 or all of 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 with the consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (ii) any
past default or compliance with any provision may be waived with the consent of
the Holders of a majority in principal amount outstanding of the Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, to comply
with Article 5 of the Indenture, to provide for uncertificated Securities in
addition to or in place of certificated Securities, to add guarantees with
respect to the Securities, to secure the Securities, to add additional covenants
or surrender rights and powers conferred on the Company, to make any change that
does not adversely affect the rights of any Securityholder or to comply with any
request of the SEC in connection with qualifying the Indenture under the TIA.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
or premium, if any, on any Security when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) failure by the Company to comply for 30 days after notice with Sections
4.3, 4.4, 4.6 or Article 5 of the Indenture; (iv) failure by the Company to
comply with other agreements in the Indenture or the Securities, for 60 days
after notice; (iv) failure by the Company or any Restricted Subsidiary to pay
any Indebtedness within any applicable grace period after final maturity or
acceleration by the Holders thereof because of a default and the total amount of
such Indebtedness unpaid or accelerated exceeds $5.0 million and in either case,
such default is not cured or waived and such acceleration, if any, rescinded or
the Indebtedness is not paid in 30 days; (v) certain events of bankruptcy,
insolvency or reorganization of the Company or any Restricted Subsidiary; and
(vi) the rendering of any judgments or decrees against the Company or any
Restricted Subsidiary for the payment of money in excess of $5.0 million, if any
such judgment or decree is not discharged, waived or stayed within 60 days after
entry of such judgment or decree.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities then outstanding
may declare all the Securities to
A-8
be due and payable. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
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 any of its Affiliates and may otherwise deal with the
Company or any of its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
No recourse for the payment of the principal of, premium, if any, or
interest or other Obligations on any of the Securities or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture, or in any of
the Securities or because of the creation of any Indebtedness represented hereby
and thereby, shall be had against any incorporator, stockholder, officer,
director, employee or controlling person of the Company, a Subsidiary Guarantor
or any Successor Person thereof. Each Holder, by accepting a Security, waives
and releases all such liability.
18. Guarantees
This Security may be entitled to the benefits of certain Guarantees,
if any, which may be made after the original issuance of this Security for the
benefit of the Holders. Reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and
obligations thereunder of any such Subsidiary Guarantors, the Trustee and the
Holders.
19. Governing Law
The Indenture and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflict of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
A-9
20. 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.
21. 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).
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Requests may
be made as follows:
If to the Company:
Hollywood Entertainment Corporation
00000 XX Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxx 00000
Attention: Secretary
If to the Trustee:
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Trustee Administration
A-10
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 Guarantee: ______________________________
(Signature must be guaranteed)
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Security
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) the second anniversary of the Issue Date; provided,
however, that neither the Company nor any Affiliate of the Company has held any
beneficial interest in this Security, or a portion thereof, at any time on or
prior to the second anniversary of the Issue Date and the undersigned confirms
that it has not utilized any general solicitation or general advertising in
connection with the transfer:
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule 501(a)
(1), (2), (3) or (7) under the Securities Act of 1933, as amended)
that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
A-11
(4) __ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as
amended; or
(5) __ pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if item (3), (4),
(5) or (7) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Securities, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Trustee or 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, as amended.
If none of the foregoing items are checked, the Trustee or Registrar shall
not be obligated to register this Security in the name of any person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.14 of the Indenture shall have
been satisfied.
Date: _______________ Your Signature: ___________________________________
Sign exactly as your name appears on the other
side of this Security.
Signature Guarantee: ______________________________
(Signature must be guaranteed)
A-12
TO BE COMPLETED BY PURCHASER IF (2) 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, as amended, 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
Issuer 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
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.6 or 4.8 of the Indenture, check the box: If you want to
elect to have only part of this Security purchased by the Company pursuant to
Section 4.6 or 4.8 of the Indenture, state the amount: $
Date: _______________ Your Signature: ___________________________________
Sign exactly as your name appears on the other
side of this Security.
Signature Guarantee: ______________________________
(Signature must be guaranteed)
A-14
SCHEDULE A
PRINCIPAL AMOUNT: ______________________________
The following increases or decreases in the principal amount of this
Global Security have been made:
Amount of Amount of Principal Signature of
decrease in increase in Amount of this authorized
Principal Principal Global Security signatory of
Amount of this Amount of this following such Trustee or
Date of Global Global decrease (or Securities
Exchange Security Security increase) Custodian
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A-15
EXHIBIT B
FACE OF SECURITY
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER 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 HEREON 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.14 OF THE INDENTURE.
B-1
No.
10 5/8% Senior Subordinated Notes Due 2004
CUSIP No. 436141 AB 1
HOLLYWOOD ENTERTAINMENT CORPORATION, an Oregon corporation, promises
to pay to Cede & Co., or registered assigns, the principal sum set forth from
time to time on Schedule A hereto on August 15, 2004.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the reverse
side of this Security.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
HOLLYWOOD ENTERTAINMENT
CORPORATION
By:
-------------------------------------
Name:
Title:
Dated: ____________, 1997
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee, certifies that this is one
of the Securities referred to in the within-mentioned Indenture.
By: U.S. TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
-----------------------------------------
Authorized Signatory
Date of Authentication:
____________, 1997
B-2
REVERSE OF SECURITY
10 5/8% SENIOR SUBORDINATED SECURITY DUE 2004
1. Interest
HOLLYWOOD ENTERTAINMENT CORPORATION, an Oregon corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, and each other entity which is required to become the Company pursuant to
the Indenture, and its successors and assigns under the Indenture, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on February 15 and August 15 of each year, commencing February 15,
1998. Interest on the Securities will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from, August 13, 1997.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the same rate
borne by the Securities, and it shall pay interest on overdue installments of
interest at such rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the February 1 and August 1 immediately preceding the interest
payment date even if Securities are canceled on registration of transfer or
registration of exchange (including pursuant to an Exchange Offer (as defined in
the applicable Registration Rights Agreement)) after the record date. Holders
must surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
its check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, U.S. Trust Company of California, N.A., a national banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company may act as Paying Agent, Registrar, co-Registrar or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as of
August 13, 1997 (the "Indenture"), between the Company and the Trustee. This
Security is one of a duly authorized issue of Exchange Securities of the Company
designated as its 10 5/8% Senior Subordinated Notes due 2004 (the "Exchange
Securities"). The Securities include the _____% Senior Subordinated Notes due
2004 (the "Initial Securities"), and the Exchange Securities issued
B-3
in exchange for the Initial Securities pursuant to the Registration Rights
Agreement. The Initial Securities and the Exchange Securities are treated as a
single class of securities under the Indenture. 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. ss. 77aaa-77bbbb) as in
effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture
and not defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms. Any conflict between
this Security and the Indenture will be governed by the Indenture.
The Securities are unsecured senior subordinated obligations of the
Company limited to $250,000,000 aggregate principal amount. The Indenture
imposes certain limitations on the Incurrence of Indebtedness by the Company and
its Restricted Subsidiaries, the existence of liens, the payment of dividends
on, and redemption of, the Capital Stock of the Company and its Subsidiaries,
restricted payments, the sale or transfer of assets and Subsidiary stock, the
issuance or sale of Capital Stock of Restricted Subsidiaries, the investments of
the Company and its Restricted Subsidiaries, consolidations, mergers and
transfers of all or substantially all the assets of the Company, and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and certain of its Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed at the option of the Company prior to August 15, 2001. Thereafter, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time or from time to time, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) if
redeemed during the 12-month period commencing on August 15 of the years set
forth below:
Period Percentage
------ ----------
2001......................................... 105.313%
2002......................................... 102.656%
2003 and thereafter.......................... 100.000%
In addition, at any time and from time to time prior to August 15,
2000, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the proceeds of one or more Public
Equity Offerings at a redemption price (expressed as a percentage of principal
amount) of 110.625% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original aggregate principal amount of the Securities
must remain outstanding after each such redemption; and provided further,
however, that such redemption shall occur within 60 days of the closing date of
such Public Equity Offerings.
B-4
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at such Holder's registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000 (except as otherwise provided in the Indenture). 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. If a notice or
communication is sent in the manner provided in the Indenture, it is duly given,
whether or not the addressee receives it. Failure to send a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
In addition, in the event of certain Asset Dispositions, the Company
will be required to make an offer to purchase Securities at a purchase price of
100% of their principal amount plus accrued interest to the date of purchase
(subject to the rights of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
7. Change of Control
Upon a Change of Control, each Holder of Securities will have the
right to require the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price in cash equal to 101% of the principal amount
of the Securities to be repurchased plus accrued and unpaid interest to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the Company,
as defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be paid. In
addition, to the extent applicable, each Subsidiary Guaranty is subordinated to
Senior Indebtedness of the relevant Subsidiary Guarantor, as defined in the
Indenture (or the relevant supplement thereto). The Company and, to the extent
applicable, each Subsidiary Guarantor, agrees, and each Holder by accepting a
Security agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give such provisions effect and appoints the Trustee
as attorney-in-fact for such purpose.
B-5
9. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture, including any transfer tax or other similar governmental charge
payable in connection therewith. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
11. 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.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of 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.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (ii) any
past default or compliance with any provision may be waived with the consent of
the Holders of a majority in principal amount outstanding of the Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, to comply
with Article 5 of the Indenture, to provide for uncertificated Securities in
addition to or in place of certificated Securities, to add guarantees with
respect to the Securities, to secure the Securities, to add additional covenants
or surrender rights and powers conferred on the Company, to make any change that
does not adversely affect the rights of any Securityholder or to comply with any
request of the SEC in connection with qualifying the Indenture under the TIA.
B-6
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
or premium, if any, on any Security when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) failure by the Company to comply for 30 days after notice with Sections
4.3., 4.4, 4.6 or Article 5 of the Indenture; (iv) failure by the Company to
comply with other agreements in the Indenture or the Securities, for 60 days
after notice; (iv) failure by the Company or any Restricted Subsidiary to pay
any Indebtedness within any applicable grace period after final maturity or
acceleration by the Holders thereof because of a default and the total amount of
such Indebtedness unpaid or accelerated exceeds $5.0 million and in either case,
such default is not cured or waived and such acceleration, if any, rescinded or
the Indebtedness is not paid in 30 days; (v) certain events of bankruptcy,
insolvency or reorganization of the Company or any Restricted Subsidiary; and
(vi) the rendering of any judgments or decrees against the Company or any
Restricted Subsidiary for the payment of money in excess of $5.0 million, if any
such judgment or decree is not discharged, waived or stayed within 60 days after
entry of such judgment or decree.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities then outstanding
may declare all the Securities to be due and payable. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
15. 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 any of its Affiliates and may otherwise deal with the
Company or any of its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
No recourse for the payment of the principal of, premium, if any, or
interest or other Obligations on any of the Securities or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the
B-7
Company in the Indenture, or in any of the Securities or because of the creation
of any Indebtedness represented hereby and thereby, shall be had against any
incorporator, stockholder, officer, director, employee or controlling person of
the Company, a Subsidiary Guarantor or any Successor Person thereof. Each
Holder, by accepting a Security, waives and releases all such liability.
17. Guarantees
This Security may be entitled to the benefits of certain Guarantees,
if any, which may be made after the original issuance of this Security for the
benefit of the Holders. Reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and
obligations thereunder of any such Subsidiary Guarantors, the Trustee and the
Holders.
18. Governing Law
The Indenture and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflict of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
19. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
21. 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 have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Requests may
be made as follows:
B-8
If to the Company:
Hollywood Entertainment Corporation
00000 XX Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxx 00000
Attention: Secretary
If to the Trustee:
U.S. Trust Company of California, N.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Trustee Administration
B-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.
Signature Guarantee: ______________________________
(Signature must be guaranteed)
B-10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.6 or 4.8 of the Indenture, check the box: If you want to
elect to have only part of this Security purchased by the Company pursuant to
Section 4.6 or 4.8 of the Indenture, state the amount: $
Date: _______________ Your Signature: ___________________________________
Sign exactly as your name appears on the other
side of this Security.
Signature Guarantee: ______________________________
(Signature must be guaranteed)
B-11
SCHEDULE A
PRINCIPAL AMOUNT: ______________________________
The following increases or decreases in the principal amount of this
Global Security have been made:
Amount of Amount of Principal Signature of
decrease in increase in Amount of this authorized
Principal Principal Global Security signatory of
Amount of this Amount of this following such Trustee or
Date of Global Global decrease (or Securities
Exchange Security Security increase) Custodian
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B-12
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
[ ]
[ ]
[ ]
Ladies and Gentlemen:
In connection with our proposed purchase of 10 5/8% Senior
Subordinated Notes due 2004 (the "Securities") of Hollywood Entertainment
Corporation, a Michigan corporation (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated August 7, 1997, relating to the Securities
and such other information as we deem necessary in order to make our
investment decision. We acknowledge that we have read and agreed to the
matters stated in the section entitled "Transfer Restrictions" of such
Offering Memorandum.
2. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the
Indenture relating to the Securities (the "Indenture") as described in the
Offering Memorandum and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Securities except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable State securities laws.
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may
not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons except as permitted in the following sentence.
We agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Securities, we
will do so only (i) to the Company or any subsidiary thereof, (ii) inside
the United States in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined in Rule 144A promulgated
under the Securities Act), (iii) outside the United States in accordance
with Rule 904 of Regulation S promulgated under the Securities Act to
non-U.S. persons, (iv) pursuant to the exemption from registration provided
by Rule 144 under the Securities Act (if available), or (v) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Securities from us a
notice advising such purchaser that resales of the Securities are
restricted as stated herein.
C-1
4. We understand that, on any proposed resale of any Securities,
we will be required to furnish to the Trustee and the Company such
certification, legal opinions and other information as the Trustee and the
Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You, the Company, the Trustee and others are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-------------------------------------
Name:
Title:
C-2
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
[ ]
[ ]
[ ]
[ ]
Re: Hollywood Entertainment Corporation (the
"Company") 10 5/8% Senior Subordinated Notes
due 2004 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
D-1
You, the Company and counsel for the Company are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By:
-------------------------------------
Name:
Title:
D-2
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of this
Security the cash payments in United States dollars of principal of, premium, if
any, and interest on this Security (and including Additional Interest payable
thereon) in the amounts and at the times when due and interest on the overdue
principal, premium, if any, and interest, if any, of this Security, if lawful,
and the payment or performance of all other obligations of the Company under the
Indenture (as defined below) or the Securities, to the Holder of this Security
and the Trustee, all in accordance with and subject to the terms and limitations
of this Security, the Indenture (as supplemented) and this Guarantee. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Security. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Indenture
dated as of August 13, 1997, among Hollywood Entertainment Corporation, an
Oregon corporation, as issuer (the "Company"), and U.S. Trust Company of
California, N.A., as trustee (the "Trustee"), as the same may be amended or
supplemented (the "Indenture").
The Guarantor hereunder shall be released and discharged from
this Guarantee automatically and unconditionally upon either (i) the release or
discharge of the guarantee or similar obligation under the Senior Credit
Facility giving rise to the Guarantor's obligation to become a Guarantor
hereunder, except a discharge by or as a result of payment under such guarantee,
or (ii) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Capital Stock in, or all or substantially all
the assets of, such Guarantor, which sale, exchange or transfer is made in
compliance with the applicable provisions of the Indenture.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. Each Guarantor hereby agrees to submit to the jurisdiction of
the courts of the State of New York in any action or proceeding arising out of
or relating to this Guarantee. This Guarantee is subject to release upon the
terms set forth in the Indenture.
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be
duly executed.
GUARANTOR
By:
-------------------------------------
Name:
Title:
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EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______________, among [Subsidiary Guarantor] (the "Subsidiary Guarantor"), a
subsidiary of Hollywood Entertainment Corporation (or its successor), an Oregon
corporation (the "Company"), the Company and U.S. Trust Company of California,
N.A., a national 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 has heretofore executed and delivered to the
Trustee an Indenture (as such may be amended from time to time, the
"Indenture"), dated as of August 13, 1997, providing for the issuance of an
aggregate principal amount of up to $250,000,000 of 10 5/8% Senior Subordinated
Notes due 2004 (the "Securities");
WHEREAS Section 4.14 of the Indenture provides that under certain
circumstances the Company is required to cause the Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Subsidiary Guarantor shall unconditionally guarantee all of the Company's
obligations under the Securities pursuant to a Subsidiary Guaranty on the terms
and conditions set forth herein; and
WHEREAS pursuant to Section 9.1 of the Indenture, the Trustee and the
Company 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
Subsidiary Guarantor, the Company and the Trustee mutually covenant and agree
for the equal and ratable benefit of the holders of the Securities as follows:
1. Definitions. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture. For all purposes of this
Supplemental Indenture, except as otherwise herein expressly provided or unless
the context otherwise requires: (i) the terms and expressions used herein shall
have the same meanings as corresponding terms and expressions used in the
Indenture; and (ii) the words "herein," "hereof" and "hereby" and other words of
similar import used in this Supplemental Indenture refer to this Supplemental
Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee. The Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth herein and to be bound by all other applicable provisions
of the Indenture. From and after the date hereof, the Subsidiary Guarantor shall
be a Subsidiary Guarantor for all purposes under the Indenture and the
Securities.
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The Subsidiary Guarantor hereby unconditionally and irrevocably guarantees,
jointly and severally, to each Holder and to the Trustee and its successors and
assigns (a) the full and punctual payment of principal of, premium, if any, and
interest on the Securities when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company under
the Indenture and the Securities and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company under
the Indenture and the Securities (all the foregoing being hereinafter
collectively called the "Guaranteed Obligations"). The Subsidiary Guarantor
further agrees that the Guaranteed Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Subsidiary
Guarantor and that such Subsidiary Guarantor will remain bound under this
Supplemental Indenture notwithstanding any extension or renewal of any
Guaranteed Obligation.
The 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. The Subsidiary Guarantor waives notice
of any default under the Securities or the Guaranteed Obligations. The
obligations of the 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 the
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 the 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 the
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.
The Subsidiary Guarantor further agrees that its Subsidiary Guaranty
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
The Subsidiary Guaranty is, to the extent and in the manner set forth
in this Supplemental Indenture, subordinated and subject in right of payment to
the prior payment in full of the principal of and premium, if any, and interest
on all Senior Indebtedness of the Subsidiary Guarantor giving such Subsidiary
Guaranty and each Subsidiary Guaranty is made subject to such provisions of this
Indenture.
Except as expressly set forth in Sections 8.2 of the Indenture and in
this Supplemental Indenture, the obligations of the 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
the 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
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agreement, by any waiver or modification of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Guaranteed
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
such Subsidiary Guarantor or would otherwise operate as a discharge of such
Subsidiary Guarantor as a matter of law or equity.
The Subsidiary Guarantor further agrees that its Subsidiary Guaranty
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, premium, if any, 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, premium, if any, or interest on any 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 Guaranteed Obligation, the
Subsidiary Guarantor hereby promises to and will, 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 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 Guaranteed Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation 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 this Supplemental
Indenture. The 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 hereby may be accelerated as provided in Article 6
of the Indenture for the purposes of such Subsidiary Guarantor's Subsidiary
Guaranty, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article 6 of the Indenture, such Obligations (whether or not due and payable)
shall forthwith become due and payable by such Subsidiary Guarantor for the
purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
3. Limitation on Liability. Any term or provision of the Indenture to
the contrary notwithstanding, the maximum aggregate amount of the obligations
guaranteed hereunder by the Subsidiary Guarantor shall not exceed the maximum
amount that can be hereby guaranteed without rendering the Indenture, as it
relates to such Subsidiary Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws
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affecting the rights of creditors generally. To effectuate the foregoing
intention, the obligations of the Subsidiary Guarantor shall be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guaranty or pursuant to its contribution obligations hereunder,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guaranty not constituting a fraudulent conveyance or fraudulent transfer under
federal, state or foreign law. The Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guaranty shall be entitled to a contribution
from each other Subsidiary Guarantor in an amount based on the consolidated net
worth of each Subsidiary Guarantor.
4. Successors and Assigns. This Supplemental Indenture shall be
binding upon the Subsidiary Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in the
Indenture and this Supplemental 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 the Indenture.
5. 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
Supplemental Indenture 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 Supplemental
Indenture at law, in equity, by statute or otherwise.
6. Modification. No modification, amendment or waiver of any provision
of this Supplemental Indenture, 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 the 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.
7. Release of Subsidiary Guarantor. A Subsidiary Guarantor shall be
released and discharged from its Guarantee automatically and unconditionally
upon either (i) the release or discharge of the guarantee or similar obligation
under the Senior Credit Facility giving rise to such Subsidiary Guarantor's
obligation to become a Subsidiary Guarantor hereunder, except a discharge by or
as a result of payment under such guarantee, or (ii) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
Capital Stock in, or all or substantially all the assets of, such Subsidiary
Guarantor, which sale, exchange or transfer is made in compliance with the
applicable provisions of the Indenture and this Supplemental Indenture.
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8. Agreement to Subordinate. Notwithstanding any other provision to
the contrary in this Supplemental Indenture, the Subsidiary Guarantor covenants
and agrees, and each Holder by accepting a Security covenants and agrees, that
all payments by such Subsidiary Guarantor in respect of its Subsidiary Guarantee
are subordinated in right of payment, to the extent and in the manner provided
in this Supplemental Indenture, to the prior payment in full of all Senior
Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date
or thereafter incurred, including all Obligations of the Company and such
Subsidiary Guarantor under the Senior Credit Facility. The subordination
provisions set forth in this Supplemental Indenture, are for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
Each Holder authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate, in the sole discretion
of the Trustee, to acknowledge or effectuate the subordination between the
Holders and the holders of Senior Indebtedness of each Subsidiary Guarantor as
provided in this Supplemental Indenture, and appoints the Trustee as such
Holder's attorney-in-fact for any and all such proposes, including, in the event
of any voluntary or involuntary liquidation or dissolution of a Subsidiary
Guarantor, whether total or partial, or in a bankruptcy, reorganization,
insolvency, receivership, dissolution, assignment for the benefit of creditors,
marshalling of assets or similar proceeding relating to a Subsidiary Guarantor
or its property, the timely filing of a claim for the unpaid balance of such
Holder's Securities in the form required in said proceeding and cause said claim
to be approved. If the Trustee does not file a property claim or proof to debt
in the form required in such proceeding prior to 20 days before the expiration
of the time to exile such claim or claims, then the Representative is hereby
authorized to have the right to file and is hereby authorized to file an
appropriate claim for and on behalf of the Holders; provided, however, that any
such claim filed by such Representative shall be superseded by the claim, if
any, subsequently filed by the Trustee.
Each Holder by accepting a Security acknowledges and agrees that the
subordination provisions set forth in this Supplemental Indenture are, and are
intended to be, an inducement and consideration to the holder of Senior
Indebtedness of each Subsidiary Guarantor, whether such Senior Indebtedness was
created 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 upon such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness, and such holder is made an obligee hereunder
and may enforce directly such subordination provisions.
9. Liquidation; Dissolution; Bankruptcy. Upon any payment or
distribution of the assets of the Subsidiary Guarantor of any kind or character,
whether in cash, property or securities, to creditors upon a total or partial
liquidation or dissolution or reorganization or similar proceeding relating to
such Subsidiary Guarantor or its property or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding:
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(a) the holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Holders are entitled to receive any payment; and
(b) until the Senior Indebtedness of such Subsidiary Guarantor is
paid in full, any payment or distribution to which Holders would otherwise be
entitled pursuant to this Supplemental Indenture shall be made to holders of
Senior Indebtedness of such Subsidiary Guarantor, as their interests may appear.
Upon any payment or distribution referred to in this Supplemental
Indenture, the Trustee and the Holders shall be entitled to rely upon any order
or decree of a court of competent jurisdiction in which such proceedings are
pending for the purpose of ascertaining the identity of Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness,
the amount thereof or payable thereon and all other facts pertinent thereto or
to this Supplemental Indenture, and the Trustee and the Holders shall be
entitled to rely upon a certificate of the liquidating trustee or agent or other
Person (including any Representative of holders of Senior Indebtedness of such
Subsidiary Guarantor) making any payment or distribution to the Trustee or to
the Holders for the purpose of ascertaining the identity of Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Supplemental Indenture.
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person, as a holder of Senior
Indebtedness, to participate in any payment or distribution pursuant to this
Section, the Trustee may request such Person (at the expense of the Holders) to
furnish evidence to the reasonable satisfaction of the Trustee, acting in good
faith, as to the amount of such Senior Indebtedness held by such Person, as to
the extent to which such Person is entitled to participate in such payment or
distribution, and as to the other facts pertinent to the rights of such Person
under this Section, 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 payment.
The consolidation or merger of the Subsidiary Guarantor with or into
any Person, or the sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of such Subsidiary Guarantor's assets to
any Person, in compliance with the terms and conditions set forth in Sections
5.1 and 5.2 of the Indenture, shall not be deemed to be a liquidation,
dissolution or reorganization or similar proceeding relating to such Subsidiary
Guarantor for purposes of this Section.
10. Default on Senior Indebtedness.
(a) If any Senior Indebtedness of the Subsidiary Guarantor is not
paid when due, the Subsidiary Guarantor may not pay the Subordinated Debt unless
the default shall have been cured or waived or such Senior Indebtedness has been
paid in full.
(b) If any default on any Senior Indebtedness of a Subsidiary
Guarantor (other than as set forth in Section 10(a) hereof occurs and such
Senior Indebtedness is
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accelerated in accordance with its terms, the Subsidiary Guarantor may not pay
the Subordinated Debt unless the default shall have been cured or waived and any
such acceleration has been rescinded or such Senior Indebtedness has been paid
in full in cash.
(c) Notwithstanding the foregoing Sections 10(a) and (b), the
Subsidiary Guarantor may pay the Subordinated Debt without regard to the
foregoing if the Subsidiary Guarantor and the Trustee receive written notice
approving such payment from the Representative of the Senior Indebtedness with
respect to which either of the events set forth in Sections 10(a) and (b) has
occurred and is continuing. During the continuance of any default (other than a
default described in Sections 10(a) and (b)) with respect to any Senior
Indebtedness of the 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, the Subsidiary Guarantor may not pay the Subordinated Debt for
the Payment Blockage Period commencing upon the receipt by the Trustee (with a
copy to the Subsidiary Guarantor) of a Blockage Notice from the Representative
of the holders of such Designated Senior Indebtedness 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 Subsidiary Guarantor from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice has been
waived in writing or (iii) because such Designated Senior Indebtedness has been
repaid in full in cash). Notwithstanding the provisions described in the
immediately preceding sentence, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders has accelerated the maturity
of such Designated Senior Indebtedness, the Subsidiary Guarantor may resume
payments on the Securities after the end of such Payment Blockage Period. The
Securities shall not be subject to more than one Payment Blockage Period in any
consecutive 365-day period, irrespective of the number of such nonpayment
defaults with respect to Designated Senior Indebtedness during such period.
(d) The Subsidiary Guarantor covenants that it will, upon request
of the Trustee, deliver an Officers' Certificate (with copies thereof to the
Representative of each class of Senior Indebtedness of such Subsidiary
Guarantor) showing in reasonable detail the Senior Indebtedness outstanding as
of the date of such Officers' Certificate and the Representative of each class
of such Senior Indebtedness. The Trustee may conclusively rely thereon except to
the extent that it shall have received, from the Representative of any class of
such Senior Indebtedness, notice in writing controverting any of the statements
made therein. Not less than 10 days prior to making any distribution in respect
of Senior Indebtedness pursuant to this Section, the Trustee shall deliver to
each Representative of any class of such Senior Indebtedness copies of the most
recent Officers' Certificate filed with it by such Subsidiary Guarantor pursuant
to this subsection (d).
(e) In the event that the Securities are declared due and payable
before their Stated Maturity in accordance with Article 6 of the Indenture, then
and in such event the holders of Senior Indebtedness of any Subsidiary Guarantor
outstanding at the time the Securities so become due and payable shall be
entitled to receive payment in full in cash of all amounts due or to become due
on or in respect of such Senior Indebtedness (whether or not an
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Event of Default has occurred thereunder or the Senior Indebtedness of such
Subsidiary Guarantor is, or has been declared to be, due and payable prior to
the date on which it otherwise would have become due and payable) before the
Holders shall be entitled to receive any payment in respect of the Securities.
11. Payments of Subordinated Debt Permitted if No Default. Nothing
contained in this Supplemental Indenture or elsewhere in the Indenture, or in
any of the Securities, shall prevent the Subsidiary Guarantor or any Person
acting on behalf of the Subsidiary Guarantor, at any time except as otherwise
provided in Sections 9 and 10, from paying the Subordinated Debt.
12. When Subordinated Debt Must Be Paid Over. In the event that any
payment is made on the Subordinated Debt to the Trustee or the Holders that,
because of the provisions of this Supplemental Indenture, should not have been
so made or may not be paid over to the Holders, such payment shall be held by
the Trustee or the Holders who receive such payment, as the case may be, for the
benefit of, and shall forthwith be paid over or delivered to, the holders of the
Senior Indebtedness of the Subsidiary Guarantor remaining unpaid or their
Representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash or in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
13. Notices by the Subsidiary Guarantor. The Subsidiary Guarantor
shall promptly notify the Trustee, each Paying Agent and the Representative of
any facts known to the Subsidiary Guarantor that would cause a payment on the
Subordinated Debt to violate the foregoing provisions of this Supplemental
Indenture, but failure to give such notice shall not affect the subordination
provided in this Supplemental Indenture of any Subsidiary Guarantee to holders
of Senior Indebtedness of the Subsidiary Guarantor. Without limiting the
foregoing, if payment of the Securities is accelerated because of an Event of
Default, the Subsidiary Guarantor shall promptly notify the Representative of
the acceleration.
14. Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until the Securities are paid in full,
Holders shall be subrogated to the rights of holders of Senior Indebtedness of
the Subsidiary Guarantor to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to Holders have
been applied to the payment of Senior Indebtedness. A distribution made under
this Supplemental Indenture to holders of Senior Indebtedness which otherwise
should have been made to Holders is not, as between the Subsidiary Guarantor and
the Holders, payment by the Subsidiary Guarantor on Senior Indebtedness.
15. Relative Rights. This Supplemental Indenture defines the relative
rights of Holders and holders of Senior Indebtedness of the Subsidiary
Guarantor. Nothing in this Indenture shall:
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(a) impair, as between a Subsidiary Guarantor and the Holders,
the obligation of a Subsidiary Guarantor, which is absolute and
unconditional, to make any payment in accordance with the terms of its
Subsidiary Guaranty;
(b) affect the relative rights of Holders and creditors of a
Subsidiary Guarantor other than holders of Senior Indebtedness of such
Subsidiary Guarantor; or
(c) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive prepayment, payments
and distributions otherwise payable to Holders.
If the Subsidiary Guarantor fails because of the foregoing provisions
of this Supplemental Indenture to pay the principal of (or premium, if any) or
interest on a Security on the due date or upon the acceleration thereof, the
failure is still a Default or Event of Default.
16. Subordination May Not Be Impaired by the Subsidiary Guarantor. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Obligation of the Subsidiary Guarantor pursuant to its Subsidiary Guaranty shall
be impaired by (a) any act or failure to act by the Subsidiary Guarantor or by
its failure to comply with this Supplemental Indenture or the Indenture, (b) any
release of any collateral or any guarantor or any Person or the Subsidiary
Guarantor's obligations under Senior Indebtedness, (c) any amendment,
supplement, extension, renewal, restatement or other modification of any Senior
Indebtedness, (d) any settlement or compromise of any Senior Indebtedness, (e)
the unenforceability of any of the Senior Indebtedness or (f) the failure of any
holder of Senior Indebtedness to pursue claims against the Subsidiary Guarantor.
The terms of the subordination provisions contained in this Supplemental
Indenture will 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 and in accordance with the
provisions described in Article 8 of the Indenture.
17. Distribution or Notice to Representative. Whenever a distribution
is to be made or a notice given to holders of Senior Indebtedness, the
distribution may be made and the notice given to their Representative (if any).
18. Rights of Trustee and Paying Agent. The Trustee or any Paying
Agent may continue to make payments in respect of the Securities and shall not
be charged with knowledge of the existence of facts that would prohibit the
making of any such payment unless, not less than three Business Days prior to
the date of any such payment, a Responsible Officer of the Trustee receives
written notice reasonably satisfactory to it that payments in respect of the
Securities may not be made under this Article. Only the Subsidiary Guarantor, a
Representative (satisfactorily identified to the Trustee) or a holder of a class
of Senior Indebtedness that has no Representative (satisfactorily identified to
the Trustee) may give the notice. Prior to the receipt of such notice, the
Trustee and any Paying Agent shall be entitled in all respects to assume that no
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such facts exist. In any case, the Trustee shall have no responsibility to the
holders of Senior Indebtedness for payments made to Holders by a Subsidiary
Guarantor or any Paying Agent unless such payments are made at the direction of
the Trustee after receipt of such notice referred to above.
Neither the Trustee nor any Paying Agent shall be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this
Supplemental Indenture, and no implied covenants or obligations with respect to
the holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. The Trustee shall not be liable to any holders of Senior Indebtedness
if it shall mistakenly pay over or deliver to Holders, the Company or any other
Person moneys or assets to which any holder of Senior Indebtedness shall be
entitled by virtue of this Supplemental Indenture or otherwise.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee.
This Section is solely for the benefit of the Trustee and any Paying
Agents and shall not limit the obligations of the Holders under Section 12
hereof.
19. Consent of Holders of Senior Indebtedness. The provisions of this
Supplemental Indenture (including the definitions contained in this Supplemental
Indenture and references to this Supplemental Indenture contained in the
Indenture) shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness of the
Subsidiary Guarantor, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the Agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
20. Contractual Subordination. This Supplemental Indenture represents
a bona fide agreement of contractual subordination pursuant to Section 510(b) of
the United States Bankruptcy Code.
21. 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 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.
22. 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.
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23. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
24. 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.
25. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction thereof.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[Subsidiary Guarantor]
By:
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Name:
Title:
HOLLYWOOD ENTERTAINMENT
CORPORATION
By:
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Name:
Title:
U.S. TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
------------------------------------
Name:
Title:
F-12
