1
Exhibit 4.3
================================================================================
DECORA INDUSTRIES, INC.,
as Company,
DECORA, INCORPORATED,
as Guarantor,
and
any future
GUARANTORS that become parties hereto
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
11% Senior Secured Notes due 2005
and
11% Senior Secured Notes due 2005, Series B
--------------------
INDENTURE
Dated as of April 29, 1998
--------------------
================================================================================
2
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
(b)(1) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
312 (a) 2.5
(b) 2.5; 13.3
(c) 13.3
313 (a) 7.6
(b) 7.6
314 (a) 4.6; 13.2
(a)(4) 4.7
(b) N.A.
(c)(1) 13.4
(c)(2) 13.4
(c)(3) N.A.
(d) 11.3; 11.4; 12.2(c)
(e) 13.5
(f) N.A.
315 (a) 7.1
(b) 7.5; 13.2
(c) 7.1
(d) 7.1
(e) 6.11
316 (a)(last sentence) 13.6
(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) 13.1
-----------------
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
3
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions......................................... 1
SECTION 1.2. Other Definitions ................................ 26
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act ........................................... 27
SECTION 1.4. Rules of Construction............................... 28
ARTICLE 2
THE NOTES
SECTION 2.1. Form and Dating..................................... 29
SECTION 2.2. Title and Terms..................................... 29
SECTION 2.3. Registrar and Paying Agent.......................... 30
SECTION 2.4. Execution and Authentication........................ 31
SECTION 2.5. Temporary Notes..................................... 32
SECTION 2.6. Transfer and Exchange............................... 33
SECTION 2.7. Mutilated, Destroyed, Lost and Stolen Notes......... 34
SECTION 2.8. Payment of Interest; Interest Rights Preserved...... 35
SECTION 2.9. Persons Deemed Owners............................... 36
SECTION 2.10. Cancellation........................................ 36
SECTION 2.11. Computation of Interest............................. 37
Section 2.12. Legal Holidays...................................... 37
SECTION 2.13. CUSIP and CUSIP Numbers............................. 37
SECTION 2.14. Paying Agent To Hold Money In Trust................. 38
Section 2.15. Deposits of Monies.................................. 38
Section 2.16. Book-Entry Provisions for Global Notes.............. 38
SECTION 2.17. Special Transfer Provisions......................... 40
ARTICLE 3
REDEMPTION
SECTION 3.1. Notices to Trustee.................................. 45
SECTION 3.2. Selection of Notes to be Redeemed................... 45
SECTION 3.3. Notice of Redemption................................ 46
SECTION 3.4. Effect of Notice of Redemption...................... 47
SECTION 3.5. Deposit of Redemption Price......................... 47
SECTION 3.6. Notes Redeemed in Part.............................. 47
-i-
4
Page
----
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Notes.................................... 48
SECTION 4.2. Corporate Existence; Conduct of Business............ 48
SECTION 4.3. Maintenance of Office or Agency..................... 49
SECTION 4.4. Payment of Taxes and Other Claims................... 49
SECTION 4.5. Additional Subsidiary Guarantees; Additional
Collateral....................................... 50
SECTION 4.6. Reports to Holders.................................. 51
SECTION 4.7. Compliance Certificate.............................. 51
SECTION 4.8. Change of Control................................... 51
SECTION 4.9. Limitation on Incurrence of Additional
Indebtedness..................................... 53
SECTION 4.10. Limitation on Restricted Payments................... 54
SECTION 4.11. Limitation on Liens................................. 57
SECTION 4.12. Limitation on Transactions with Affiliates.......... 57
SECTION 4.13. Limitation on Asset Sales........................... 59
Section 4.14. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.............. 62
SECTION 4.15. Limitation on Issuance or Sale of Capital Stock
of Restricted Subsidiaries....................... 63
SECTION 4.16. Limitation on Sale and Leaseback Transactions....... 64
SECTION 4.17. Limitation on Preferred Stock of Restricted
Subsidiaries..................................... 64
SECTION 4.18. Designation of Unrestricted Subsidiaries............ 64
SECTION 4.19. Limitation on Capital Expenditures.................. 66
SECTION 4.20. Impairment of Security Interest..................... 67
SECTION 4.21. Amendment to Pledge Agreements...................... 67
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.1. Merger, Consolidation and Sale of Assets............ 67
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default................................... 70
SECTION 6.2. Acceleration........................................ 73
SECTION 6.3. Other Remedies...................................... 74
SECTION 6.4. Waiver of Past Defaults............................. 74
SECTION 6.5. Control by Majority................................. 74
-ii-
5
Page
----
SECTION 6.6. Limitation on Suits................................. 75
SECTION 6.7. Rights of Holders to Receive Payment................ 76
SECTION 6.8. Collection Suit by Trustee.......................... 76
SECTION 6.9. Trustee May File Proofs of Claim.................... 76
SECTION 6.10. Priorities.......................................... 76
SECTION 6.11. Undertaking for Costs............................... 77
ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee................................... 78
SECTION 7.2. Rights of Trustee................................... 79
SECTION 7.3. Individual Rights of Trustee........................ 82
SECTION 7.4. Trustee's Disclaimer................................ 82
SECTION 7.5. Notice of Defaults.................................. 82
SECTION 7.6. Reports by Trustee to Holders....................... 82
SECTION 7.7. Compensation and Indemnity.......................... 83
SECTION 7.8. Replacement of Trustee.............................. 84
SECTION 7.9. Successor Trustee by Merger......................... 85
SECTION 7.10. Eligibility; Disqualification....................... 85
SECTION 7.11. Preferential Collection of Claims Against Issuer.... 86
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Notes; Defeasance......... 86
SECTION 8.2. Conditions to Defeasance............................ 88
SECTION 8.3. Application of Trust Money.......................... 90
SECTION 8.4. Repayment to Issuer................................. 90
SECTION 8.5. Indemnity for Government Obligations................ 90
SECTION 8.6. Reinstatement....................................... 90
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.......................... 91
SECTION 9.2. With Consent of Holders............................. 92
SECTION 9.3. Compliance with Trust Indenture Act................. 94
SECTION 9.4. Revocation and Effect of Consents and Waivers....... 94
SECTION 9.5. Notation on or Exchange of Notes.................... 94
SECTION 9.6. Trustee to Sign Amendments.......................... 95
-iii-
6
Page
----
ARTICLE 10
GUARANTEES
SECTION 10.1. Guarantees.......................................... 95
SECTION 10.2. Limitation on Liability............................. 97
SECTION 10.3. Successors and Assigns.............................. 98
SECTION 10.4. No Waiver........................................... 98
SECTION 10.5. Modification........................................ 98
SECTION 10.6. Release of Guarantor................................ 99
SECTION 10.7. Execution of Supplemental Indenture for Future
Subsidiary Guarantors............................ 99
ARTICLE 11
COLLATERAL
SECTION 11.1. Pledge of Collateral................................ 100
SECTION 11.2. Recording; Priority; Opinions, Etc.................. 101
SECTION 11.3. Release of Collateral............................... 102
SECTION 11.4. Trust Indenture Act Requirements.................... 103
SECTION 11.5. Suits To Protect Collateral......................... 104
SECTION 11.5. Purchaser Protected................................. 104
SECTION 11.7. Powers Exercisable by Receiver or Trustee........... 104
SECTION 11.8. Determinations Relating to Collateral............... 105
SECTION 11.9. Form and Sufficiency of Release..................... 105
SECTION 11.06. Release upon Termination of Issuer's
Obligations...................................... 105
ARTICLE 12
APPLICATION OF TRUST MONEYS
SECTION 12.1. "Trust Moneys" Defined.............................. 106
SECTION 12.2. Withdrawal of Net Cash Proceeds Following an
Asset Sale....................................... 107
SECTION 12.3. Withdrawal of Trust Moneys for Replacement
Assets........................................... 108
SECTION 12.4. Withdrawal of Trust Moneys on Basis of
Retirement of Notes.............................. 110
SECTION 12.5. Investment of Trust Moneys.......................... 111
SECTION 12.6. Powers Exercisable by Trustee or Receiver........... 112
SECTION 12.7. Disposition of Securities Retired................... 112
-iv-
7
Page
----
ARTICLE 13
MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls........................ 112
SECTION 13.2. Notices............................................. 113
SECTION 13.3. Communication by Holders with Other Holders......... 113
SECTION 13.4. Certificate and Opinion as to Conditions
Precedent........................................ 114
SECTION 13.5. Statements Required in Certificate or Opinion....... 114
SECTION 13.6. When Notes Disregarded.............................. 115
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar........ 115
SECTION 13.8. Legal Holidays...................................... 115
SECTION 13.9. Governing Law....................................... 116
SECTION 13.10. No Recourse Against Others.......................... 116
SECTION 13.11. Successors.......................................... 116
SECTION 13.12. Multiple Originals.................................. 116
SECTION 13.13. Table of Contents; Headings......................... 116
SECTION 13.14. Severability Clause................................. 117
Signatures .......................................................... S-1
Exhibit A - Form of Note.............................................. A-1
Exhibit B - Form of Exchange Note..................................... B-1
Exhibit C - Private Placement Legend.................................. C-1
Exhibit D - Legend for Book-Entry Securities.......................... D-1
Exhibit E - Form of Certificate To Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors....... E-1
Exhibit F - Form of Certificate To Be Delivered in Connection
with Transfers Pursuant to Regulation S.............. F-1
Exhibit G - Form of Guarantee......................................... G-1
Exhibit H - Form of Supplemental Indenture............................ H-1
Exhibit I - Form of Additional Guarantor Pledge Agreement............. I-1
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture.
-v-
8
INDENTURE dated as of April 29, 1998, among DECORA INDUSTRIES, INC.,
a Delaware corporation (together with its successors, "Issuer"), DECORA,
INCORPORATED, a Delaware corporation and a wholly owned Subsidiary of Issuer
(together with its successors, "Decora"), any Subsidiaries of Issuer that become
parties hereto (collectively, the "Guarantors"), and UNITED STATES TRUST COMPANY
OF NEW YORK, 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 Issuer's 11% Senior
Secured Notes due 2005:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with Issuer or any of its Subsidiaries or
assumed in connection with the acquisition of assets from such Person and in
each case not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"amend" means amend, modify, supplement, restate or amend and
restate, including successively; and "amending" and "amended" have correlative
meanings.
"Asset Acquisition" means (a) an Investment by Issuer or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with or into Issuer or any
Restricted Subsidiary, or (b) the acquisition by Issuer or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person or
comprises any division or line of business of such
9
-2-
Person or any other properties or assets of such Person other than in the
ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by Issuer
or any Restricted Subsidiary (including any Sale and Leaseback Transaction) to
any Person other than Issuer or a Wholly Owned Restricted Subsidiary of (a) any
Capital Stock of any Restricted Subsidiary or (b) any other property or assets
of Issuer or any Restricted Subsidiary other than in the ordinary course of
business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which Issuer or its Restricted
Subsidiaries receive aggregate consideration of less than $750,000, (ii) the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of Issuer in compliance with Article 5, (iii) any transaction
constituting a Change of Control or a Restricted Payment or (iv) the granting of
any Lien, or any foreclosure thereon, to the extent granted in accordance with
Section 4.11.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, as of the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for which
such lease has been extended).
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
10
-3-
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-2 from S&P or at least P-2 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of Is
11
-4-
▇▇▇▇ to any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a "Group"), together with any Affiliates thereof (whether or
not otherwise in compliance with the provisions of this Indenture) other than to
a Wholly Owned Restricted Subsidiary in compliance with Article 5; (ii) the
approval by the holders of Capital Stock of Issuer of any plan or proposal for
the liquidation or dissolution of Issuer (whether or not otherwise in compliance
with the provisions of this Indenture); (iii) any Person or Group shall become
the owner, directly or indirectly, beneficially or of record, of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding Capital Stock of Issuer; or (iv) the replacement of a
majority of the Board of Directors of Issuer over a two-year period from the
directors who constituted the Board of Directors of Issuer at the beginning of
such period, and such replacement shall not have been approved by a vote of at
least a majority of the Board of Directors of Issuer then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means (i) the Share (as defined in the German Pledge
Agreement) and the rights pertaining thereto under the German Pledge Agreement
and (ii) Collateral as defined in the other Security Documents.
"Commission" or "SEC" means the Securities and Exchange
Commission.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company Order" means a written request or order signed in the name
of Issuer by any one of its Chairman of the Board, its Vice-Chairman, its Chief
Executive Officer, its President or a Vice President, and by its Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, and delivered to
the Trustee.
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of (i) Consolidated Net Income plus (ii) to the extent Consolidated
Net Income has been reduced thereby,
12
-5-
(A) all income taxes of Issuer and the Restricted Subsidiaries paid or accrued
in accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less (iii) any non-cash
items increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for Issuer and the Restricted Subsidiaries in accordance with
GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of (x)
Consolidated EBITDA during the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of the transaction giving rise to the
need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction
Date") to (y )Consolidated Fixed Charges for the Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence or repayment of any Indebtedness of Issuer or
any Restricted Subsidiary (and the application of the proceeds thereof) giving
rise to the need to make such calculation and any incurrence or repayment of
other Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
Issuer or any Restricted Subsidiary (including any Person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense calculated on a basis consistent with Regulation S-X under the Exchange
Act) attributable to the assets which are the subject of the Asset Acquisition
or Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If Issuer or
any Restricted Subsidiary directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the
13
-6-
incurrence of such guaranteed Indebtedness as if Issuer or any Restricted
Subsidiary had directly incurred such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the Transaction Date; and
(2) notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Swap Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of (i) Consolidated Interest Expense plus (ii) the product of (x)
the amount of all dividend payments on any series of Preferred Stock of Issuer
or any Restricted Subsidiary (other than dividends paid in Qualified Equity
Interests or paid to Issuer or any Restricted Subsidiary) paid, accrued or
scheduled to be paid or accrued during such period times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, for any period, the sum of,
without duplication: (i) the aggregate of the interest expense of Issuer and the
Restricted Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP, including without limitation, (a) any amortization of debt
discount and amortization or write-off of deferred financing costs, (b) the net
costs under Interest Swap Obligations, (c) all capitalized interest and (d) the
interest portion of any deferred payment obligation; and (ii) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by Issuer and the Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of Issuer and the Restricted Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided, however, that
there shall be excluded therefrom (a) after-tax gains from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains, (c) the net income of any Person acquired
in a "pooling of interests" transaction accrued prior to the date it becomes a
Re-
14
-7-
stricted Subsidiary or is merged or consolidated with Issuer or any Restricted
Subsidiary, (d) the net income (but not loss) of any Restricted Subsidiary to
the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by a contract, operation of
law or otherwise, (e) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of cash dividends or distributions paid to
Issuer or to a Wholly Owned Restricted Subsidiary by such Person (subject to the
limitations of the foregoing clause (d)), (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time following the Issue
Date, (g) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued), and (h) in the case of a
successor to Issuer by consolidation or merger or as a transferee of Issuer's
assets, any earnings of the successor Person prior to such consolidation, merger
or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Equity Interests of such Person or any Unrestricted Subsidiaries.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of Issuer and the
Restricted Subsidiaries reducing Consolidated Net Income of Issuer and the
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"Corporate Trust Office" means the office of the Trustee located at
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or such other
office designated by the Trustee and notified to
Issuer in accordance with this Indenture.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
Issuer or any Restricted Subsidiary against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
15
-8-
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Disinterested Director" means a member of the Board of Directors of
Issuer or a Restricted Subsidiary, as the case may be, who does not have any
direct or indirect personal financial interest in or with respect to the
transaction being considered; provided, however, an indirect interest in an
Affiliate solely by reason of such director's ownership of Equity Interests of
Issuer shall not be deemed to be an indirect personal financial interest in or
with respect to the transaction being considered.
"Disqualified Equity Interests" means that portion of any Equity
Interests which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes; provided, however,
that any Equity Interests that would not constitute Disqualified Equity
Interests but for provisions thereof giving holders thereof the right to require
Issuer to redeem such Equity Interests upon the occurrence of a change in
control occurring prior to the final maturity date of the Notes shall not
constitute Disqualified Equity Interests if the change in control provisions
applicable to such Equity Interests are no more favorable to the holders of such
Equity Interests than Section 4.8 and such Equity Interests specifically provide
that Issuer will not redeem any such Equity Interests pursuant to such
provisions prior to Issuer's repurchase of the Notes as are required to be
repurchased pursuant to Section 4.8.
"Equity Interests" means Capital Stock and any warrants, options or
other rights to purchase or acquire any Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" means the 11% Senior Secured Notes due 2005, Series
B, to be issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement.
"Exchange Offer" has the meaning given to such term in the
Registration Rights Agreement.
"fair market value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing
16
-9-
seller and a willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction.
"Foreign Credit Facility" means one or more senior credit facilities
providing for term loans, revolving credit loans and/or letters of credit
between one or more Foreign Subsidiaries, on the one hand, and one or more
lenders, on the other hand, together with related documents (including
promissory notes, security agreements and guarantees), as the same may be
amended or Refinanced from time to time.
"Foreign Subsidiary" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States or a state thereof
or the District of Columbia and with respect to which more than 80% of any of
its sales, earnings or assets (determined on a consolidated basis in accordance
with GAAP) are located in, generated from or derived from operations located in
territories outside the United States of America and jurisdictions outside the
United States of America.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect from time to
time.
"German Holdings" means Decora Industries Deutschland GmbH, a German
company and a wholly owned Subsidiary of Issuer, and its successors.
"German Pledge Agreement" means the Pledge Agreement dated April 29,
1998 between Issuer and the Trustee relating to Issuer's pledge of 65% of its
shares in German Holdings.
"Global Notes" means one or more Regulation S Global Notes and 144A
Global Notes.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any Person and any obligation, direct or indirect, contingent or otherwise,
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 obli-
17
-10-
gee 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. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Guarantee" means a guarantee of Issuer's obligations under the
Transaction Documents pursuant to Article 10.
"Guarantor" means (i) Decora and (ii) each Restricted Subsidiary
that in the future executes a supplemental indenture in which such Subsidiary
agrees to be bound by the terms of this Indenture as a Guarantor; provided,
however, that any Person constituting a Guarantor as described above shall cease
to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of this Indenture.
"Guarantor Pledge Agreement" means (i) the Pledge Agreement dated
April 29, 1998 between Issuer and the Trustee relating to Issuer's pledge of its
shares in Decora and any future direct Subsidiary that becomes a Guarantor and
(ii) one or more pledge agreements between a Guarantor and the Trustee entered
into pursuant to Section 4.5.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Hornschuch" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ AG, a German company and a
Subsidiary of German Holdings, and its successors.
"incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred" and "incurring" shall have meanings
correlative to the foregoing). Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary (other than by reason of the German
Holdings Revocation) or is merged or consolidated with or into Issuer or any
Restricted Subsidiary shall be deemed to be incurred at such time. The accrual
of interest or the accretion of original issue discount shall not be deemed to
be an incurrence.
"Indebtedness" means with respect to any Person,
18
-11-
without duplication, (i) all indebtedness of such Person for borrowed money,
(ii) all indebtedness of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all Capitalized Lease Obligations of such
Person, (iv) all indebtedness of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
indebtedness under any title retention agreement (but excluding trade accounts
payable and other accrued liabilities arising in the ordinary course of
business), (v) all indebtedness for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below, (vii) all
indebtedness of any other Person of the type referred to in clauses (i) through
(vi) which are secured by any Lien on any property or asset of such Person, the
amount of such indebtedness being deemed to be the lesser of the fair market
value of such property or asset or the amount of the indebtedness so secured,
(viii) all indebtedness under currency agreements and interest swap agreements
of such Person and (ix) all Disqualified Equity Interests issued by such Person
with the amount of Indebtedness represented by such Disqualified Equity
Interests being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Equity Interests which do not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Equity
Interests as if such Disqualified Equity Interests were purchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Equity Interests, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Equity Interests.
"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.
"Independent Financial Advisor" means a nationally recognized
investment banking, consulting, accounting or appraisal firm (i) which does not,
and whose directors, officers and employees or Affiliates do not, have a direct
or indirect financial interest in Issuer and (ii) which, in the judgment of the
Board of Directors of Issuer is otherwise independent and qualified to perform
the task for which it is to be engaged.
"Initial Purchaser" means Lazard Freres & Co. LLC.
19
-12-
"Initial Notes" means the 11% Senior Secured Notes due 2005 of
Issuer originally issued on the Issue Date.
"interest" means, with respect to the Notes, the sum of any interest
and any Liquidated Damages, if any, on the Notes.
"Interest Payment Date" means, when used with respect to any Note,
the Stated Maturity of an installment of interest on such Note, as set forth in
such Note.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
Issuer or any Restricted Subsidiary on commercially reasonable terms in
accordance with normal trade practices of Issuer or such Restricted Subsidiary,
as the case may be. For the purposes of Section 4.10, the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by Issuer or any Restricted Subsidiary, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment, reduced by the payment of dividends
or distributions in connection with such Investment or any other amounts
received in respect of such Investment; provided that no such payment of
dividends or distributions or receipt of any such other amounts shall reduce the
amount of any Investment if such payment of dividends or distributions or
receipt of any such amounts would be included in Consolidated Net Income. If
Issuer or any Restricted Subsidiary sells or otherwise disposes of any Common
Stock of any direct or indirect Restricted Subsidiary such that, after giving
effect to any such sale or disposition, Issuer no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such Restricted
Subsidiary,
20
-13-
Issuer shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of. No Investment shall be deemed to
be made solely by reason of the conversion of an equity interest into a debt
obligation or vice versa.
"Issue Date" means April 29, 1998, the date of original issuance of
the Initial Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Liquidated Damages" has the meaning set forth in the
Registration Rights Agreement.
"Mortgages" means any and all mortgages, deeds of trust or other
security instruments hereafter granting Liens on the real property or leasehold
estates of Issuer or any Restricted Subsidiary to the Trustee for its benefit
and the benefit of the Holders from time to time.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by Issuer or any Restricted Subsidiary from such Asset Sale
net of (a) reasonable out-of-pocket expenses and fees relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
fees and sales commissions), (b) taxes paid or payable after taking into account
any reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements, (c) repayment of Indebtedness that
is required to be repaid in connection with such Asset Sale and (d) appropriate
amounts to be provided by Issuer or any Restricted Subsidiary, as the case may
be, as a reserve, in accordance with GAAP, against any liabilities associated
with such Asset Sale and retained by Issuer or any Restricted Subsidiary, as the
case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
21
-14-
"Non-U.S. Person" means a Person who is not a U.S. Person, as
defined in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated April 24,
1998 relating to the offering and sale of the Initial Notes.
"Officer" means the Chairman of the Board, any Vice Chairman,
the Chief Executive Officer, the Chief Financial Officer, the President,
any Executive Vice President, Vice President, the Secretary or any
Assistant Secretary of Issuer.
"Officers' Certificate" means with respect to any Person a
certificate signed by two Officers, one of which is the Chairman of the Board,
the Chief Executive Officer, the Chief Financial Officer, the
President or any Executive Vice President.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be counsel to Issuer or
the Trustee. Opinions of Counsel required to be delivered under this Indenture
may have qualifications customary for opinions of the type required, and counsel
delivering such Opinions of Counsel may rely on certificates of Issuer or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact.
"Payment Dates" means Interest Payment Date, Redemption Date,
Change of Control Payment Date, Net Proceeds Offer Payment Date, date
established for the payment of Defaulted Interest or Stated Maturity of
the principal of any Note.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Notes and the Guarantees, and Permitted
Refinancings thereof;
(ii) Indebtedness incurred pursuant to the U.S. Credit Facility in
an aggregate principal amount at any time outstanding not to exceed the
greater of (x) $15.0 million and (y) the sum of 85% of the book value of
ac-
22
-15-
counts receivable and 60% of the book value of inventory of Issuer and the
Restricted Subsidiaries (other than any Foreign Subsidiary), calculated on
a consolidated basis in accordance with GAAP;
(iii) Indebtedness incurred pursuant to the Foreign Credit Facility;
provided, however, that after giving effect to such incurrence, the
aggregate principal amount outstanding under the Foreign Credit Facility
shall not exceed the greater of (x) $7.5 million and (y) the sum of 85% of
the book value of accounts receivable and 60% of the book value of
inventory of the Foreign Subsidiaries, calculated on a consolidated basis
in accordance with GAAP;
(iv) Permitted Refinancings of (x) Indebtedness of Issuer or any
Restricted Subsidiary (other than Indebtedness described in clause (i),
(ii) or (iii) above) to the extent outstanding on the Issue Date reduced
by the amount of any scheduled amortization payments or mandatory
prepayments when actually paid or permanent reductions thereon and (y)
Indebtedness incurred under the Consolidated Fixed Charge Coverage Ratio
test of Section 4.9(a);
(v) Interest Swap Obligations of Issuer covering Indebtedness of
Issuer or any Restricted Subsidiary and Interest Swap Obligations of any
Restricted Subsidiary covering Indebtedness of such Restricted Subsidiary;
provided, however, that such Interest Swap Obligations are entered into to
protect Issuer and the Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with this Indenture
to the extent the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to
which such Interest Swap Obligation relates;
(vi) Indebtedness under Currency Agreements; provided, however, that
in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of Issuer and the
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vii) Indebtedness of a Wholly Owned Restricted Subsidiary to Issuer
or to a Wholly Owned Restricted Subsidiary for so long as such
Indebtedness is held by Issuer or a Wholly Owned Restricted Subsidiary, in
each case subject to no Lien held by a Person other than Issuer or a
Wholly Owned Restricted Subsidiary; provided, however, that if as of any
date any Person other than Issuer or a Wholly Owned
23
-16-
Restricted Subsidiary owns or holds any such Indebtedness or holds a Lien
in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of
such Indebtedness;
(viii) Indebtedness of Issuer to a Wholly Owned Restricted
Subsidiary for so long as such Indebtedness is held by a Wholly Owned
Restricted Subsidiary, in each case subject to no Lien; provided, however,
that (a) any Indebtedness of Issuer to any Wholly Owned Restricted
Subsidiary is unsecured and subordinated, pursuant to a written agreement,
to Issuer's obligations under this Indenture and the Notes and (b) if as
of any date any Person other than a Wholly Owned Restricted Subsidiary
owns or holds any such Indebtedness or any Person holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Indebtedness permitted by this clause
(viii);
(ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of
incurrence;
(x) Indebtedness of Issuer or any Restricted Subsidiary represented
by letters of credit for the account of Issuer or such Restricted
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or similar requirements in the ordinary course of business;
(xi) guarantees by Issuer or a Guarantor of any Indebtedness of
Issuer or a Wholly Owned Restricted Subsidiary permitted to be incurred
under Section 4.9;
(xii) Permitted Intercompany Loans in an aggregate principal amount
not to exceed $5.0 million at any one time outstanding;
(xiii) Indebtedness represented by Capitalized Lease Obligations and
Purchase Money Indebtedness of Issuer and the Restricted Subsidiaries
incurred in the ordinary course of business, and Permitted Refinancings
thereof, not to exceed (x) prior to the German Holdings Revocation, $2.5
million at any one time outstanding and (y) after the German Holdings
Revocation, $5.0 million at any one time
24
-17-
outstanding; and
(xiv) additional Indebtedness of Issuer or any Restricted Subsidiary
in an aggregate principal amount not to exceed (x) prior to the German
Holdings Revocation, $5.0 million at any one time outstanding and (y)
after the German Holdings Revocation, $10.0 million at any one time
outstanding.
"Permitted Intercompany Loan" shall mean any loan or advance between
Issuer and one of its Subsidiaries or between its Subsidiaries; provided,
however, that (x) no payments of principal on such loan or advance shall be
required, whether or not upon the happening of any event, on or prior to the
final maturity date of the Notes, (y) upon a bankruptcy, insolvency,
liquidation, dissolution or other similar proceeding all amounts due in respect
of the Notes and this Indenture (including any interest accruing subsequent to
an event of bankruptcy or insolvency, whether or not allowed or allowable
thereunder) shall first be paid in full before any payment in respect of any
Permitted Intercompany Loan shall be made and (z) upon a Default, no payments in
respect of any Permitted Intercompany Loan may be made until such Default has
been waived or cured or the Notes has been discharged in full.
"Permitted Investments" means
(i) Investments by Issuer or any Restricted Subsidiary in any Person
that is or will become immediately after such Investment a Wholly Owned
Restricted Subsidiary or that will merge or consolidate into Issuer or a
Wholly Owned Restricted Subsidiary;
(ii) Investments in Issuer by any Restricted Subsidiary; provided
that any Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement, to Issuer's obligations
under the Notes and this Indenture;
(iii) investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of Issuer and its
Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes not to exceed (x) prior to the German Holdings
Revocation, $500,000 in the aggregate at any one time outstanding and (y)
after the German Holdings Revocation, $1.0 million at any one time
outstanding;
(v) Currency Agreements and Interest Swap Obligations entered into
in the ordinary course of Issuer's or
25
-18-
any Restricted Subsidiary's businesses and otherwise in compliance with
this Indenture;
(vi) Investments in Unrestricted Subsidiaries not to exceed (x)
prior to the German Holdings Revocation, $500,000 at any one time
outstanding and (y) after the German Holdings Revocation, $1.0 million at
any one time outstanding;
(vii) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers;
(viii) Investments made by Issuer or its Restricted Subsidiaries as
a result of consideration received in connection with an Asset Sale made
in compliance with Section 4.13;
(ix) any Investment to the extent that the consideration therefor
(x) consists solely of Qualified Equity Interests or (y) is paid solely
with the proceeds of a substantially concurrent issuance and sale of
Qualified Equity Interests (provided that any such proceeds used for this
purpose shall not increase the Basket);
(x) Investments in Hornschuch made with the proceeds of the offering
of the Initial Notes to the extent used to purchase Equity Interests of
Hornschuch as described in the Offering Memorandum under "The Transactions
and Use of Proceeds"; and
(xi) additional Investments in an aggregate amount not to exceed (x)
prior to the German Holdings Revocation, $500,000 at any one time
outstanding and (y) after the German Holdings Revocation, $1.0 million at
any one time outstanding.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which Issuer or its Restricted Subsidiaries shall
have set aside on its books such reserves as may be required pursuant to
GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not
yet delinquent or
26
-19-
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of Issuer or
any Restricted Subsidiary;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, however, that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of Issuer
or any Restricted Subsidiary acquired in the ordinary course of business;
provided, however, that (a) the related purchase money Indebtedness shall
not exceed the cost of such property or assets and shall not be secured by
any property or assets of Issuer or any Restricted Subsidiary other than
the property and assets so acquired and (b) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
27
-20-
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of
Issuer or any Restricted Subsidiary, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xii) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to clause (xiii) of the definition
of "Permitted Indebtedness";
(xiii) Liens securing Indebtedness under Currency Agreements; and
(xiv) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.9; provided, however, that (a) such Liens secured such
Acquired Indebtedness at the time of and prior to the incurrence of such
Acquired Indebtedness by Issuer or a Restricted Subsidiary and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by Issuer or a Restricted Subsidiary and (b) such
Liens do not extend to or cover any property or assets of Issuer or of any
Restricted Subsidiary other than the property or assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of Issuer or a Restricted Subsidiary and are no more
favorable to the lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by Issuer or a
Restricted Subsidiary.
"Permitted Refinancing" means, with respect to any Indebtedness of
any Person, any Refinancing of such Indebtedness; provided, however, that (i)
such Indebtedness shall not result in an increase in the aggregate principal
amount of Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid under the terms
of the instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by Issuer in connection with such Refinancing), (ii) such
Indebtedness shall not have a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or a final maturity earlier than the final maturity of the Indebtedness being
Refinanced, (iii) if the Indebtedness
28
-21-
being Refinanced is Indebtedness of Issuer, then such Refinancing Indebtedness
shall be Indebtedness solely of Issuer and (iv) if the Indebtedness being
Refinanced is subordinate or junior to the Notes, then such Refinancing
Indebtedness shall be subordinate to the Notes at least to the same extent and
in the same manner as the Indebtedness being Refinanced.
"Person" means an individual, partnership, limited liability
company, corporation, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Pledge Agreements" means all Guarantor Pledge Agreements and
the German Pledge Agreement.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" of any Note means principal of and premium, if
any, on such Note.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on
the Initial Notes in the form set forth in Exhibit C.
"Public Equity Offering" means an underwritten primary public
offering of common stock of Issuer pursuant to an effective registration
statement under the Securities Act (other than any registration statement filed
on Form S-8 or similar form).
"Purchase Money Indebtedness" means Indebtedness of Issuer or any
Restricted Subsidiary incurred in the normal course of business for the purpose
of financing all or any part of the purchase price, or the cost of installation,
construction or improvement, of property or equipment; provided, however, (A)
the Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of Issuer or any Restricted Subsidiary
other than the property and assets so acquired or constructed and (B) the Lien
securing such Indebtedness shall be created within 180 days of such acquisition
or construction or, in the case of a Refinancing of any Purchase Money
Indebtedness, within 180 days of such Refinancing.
"Qualified Equity Interests" means any Equity Inter-
29
-22-
ests that are not Disqualified Equity Interests.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Real Property" means all right, title and interest of Issuer or any
Restricted Subsidiary (including, without limitation, any leasehold estate) in
and to a parcel of real property owned or operated by Issuer or any Restricted
Subsidiary together with, in each case, all improvements and appurtenant
fixtures, equipment, personal property, easements and other property and rights
incidental to the ownership, lease or operation thereof.
"Record Date" means the Record Date specified in the Notes.
"redeem" means redeem, repurchase, defease or otherwise acquire or
retire for value; and "redemption" and "redeemed" have correlative meanings.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Issue Date among Issuer, the Guarantors party thereto
and the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Release Notice" means a notice that shall (i) state that it is
being delivered pursuant to Section 11.3(b), (ii) specify the fair market value
of the Collateral subject to the applicable Asset Sale, which shall be
determined in good faith by an Independent Financial Advisor within 60 days of
the date of such notice if such fair market value exceed $2.5 million, (iii)
certify that the purchase price received is at least equal to the fair market
value of the Collateral subject to the applicable Asset Sale and (iv) confirm
that the sale is a bona fide sale to a Person that is not an Affiliate of
Issuer. Such notice shall be accompanied by an Officers' Certificate which shall
state that such Asset Sale complies with the foregoing and the terms and
conditions of Section 4.13 and that the Net Cash Proceeds of such Asset Sale
will be applied pursuant to Section 4.13.
30
-23-
"Replacement Assets" means, with respect to any Asset Sale,
properties and assets that replace the properties and assets that were the
subject of such Asset Sale or properties and assets that will be used in the
business of Issuer and the Restricted Subsidiaries as existing on the Issue Date
or in businesses reasonably related thereto.
"Responsible Officer" means, when used with respect to the Trustee,
any officer assigned to the Corporate Trust Office with direct responsibility
for the administration of this Indenture, including any vice president,
assistant vice president, assistant secretary or any other officer of the
Trustee to whom any corporate trust matter is referred because of his or her
knowledge or familiarity with the particular subject.
"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 any Subsidiary of Issuer which at the
time of determination is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to Issuer or a Restricted Subsidiary of any property, whether
owned by Issuer or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by Issuer or such
Restricted Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"Security Documents" means (i) the Pledge Agreements and (ii) any
other pledge or security agreements and Mortgages that may be delivered from
time to time pursuant to Section 4.5(b) or Article 12, which agreements and
Mortgages shall be in form and substance satisfactory to the Trustee.
"Significant Subsidiary," means, at any date of determination, (a)
any Restricted Subsidiary that satisfies the criteria for a "significant
subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the Securities
Act, and (b) any Restricted Subsidiary which, when aggregated with all other
Restricted Subsidiaries that are not otherwise Significant Subsidiaries and as
to which any event described in Section 6.1(vi) or (vii) has occurred and is
continuing, would consti-
31
-24-
tute a Significant Subsidiary under clause (a) of this definition.
"Special Record Date" means, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 2.8 hereof.
"Stated Maturity" means, with respect to any Note or any installment
of interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness, means the date specified
in the instrument governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or any installment of interest is due and
payable.
"Subsidiary," with respect to any Person, means (i) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.3; provided, however, that, in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any such
amendments, the Trust Indenture Act of 1939 as so amended.
"Transaction Documents" means the Notes, this Indenture, the
Registration Rights Agreement and the Security Documents.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code
as in effect in the State of New York from time to time.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of Issuer designated
as such pursuant to Section 4.18. Any such designation may be revoked by a
resolution of the Board of Directors of Issuer delivered to the Trustee, subject
to the pro-
32
-25-
visions of Section 4.18.
"U.S. Credit Facility" means one or more senior credit facilities
providing for term loans, revolving credit loans and/or letters of credit
between the Company and/or one or more Restricted Subsidiaries (other than any
Foreign Subsidiary), on the one hand, and one or more lenders, on the other
hand, together with related documents (including promissory notes, security
agreements and guarantees), as the same may be amended or Refinanced from time
to time.
"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.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding Capital Stock
(other than in the case of a foreign Restricted Subsidiary, directors'
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by such Person or any Wholly
Owned Restricted Subsidiary of such Person.
SECTION 1.2. Other Definitions.
Term Defined in Section
---- ------------------
"Acceleration Notice" 6.2
"Affiliate Transaction" 4.12
"Agent Members" 2.16
"Bankruptcy Law" 6.1
33
-26-
Term Defined in Section
---- ------------------
"Basket" 4.10(I)(e)(iii)
"Change of Control Payment Date" 4.8(b)(3)
"Collateral Account" 12.1
"covenant defeasance option" 8.1(b)
"Custodian" 6.1
"Defaulted Interest" 2.8
"defeasance trust" 8.2
"Designation" 4.18
"Designation Amount" 4.18
"Distribution Compliance Period" 2.17
"Event of Default" 6.1
"German Holdings Revocation" 4.18
"Guaranteed Obligations" 10.1
"Guarantees" 4.5
"legal defeasance option" 8.1(b)
"Net Proceeds Offer" 4.13
"Net Proceeds Offer Amount" 4.13
"Net Proceeds Offer Payment Date" 4.13
"Net Proceeds Offer Period" 4.13
"Net Proceeds Offer Trigger Date" 4.13
"Note Register" 2.6
"144A Global Note" 2.4
"Paying Agent" 2.3
"Payment Default" 6.1
"Physical Notes" 2.4
"Revocation Condition" 4.18
"Redemption Date" 3.3
"Reference Date" 4.10(I)(e)(iii)(A)
"Regulation S Global Note" 2.4
"Released Trust Moneys" 12.3
"Restricted Payment" 4.10(I)
"Revocation" 4.18(c)
"Registrar" 2.3
"Surviving Entity" 5.1
"Trust Moneys" 12.1
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 Notes.
"indenture note holder" means a Noteholder.
34
-27-
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the Notes means Issuer and any other obligor on
the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.4. 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" or "includes" means including or includes 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 Issuer 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; and
(8) references to a Section or Article refers to a Section or
Article, as the case may be, of this Indenture; and
(9) "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.
35
-28-
ARTICLE 2
THE NOTES
SECTION 2.1. Form and Dating. The Initial Notes and the Exchange
Notes and the Trustee's certificate of authentication with respect thereto shall
be in substantially the forms set forth, or referenced, in Exhibit A and Exhibit
B, respectively, annexed hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with any applicable law or with the rules of the Depository, any clearing agency
or any securities exchange or as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution thereof.
The definitive Notes shall be printed, typewritten, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms
and provisions contained in the Notes shall constitute, and are expressly made,
a part of this Indenture.
SECTION 2.2. Title and Terms. The aggregate principal amount of
Notes which may be authenticated and delivered under this Indenture is limited
to $112,750,000 in aggregate principal amount of Notes, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.4, 2.5, 2.6, 2.7, 3.6,
4.8, 4.13 or 9.5.
The final Stated Maturity of the Notes shall be May 1, 2005, and the
Notes shall bear interest at the rate of 11% per annum from the Issue Date or
from the most recent Interest Payment Date to which interest has been paid, as
the case may be, payable semiannually on May 1 and November 1 in each year,
commencing on November 1, 1998, to the Holders of record at the close of
business on the April 15 and October 15, respectively, immediately preceding
such Interest Payment Dates, until the principal thereof is paid or duly
provided for. Interest on any overdue principal, interest (to the extent lawful)
or premium, if any, shall be payable on demand.
The Notes shall be redeemable at the option of Issuer as provided in
Article 3 and paragraphs 5 and 6 on the reverse
36
-29-
of the Notes.
At the election of Issuer, the entire Indebtedness on the Notes or
certain of Issuer's obligations and covenants and certain Defaults thereunder
may be defeased as provided in Sections 8.1 and 8.2.
SECTION 2.3. Registrar and Paying Agent. Issuer shall maintain an
office or agency (which shall be located in the Borough of Manhattan in The City
of New York, State of New York) where Notes may be presented for registration of
transfer or for exchange (the "Registrar"), an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for payment (the "Paying Agent") and an office or
agency where notices and demands to or upon Issuer in respect of the Transaction
Documents may be served. The Registrar shall keep a register of the Notes and of
their transfer and exchange. Issuer may have one or more co-registrars and one
or more additional paying agents. The term "Paying Agent" includes any
additional paying agent. Issuer may act as its own Paying Agent, except for the
purposes of payments on account of principal on the Notes pursuant to Sections
4.8 and 4.13.
Issuer shall enter into an appropriate agency agreement with any
Paying Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Paying Agent. Issuer shall notify the Trustee of
the name and address of any such Paying Agent. If Issuer fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such and shall be entitled to appropriate compensation in
accordance with Section 7.7.
Issuer initially appoints the Trustee as the Registrar and Paying
Agent and agent for service of notices and demands in connection with the Notes.
SECTION 2.4. Execution and Authentication. The Initial Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A hereto. The Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage.
The terms and provisions contained in the Notes annexed hereto as
Exhibits A and B shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, Issuer, the Guarantors and the Trustee,
by their execution and delivery of this Indenture, expressly agree
37
-30-
to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A and Notes offered
and sold in reliance on Regulation S shall be issued initially in the form of
one or more Global Notes (the "144A Global Notes" and the "Regulation S Global
Notes," respectively), substantially in the form set forth in Exhibit A,
deposited with the Trustee, as custodian for the Depository, duly executed by
Issuer and authenticated by the Trustee as hereinafter provided and shall bear
the legend set forth in Exhibit C. The aggregate principal amount of the Global
Notes may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Notes offered and sold to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) shall, and
Notes issued in exchange for interests in a Global Note pursuant to Section 2.17
may, be issued in the form of permanent certificated Notes in registered form in
substantially the form set forth in Exhibit A hereto (the "Physical Notes"),
duly executed by Issuer and authenticated by Trustee as hereinafter provided and
shall bear the Private Placement Legend.
All Notes offered and sold in reliance on Regulation S shall remain
in the form of a Global Note 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 Issuer have been so complied with.
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign, and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for Issuer, by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Note
was an Officer or Assistant Secretary, as the case may be, at the time of such
execution but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
The Trustee shall authenticate (i) Initial Notes for original issue
in an aggregate principal amount not to exceed $112,750,000, (ii) Private
Exchange Notes from time to time only in exchange for a like principal amount of
Initial Notes and (iii) Unrestricted Notes from time to time only in exchange
for (A) a like principal amount of Initial Notes or (B) a like
38
-31-
principal amount of Private Exchange Notes, in each case upon a Company Order of
Issuer in the form of an Officers' Certificate of Issuer. Each such Company
Order shall specify the amount of Notes to be authenticated and the date on
which the Notes are to be authenticated, whether the Notes are to be Initial
Notes, Private Exchange Notes or Unrestricted Notes and whether (subject to this
Section 2.4) the Notes are to be issued as Physical Notes or Global Notes and
such other information as the Trustee may reasonably request. The aggregate
principal amount of Notes outstanding at any time may not exceed $112,750,000,
except as provided in Section 2.7.
Notwithstanding the foregoing, all Notes issued under this Indenture
shall vote and consent together on all matters (as to which any of such Notes
may vote or consent) as one class and no series of Notes will have the right to
vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to Issuer to authenticate Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with Issuer and Affiliates of Issuer.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.5. Temporary Notes. Until definitive Notes are prepared
and ready for delivery, Issuer may execute and upon a Company Order the Trustee
shall authenticate and deliver temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes, in any authorized denominations,
but may have variations that Issuer reasonably considers appropriate for
temporary Notes as conclusively evidenced by Issuer's execution of such
temporary Notes.
If temporary Notes are issued, Issuer will cause definitive Notes to
be prepared without unreasonable delay but in no event later than the date that
the Exchange Offer is consummated. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of Issuer designated for such
purpose pursuant to Section 4.3, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes, Issuer shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of like tenor and of
39
-32-
authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
SECTION 2.6. Transfer and Exchange. Issuer shall cause to be kept at
the Corporate Trust Office of the Trustee a register (the register maintained in
such office and in any other office or agency designated pursuant to Section 4.3
being sometimes referred to herein as the "Note Register") in which, subject to
such reasonable regulations as the Registrar may prescribe, Issuer shall provide
for the registration of Notes and of transfers and exchanges of Notes. The
Trustee is hereby initially appointed Registrar for the purpose of registering
Notes and transfers of Notes as herein provided.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar or a co-Registrar with a request from the Holder of such Notes to
register the transfer or exchange for an equal principal amount of Notes of
other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested; provided, however, that every Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer or exchange in form
satisfactory to Issuer and the Registrar, duly executed by the Holder thereof or
its attorney duly authorized in writing. Whenever any Notes are so presented for
exchange, Issuer shall execute, and the Trustee shall authenticate and deliver,
the Notes which the Holder making the exchange is entitled to receive. No
service charge shall be made to the Noteholder for any registration of transfer
or exchange. Issuer may require from the Noteholder payment of a sum sufficient
to cover any transfer taxes or other governmental charge that may be imposed in
relation to a transfer or exchange, but this provision shall not apply to any
exchange pursuant to Sections 3.6, 4.8, 4.13 or 9.5 hereof (in which events
Issuer will be responsible for the payment of all such taxes which arise solely
as a result of the transfer or exchange and do not depend on the tax status of
the Holder). The Trustee shall not be required to exchange or register the
transfer of any Note for a period of 15 days immediately preceding the first
mailing of notice of redemption of Notes to be redeemed or of any Note selected,
called or being called for redemption except, in the case of any Note to be
redeemed in part, the portion thereof not to be redeemed.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of Issuer, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
40
-33-
Any holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book-entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a
book-entry system.
SECTION 2.7. Mutilated, Destroyed, Lost and Stolen Notes. If a
mutilated Note is surrendered to the Trustee or if the Holder of a Note claims
that the Note has been lost, destroyed or wrongfully taken, Issuer shall execute
and upon a Company Order, the Trustee shall authenticate and deliver a
replacement Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding, if the Holder of such Note furnishes to Issuer
and to the Trustee, in the case of such loss, destruction or theft, evidence
reasonably acceptable to them of the ownership and the destruction, loss or
theft of such Note and, in the case of such loss, destruction or theft, an
indemnity bond shall be posted by such Holder, sufficient in the judgment of
Issuer or the Trustee, as the case may be, to protect Issuer, the Trustee or any
Agent from any loss that any of them may suffer if such Note is replaced. Issuer
may charge such Holder for Issuer's expenses in replacing such Note (including
(i) expenses of the Trustee charged to Issuer and (ii) any tax or other
governmental charge that may be imposed) and the Trustee may charge Issuer for
the Trustee's expenses in replacing such Note.
Every replacement Note issued pursuant to this Section 2.7 in lieu
of any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of Issuer, whether or not the destroyed, lost or stolen
Note 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
Notes duly issued hereunder.
SECTION 2.8. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Person in whose name such
Note is registered at the close of business on the Record Date for such
interest.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the Record Date; and such Defaulted
41
-34-
Interest may be paid by Issuer, at its election in each case, as provided in
subsection (a) or (b) below:
(a) Issuer may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes are registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. Issuer shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date of
the proposed payment, and at the same time Issuer shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as provided in this subsection (a). Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify Issuer in writing of such Special Record Date. In the name and at the
expense of Issuer, the Trustee shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at its address as it appears in the
Note Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Notes are registered on such Special Record Date and
shall no longer be payable pursuant to the following subsection (b).
(b) Issuer may elect to make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after written notice given by Issuer to the
Trustee of the proposed payment pursuant to this subsection (b), such payment
shall be deemed practicable by the Trustee. The Trustee shall be entitled to
rely on an Opinion of Counsel regarding the legality of any proposed payment
pursuant to this subsection (b).
Subject to the foregoing provisions of this Section 2.8, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
42
-35-
SECTION 2.9. Persons Deemed Owners. Prior to and at the time of due
presentment for registration of transfer, Issuer, the Trustee and any agent of
Issuer or the Trustee may treat the Person in whose name any Note is registered
in the Note Register as the owner of such Note for the purpose of receiving
payment of principal of and (subject to Section 2.8) interest on such Note and
for all other purposes whatsoever, whether or not such Note shall be overdue,
and neither Issuer, the Trustee nor any agent of Issuer or the Trustee shall be
affected by notice to the contrary.
SECTION 2.10. Cancellation. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall be delivered to the
Trustee and, if not already canceled, shall be promptly canceled by it. Issuer
and any Guarantor may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which Issuer or such
Guarantor may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Trustee. The Registrar and the Paying Agent
shall forward to the Trustee any Notes surrendered to them for registration of
transfer or exchange, redemption or payment. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section 2.10, except as
expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be destroyed and certification of their destruction delivered to Issuer
unless, by a Company Order, Issuer shall direct that the canceled Notes be
returned to it.
The Trustee shall provide Issuer a list of all Notes that have been
canceled from time to time as requested by Issuer.
SECTION 2.11. Computation of Interest. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months and, in the
case of a partial month, the actual number of days elapsed.
SECTION 2.12. Legal Holidays. In any case where any Payment Date
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal or interest need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such Payment Date. In such event, no interest
shall accrue with respect to such payment for the period from and after such
Payment Date, to the next succeeding Business Day.
43
-36-
SECTION 2.13. CUSIP and CUSIP Numbers. Issuer in issuing the Notes
may use "CUSIP" and "CINS" numbers (if then generally in use), and if Issuer
does so, the Trustee shall use the CUSIP or CINS numbers, as the case may be, in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice shall state that no representation is made as to
the correctness or accuracy of the CUSIP or CINS number, as the case may be,
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. Issuer shall promptly
notify the Trustee in writing of any change in the CUSIP or CINS number of any
type of Notes.
SECTION 2.14. Paying Agent To Hold Money In Trust. Each Paying Agent
shall hold in trust for the benefit of the Noteholders or the Trustee all money
held by the Paying Agent for the payment of principal of, premium, if any, or
interest on the Notes, and shall notify the Trustee of any default by Issuer in
making any such payment. Money held in trust by the Paying Agent need not be
segregated, except as required by law and except if Issuer, any Guarantor or any
of their respective Affiliates is acting as Paying Agent, and in no event shall
the Paying Agent be liable for any interest on any money received by it
hereunder. Issuer at any time may require the Paying Agent to pay all money held
by it to the Trustee and account for any funds disbursed and the Trustee may at
any time during the continuance of any Event of Default, upon a Company Order to
the Paying Agent, require such Paying Agent to pay forthwith all money so held
by it to the Trustee and to account for any funds disbursed. Upon making such
payment, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.15. Deposits of Monies. Prior to 10:00 a.m. New York City
time on each Payment Date, Issuer shall deposit with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Payment Date in a timely manner which permits the Paying Agent to remit
payment to the Holders on such Payment Date.
SECTION 2.16. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit D hereto.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture
44
-37-
with respect to any Global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Note, and the Depository may be
treated by Issuer, the Trustee and any agent of Issuer or the Trustee as the
absolute owner of the Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent Issuer, the Trustee or any agent of
Issuer 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 Note.
(b) Transfers of Global Notes shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Sections 2.4 and 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depository notifies Issuer
that it is unwilling or unable to continue as Depository for any Global Note, or
that it will cease to be a "Clearing Agency" under the Exchange Act, and in
either case a successor Depository is not appointed by Issuer within 90 days of
such notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository or the Trustee to
issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Note in an amount equal to the principal amount
of the beneficial interest in such Global Note to be transferred, and Issuer
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and principal amount of authorized denominations.
(d) In connection with the transfer of Global Notes as an entirety
to beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed
to be surrendered to the Trustee for cancellation, and Issuer shall execute, and
the Trustee shall authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in the Global Notes,
an equal aggregate principal amount of Physical Notes of like tenor of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered
in exchange for an interest in a Global Note
45
-38-
pursuant to subparagraph (b), (c) or (d) of this Section 2.16 shall, except as
otherwise provided by Section 2.17, bear the Private Placement Legend.
(f) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following additional provisions shall apply with respect to the registration of
any proposed transfer of an Initial Note to any Institutional Accredited
Investor which is not a QIB:
(i) the Registrar shall register the transfer of any Initial Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the second anniversary of the Issue Date;
provided, however, that the Holder of such Note certifies to the Registrar
that neither Issuer nor any Affiliate of Issuer has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to the
second anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Notes without registering such Initial Notes
thereunder or (y) the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit E hereto and any legal
opinions and certifications required thereby; and
(ii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
(x) written instructions given in accordance with the Depository's and the
Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and a decrease in
the principal amount of the Global Note from which such interests are to
be transferred in an amount equal to the principal amount of the Notes to
be transferred and Issuer shall execute, and the Trustee shall
authenticate, Physical Notes in a principal amount equal to the principal
amount of the Global Note to be transferred.
(b) Transfers to Non-U.S. Persons. The following additional
provisions shall apply with respect to the registra-
46
-39-
tion of any proposed transfer of an Initial Note to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Initial Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the second anniversary of the Issue Date;
provided, however, that the Holder of such Note certifies to the Registrar
that neither Issuer nor any Affiliate of Issuer has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to the
second anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Securities Act without registering such Initial
Notes thereunder or (y) the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit F hereto;
(ii) if the proposed transferee is an Agent Member and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Regulation S Global Note, upon receipt by
the Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's procedures and (y) the appropriate
certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the
Registrar shall register the transfer and reflect on its books and records
the date and an increase in the principal amount of the Regulation S
Global Note in an amount equal to the principal amount of Physical Notes
to be transferred, and the Trustee shall cancel the Physical Notes so
transferred;
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
(x) written instructions given in accordance with the Depository's and the
Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and (A) a decrease
in the principal amount of the Global Note from which such interests are
to be transferred in an amount equal to the principal amount of the Notes
to be transferred and (B) an increase in the principal amount of the
Regulation S Global Note in an amount equal to the principal amount of the
Global Note to be transferred; and
(iv) until the 41st day after the Issue Date (the "Distribution
Compliance Period"), an owner of a beneficial interest in the Regulation S
Global Note may not
47
-40-
transfer such interest to a transferee that is a U.S. person or for the
account or benefit of a U.S. person within the meaning of Rule 902(o) of
the Securities Act. During the Distribution Compliance Period, all
beneficial interests in the Regulation S Global Note shall be transferred
only through Cedel or Euroclear, either directly if the transferor and
transferee are participants in such systems, or indirectly through
organizations that are participants therein.
(c) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Note to a QIB
(excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Initial Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the second anniversary of the Issue Date;
provided, however, that the Holder of such Note certifies to the Registrar
that neither Issuer nor any Affiliate of Issuer has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to the
second anniversary of the Issue Date and such transfer can otherwise be
lawfully made under the Securities Act without registering such Initial
Note thereunder or (y) such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Note
stating, or has otherwise advised Issuer 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 Note stating, or has otherwise advised Issuer and the Registrar in
writing, that it is purchasing the Note 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 the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding Issuer 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;
(ii) if the proposed transferee is an Agent Member and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the 144A Global Note, upon receipt by the
Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
48
-41-
register the transfer and reflect on its book and records the date and an
increase in the principal amount of the 144A Global Note in an amount
equal to the principal amount of Physical Notes to be transferred, and the
Trustee shall cancel the Physical Note so transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall register the transfer and
reflect on its books and records the date and (A) a decrease in the
principal amount of the Global Note from which interests are to be
transferred in an amount equal to the principal amount of the Notes to be
transferred and (B) an increase in the principal amount of the 144A Global
Note in an amount equal to the principal amount of the Global Note to be
transferred.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 2.17 exist, (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to Issuer 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 Note has been sold pursuant to an effective registration
statement under the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Note
constituting a Restricted Security pursuant to any exemption from the
registration requirements of the Securities Act other than as provided for by
Section 2.17(a), (b) and (c), the Registrar shall only register such transfer or
exchange if such transferor delivers an Opinion of Counsel satisfactory to
Issuer and the Registrar that such transfer is in compliance with the Securities
Act and the terms of this Indenture.
(f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
49
-42-
The Registrar shall retain in accordance with its customary
procedures copies of all letters, notices and other written communications
received pursuant to Section 2.16 or this Section 2.17. Issuer shall have the
right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable prior
written notice to the Registrar.
ARTICLE 3
REDEMPTION
SECTION 3.1. Notices to Trustee. If Issuer elects to redeem Notes
pursuant to paragraph 5 thereof, it shall notify the Trustee in writing of the
redemption date, the principal amount of Notes to be redeemed and the
subparagraph of the Notes pursuant to which the redemption will occur. Issuer
shall give each notice to the Trustee provided for in this Section at least 45
days before the redemption date unless the Trustee consents to a shorter period.
Such notice shall be accompanied by an Officers' Certificate from Issuer to the
effect that such redemption will comply with the provisions herein.
SECTION 3.2. Selection of Notes to be Redeemed. In the event that
less than all of the Notes are to be redeemed at any time, selection of such
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed or, if such Notes are not then listed on a national
securities exchange, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided, however, that no Notes of a
principal amount of $1,000 or less shall be redeemed in part; provided, further,
that if a partial redemption is made with the proceeds of a Public Equity
Offering, selection of the Notes or portions thereof for redemption shall be
made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as
is practicable (subject to Depository procedures), unless such method is
otherwise prohibited. Provisions of this Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption. The
Trustee shall notify Issuer promptly of the Notes or portions of Notes to be
redeemed. If any Note is to be redeemed in part only, the notice of redemption
relating to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. In the event Issuer is required to make an offer to purchase
Notes pursuant to Section 4.8 or 4.13 and the amount available for such offer is
not evenly divisible by $1,000, the Trustee shall
50
-43-
promptly refund to Issuer any remaining funds, which in no event will exceed
$1,000.
SECTION 3.3. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Notes (each, a "Redemption Date"),
Issuer shall mail a notice of redemption by first-class mail to the registered
address appearing in the Note Register of each Holder of Notes to be redeemed.
The notice shall identify the Notes 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 Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be
redeemed;
(6) that, unless Issuer defaults in making such redemption payment,
interest on Notes (or portion thereof) called for redemption ceases to
accrue on and after the Redemption Date;
(7) the paragraph of the Notes pursuant to which the Notes called
for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Notes being redeemed;
and
(9) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At Issuer's request, the Trustee shall give the notice of redemption
in Issuer's name and at Issuer's sole expense. In such event, Issuer shall
provide the Trustee with the information required by this Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes 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 Notes shall be paid at the redemption price stated in
the notice, plus accrued interest to the Redemption Date. Such notice if mailed
in the manner herein provided shall be
51
-44-
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 3.5. Deposit of Redemption Price. Prior to 10:00 a.m. (New
York City time) on the Redemption Date, Issuer shall deposit with the Trustee or
Paying Agent (or, if Issuer or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest (if any) on all Notes or portions thereof to be redeemed on that date
other than Notes or portions of Notes called for redemption which have been
delivered by Issuer to the Trustee for cancellation.
SECTION 3.6. Notes Redeemed in Part. Upon surrender of a Note that
is redeemed in part (with, if Issuer or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to Issuer and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), Issuer shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered, except that if a Global Certificate is so surrendered,
Issuer shall execute, and the Trustee shall authenticate and deliver to the
Depository for such Global Certificate, without service charge, a new Global
Certificate in denomination equal to and in exchange for the unredeemed portion
of the principal of the Global Certificate so surrendered.
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Notes. Issuer shall promptly pay the
principal of and interest on the Notes on the dates and in the manner provided
in the Notes 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. Issuer shall pay interest on overdue principal at 1% per
annum in excess of the rate per annum set forth in the Notes, and it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
52
-45-
SECTION 4.2. Corporate Existence; Conduct of Business.
(a) Subject to Article 5 and Section 4.13, Issuer shall do or caused
to be done, at its own cost and expense, all things necessary to, and will cause
each Restricted Subsidiary to, preserve and keep in full force and effect the
corporate or partnership existence and rights (charter and statutory), licenses
and/or franchises of Issuer and each Restricted Subsidiary; provided, however,
that neither Issuer nor any Restricted Subsidiary shall be required to preserve
any such rights, licenses or franchises if the Board of Directors of Issuer
shall reasonably determine that the preservation thereof is no longer desirable
in the conduct of the business of Issuer and the Subsidiaries, taken as a whole.
(b) Issuer and the Restricted Subsidiaries will not engage in any
businesses which are not the same, similar or reasonably related to the
businesses in which Issuer and the Restricted Subsidiaries are engaged on the
Issue Date, except to the extent as would not be material to Issuer and the
Restricted Subsidiaries taken as a whole.
SECTION 4.3. Maintenance of Office or Agency. Issuer shall maintain
an office or agency (which shall be located in the Borough of Manhattan in The
City of New York, State of New York) where Notes may be presented for
registration of transfer or for exchange, an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for payment and an office or agency where notices
and demands to or upon Issuer in respect of the Transaction Documents may be
served. Issuer 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 Issuer
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 13.2.
Issuer may also from time to time designate one or more other
offices or agencies where the Notes 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
Issuer of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. Issuer 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.
53
-46-
Issuer hereby initially designates the Trustee's office or agency in
New York City as set forth in Section 13.2 as an agency of Issuer in accordance
with Section 2.3.
SECTION 4.4. Payment of Taxes and Other Claims. Issuer 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 Issuer 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 4.5. Additional Subsidiary Guarantees; Additional
Collateral. (a) If Issuer or any Restricted Subsidiary shall organize, acquire
or otherwise invest in another Person that becomes a Restricted Subsidiary, then
Issuer shall cause such Restricted Subsidiary to (i) execute and deliver to the
Trustee a supplemental indenture substantially in the form of Exhibit G pursuant
to which such Restricted Subsidiary shall become a Guarantor under this
Indenture on the terms set forth in this Indenture and (ii) deliver to the
Trustee an Opinion of Counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and constitutes
a legal, valid, binding and enforceable obligation of such Restricted
Subsidiary. Thereafter, such Restricted Subsidiary shall be a Guarantor for all
purposes of this Indenture. Notwithstanding the foregoing, no Foreign Subsidiary
(so long as it is a Foreign Subsidiary) shall be required to become a Guarantor.
(b) Concurrently with any Restricted Subsidiary becoming a
Guarantor, Issuer shall (i) supplement Schedule I to the Guarantor Pledge
Agreement to add Issuer's direct interests, if any, in Capital Stock of such
Guarantor as Collateral thereunder and for such interests to be subject to the
Guarantor Pledge Agreement as Additional Shares (as defined in the Guarantor
Pledge Agreement) and (ii) cause each other Guarantor that holds any Capital
Stock of such new Guarantor to enter into a pledge agreement substantially in
the form of Exhibit I and pledge such Capital Stock as Collateral thereunder.
SECTION 4.6. Reports to Holders. Issuer shall deliver to the Trustee
within 15 days after the filing of the same with the Commission, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, which Issuer is required to file with the Commission pur-
54
-47-
suant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that Issuer
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, Issuer shall file with the Commission, to the extent permitted,
and provide the Trustee and Holders with such annual reports and such
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act within the time periods specified therein. Issuer shall also
comply with the other provisions of TIA Section 314(a). In addition, for so long
as any Notes remain outstanding, Issuer 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, and, to any beneficial holder of Notes, if not obtainable from
the Commission, information of the type that would be filed with the Commission
pursuant to the foregoing provisions, upon the request of any such holder.
SECTION 4.7. Compliance Certificate. Issuer shall deliver to the
Trustee within 120 days after the end of each fiscal year of Issuer an Officers'
Certificate, one of the signers of which shall be the principal executive,
financial or accounting officer of Issuer, stating that in the course of the
performance by the signers of their duties as Officers of Issuer 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 Issuer is taking or proposes to
take with respect thereto. Issuer also shall comply with TIA Section 314(a)(4).
SECTION 4.8. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require Issuer to purchase all or a portion of such Holder's
Notes at a purchase price in cash equal to 101% of the principal amount at
maturity thereof, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest due on an Interest Payment Date that is on or prior to the
date fixed for redemption), in accordance with the terms contemplated in Section
4.8(b).
(b) Within 30 days following any Change of Control, Issuer shall
send, by first class 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 Issuer to purchase such Holder's Notes at the
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and un-
55
-48-
paid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on an
Interest Payment Date that is on or prior to the date fixed for purchase);
(2) the circumstances and relevant facts and relevant financial
information regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor
later than 45 days from the date such notice is mailed, other than as may
be required by law) (the "Change of Control Payment Date"); and
(4) the instructions as determined by Issuer, consistent with this
Section 4.8, that a Holder must follow in order to have its Notes
purchased.
(c) Holders electing to have a Note purchased will be required to
surrender the Note, together with all necessary endorsements and other
appropriate materials duly completed, to Issuer at the address specified in the
notice prior to the close of business on the third Business Day prior to the
Change of Control Payment Date. Holders will be entitled to withdraw their
election if the Trustee or Issuer 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 Note which was delivered for purchase
by the Holder as to which such notice of withdrawal is being submitted and a
statement that such Holder is withdrawing its election to have such Note
purchased.
(d) On the Change of Control Payment Date, all Notes purchased by
Issuer under this Section 4.8 shall be delivered to the Trustee for
cancellation, and Issuer shall pay the purchase price plus accrued and unpaid
interest, if any, to the Holders entitled thereto.
(e) Issuer shall comply, to the extent applicable, with the
requirements of Section 14e-1 under the Exchange Act and any other securities
laws and regulations in connection with the repurchase of Notes pursuant to this
Section 4.8.
SECTION 4.9. Limitation on Incurrence of Additional
Indebtedness.
(a) Issuer shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, incur any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any
56
-49-
such Indebtedness, Issuer may incur Indebtedness (including, without limitation,
Acquired Indebtedness) and Restricted Subsidiaries may incur Acquired
Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio is greater than (i) 2.0 to 1.0 if such incurrence
occurs on or prior to the third anniversary of the Issue Date and (ii) 2.25 to
1.0 if such incurrence occurs thereafter.
(b) Notwithstanding the foregoing, Issuer shall not, and shall not
permit any Guarantor to, incur any Indebtedness that purports to be by its terms
(or by the terms of any agreement or instrument governing such Indebtedness)
subordinated to any other Indebtedness of Issuer or of such Guarantor, as the
case may be, unless such Indebtedness is also by its terms (or by the terms of
the agreement or instrument governing such Indebtedness) made expressly
subordinated to the Notes or the Guarantee of such Guarantor, as applicable, to
at least the same extent as such Indebtedness is subordinated to such other
Indebtedness of Issuer or such Guarantor, as applicable.
SECTION 4.10. Limitation on Restricted Payments. (I) Issuer
shall not, and shall not cause or permit any Restricted Subsidiary to,
directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Equity Interests of
Issuer) on or in respect of Equity Interests of Issuer to holders of such
Equity Interests,
(b) redeem any Equity Interests of Issuer or any Restricted
Subsidiary (other than any held by Issuer),
(c) redeem or prepay, in whole or in part, prior to the scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, as
applicable, any Indebtedness of Issuer or any Guarantor that is
subordinate or junior in right of payment to the Notes or the Guarantee of
such Guarantor, as the case may be, or
(d) make any Investment (each of the foregoing actions set forth in
clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment"),
(e) if at the time of such Restricted Payment or immediately after
giving effect thereto,
(i) a Default shall have occurred and be continuing; or
57
-50-
(ii) Issuer is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.9(a); or
(iii) the aggregate amount of Restricted Payments (including
such proposed Restricted Payment but excluding Restricted Payments
pursuant to clause (2), (3) or (4) of the next paragraph) made
subsequent to the Issue Date shall exceed the sum (the "Basket") of:
(A) 50% of the cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) earned subsequent to the Issue Date and on or
prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting
period); plus
(B) 100% of the aggregate net cash proceeds received by
Issuer from any Person (other than a Subsidiary of Issuer)
from the issuance and sale subsequent to the Issue Date and on
or prior to the Reference Date of Qualified Equity Interests
of Issuer; plus
(C) without duplication of any amounts included in
clause (B) above, 100% of the aggregate net cash proceeds of
any common equity contribution received by Issuer (other than
from a Subsidiary of Issuer); plus
(D) in the case of the disposition or repayment of any
Investment that was treated as a Restricted Payment made after
the Issue Date an amount (to the extent not included in the
computation of Consolidated Net Income) equal to the lesser
of: (x) the return of capital with respect to such Investment
and (y) the amount of such Investment that was treated as a
Restricted Payment, in either case, less the cost of the
disposition of such Investment and net of taxes; plus
(E) so long as the Designation thereof was treated as a
Restricted Payment after the Issue Date, with respect to any
Unrestricted Subsidiary that has been redesignated as a
Restricted Subsidiary after the Issue Date in accordance with
Section 4.18, Issuer's proportionate interest in an amount
equal to the excess of (x) the
58
-51-
total assets of such Subsidiary, valued on an aggregate basis
at the lesser of book value and fair market value, over (y)
the total liabilities of such Subsidiary, determined in
accordance with GAAP (and provided that such amount shall not
in any case exceed the Designation Amount with respect to such
Restricted Subsidiary upon its Designation); minus
(F) with respect to each Subsidiary of Issuer which has
been designated as an Unrestricted Subsidiary after the Issue
Date in accordance with Section 4.18, the greater of (x) $0
and (y) the Designation Amount thereof (measured as of the
date of Designation).
(II) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; (2) the redemption of any
Equity Interests of Issuer, either (i) solely in exchange for Qualified Equity
Interests of Issuer or (ii) through the application of net cash proceeds of a
substantially concurrent sale (other than to a Subsidiary of Issuer) of
Qualified Equity Interests of Issuer; (3) the redemption or prepayment of any
Indebtedness of Issuer that is subordinate or junior in right of payment to the
Notes either (i) solely in exchange for Qualified Equity Interests of Issuer or
(ii) through the application of net cash proceeds of a substantially concurrent
sale (other than to a Subsidiary of Issuer) of (A) Qualified Equity Interests of
Issuer or (B) Permitted Refinancings of Indebtedness permitted to be incurred
under this Indenture; and (4) Permitted Investments. No transaction pursuant to
this paragraph shall increase the Basket.
(III) The amount of any non-cash Restricted Payment shall be the
fair market value, on the date such Restricted Payment is made, of the assets or
securities proposed to be transferred or issued by Issuer or such Restricted
Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of Issuer, whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $2.5 million.
SECTION 4.11. Limitation on Liens. Issuer shall not, and shall not
cause or permit any Restricted Subsidiary
59
-52-
to, directly or indirectly, create, incur, assume or permit or suffer to exist
any Liens of any kind against or upon any property or assets of Issuer or any
Restricted Subsidiary whether owned on the Issue Date or acquired after the
Issue Date, or any proceeds therefrom, or assign or otherwise convey any right
to receive income or profits therefrom unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to the
Notes, the Notes are secured by a Lien on such property, assets or proceeds that
is senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured. The foregoing shall not apply to: (a) Liens
existing as of the Issue Date to the extent and in the manner such Liens are in
effect on the Issue Date; (b) Liens securing the Notes, the Guarantees and the
Pledge Agreements; (c) Liens securing obligations under the U.S. Credit Facility
incurred pursuant to clause (ii) of the definition of "Permitted Indebtedness"
and Liens securing obligations under the Foreign Credit Facility incurred
pursuant to clause (iii) of the definition of "Permitted Indebtedness"; (d)
Liens of Issuer or a Wholly Owned Restricted Subsidiary on assets of any
Restricted Subsidiary; (e) Liens securing Permitted Refinancings of Indebtedness
secured by a Lien permitted under this Indenture and incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens (x) are no
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (y) do not extend to or cover any property or assets of Issuer or
any Restricted Subsidiary not securing the Indebtedness so Refinanced; (f) Liens
(other than Liens referred to in clauses (a) through (e)) that secure
obligations in an aggregate amount not to exceed (x) prior to the German
Holdings Revocation, $2.0 million at any one time outstanding and (y) after the
German Holdings Revocation, $4.0 million at any one time outstanding; and (g)
Permitted Liens.
SECTION 4.12. Limitation on Transactions with Affiliates. (a) Issuer
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, enter into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), unless such
transaction or series of related transactions is on terms that are no less
favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of Issuer or such Restricted Subsidiary. All Affiliate Transactions
(and each series of related Affiliate Transactions) involving aggregate value in
excess of $500,000 shall be approved by a majority of the Disin-
60
-53-
terested Directors of the Board of Directors of Issuer or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If there are no
Disinterested Directors or if Issuer or any Restricted Subsidiary enters into an
Affiliate Transaction (or a series of related Affiliate Transactions) that
involves an aggregate value in excess of $2.5 million, Issuer or such Restricted
Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain
a favorable opinion as to the fairness of such transaction or series of related
transactions to Issuer or such Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor and file the same
with the Trustee; provided, however, that no such opinion shall be required for
(i) any Permitted Intercompany Loan or (ii) commercial transactions in the
ordinary course of business and on reasonable and ordinary commercial terms
exclusively between or among Issuer and/or one or more of its Subsidiaries.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of Issuer or any Restricted
Subsidiary as determined in good faith by Issuer's Board of Directors; (ii)
transactions exclusively between or among Issuer and any of its Wholly Owned
Restricted Subsidiaries or exclusively between or among such Wholly Owned
Restricted Subsidiaries, provided such transactions are not otherwise prohibited
by this Indenture; (iii) any transaction pursuant to an agreement in effect on
the Issue Date as in effect on the Issue Date or as thereafter amended in a
manner not less favorable to the Holders; and (iv) Restricted Payments permitted
by this Indenture, Permitted Investments and any transaction that is deemed not
to be an Investment by reason of the last sentence of the definition of
"Investment."
SECTION 4.13. Limitation on Asset Sales. Issuer shall not, and shall
not permit any Restricted Subsidiary to, consummate an Asset Sale unless (i)
Issuer or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of; (ii) at least 80% of the
consideration received by Issuer or the Restricted Subsidiary, as the case may
be, from such Asset Sale shall be in the form of cash or Cash Equivalents; and
(iii) upon the consummation of an Asset Sale, Issuer shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 180 days of receipt thereof either (A) to permanently prepay any
term loans of Issuer or any Restricted Subsidiary under the U.S. Credit Fa-
61
-54-
cility and/or Foreign Credit Facility, as applicable, (B) to make an investment
in Replacement Assets or (C) any combination of the foregoing clauses (A) and
(B); provided, however, that if the assets which were the subject of such Asset
Sale constitute Collateral, Issuer or the applicable Restricted Subsidiary shall
have entered into appropriate security documents pursuant to Article 12, and
such Replacement Assets shall be subject to a perfected first priority Lien in
favor of the Trustee and shall constitute Collateral. Pending such application,
to the extent that the assets which are the subject of any Asset Sale constitute
Collateral, such Net Cash Proceeds shall be deposited in the Collateral Account
in accordance with this Indenture, and Issuer or the applicable Restricted
Subsidiary shall enter into appropriate security documents pursuant to Article
12 and the Net Cash Proceeds of such Asset Sale shall be subject to a perfected
first priority Lien in favor of the Trustee. On the 181st day after an Asset
Sale or such earlier date, if any, as the Board of Directors of Issuer or of
such Restricted Subsidiary determines not to apply the Net Cash Proceeds
relating to such Asset Sale as set forth in clause (iii) of the next preceding
sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of
Net Cash Proceeds which have not been applied on or before such Net Proceeds
Offer Trigger Date as permitted in clause (iii) of the next preceding sentence
(each a "Net Proceeds Offer Amount") shall be applied by Issuer or such
Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45
days following the applicable Net Proceeds Offer Trigger Date, from all Holders
on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount
at a price equal to 100% of the principal amount at maturity of the Notes to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
received by Issuer or any Restricted Subsidiary, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this covenant. Issuer may defer the Net Proceeds
Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to
or in excess of $5.0 million resulting from one or more Asset Sales (at which
time, the entire unutilized Net Proceeds Offer Amount, and not just the amount
in excess of $5.0 million, shall be applied as required pursuant to this
paragraph). To the extent that the Net Cash Proceeds of any Asset Sale of assets
constituting Collateral are not required to be applied to the Notes and if there
are Net Cash Proceeds remaining in the Collateral Account after all such offers
or redemp-
62
-55-
tions required or permitted by this Indenture, then such remaining Net Cash
Proceeds shall be held in the Collateral Account as Collateral and shall be
permitted to be reinvested by Issuer at any time as provided above. Pending the
final application of the Net Cash Proceeds of a sale of assets not constituting
Collateral, Issuer may temporarily reduce revolving credit indebtedness or
otherwise invest such Net Cash Proceeds in any manner that is not prohibited by
this Indenture.
In the event of the transfer of substantially all (but not all) of
the property and assets of Issuer and the Restricted Subsidiaries as an entirety
to a Person in a transaction permitted under Article 5, the Surviving Entity
shall be deemed to have sold the properties and assets of Issuer and the
Restricted Subsidiaries not so transferred for purposes of this Section 4.13,
and shall comply with the provisions of this Section 4.13 with respect to such
deemed sale as if it were an Asset Sale. In addition, the fair market value of
such properties and assets of Issuer and the Restricted Subsidiaries deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of this Section
4.13.
Promptly, and in any event within 25 days after Issuer becomes
obligated to make a Net Proceeds Offer, Issuer shall be obligated to deliver to
the Trustee and send, to each Holder, at the address appearing in the Notes
Register, a written notice stating that the Holder may elect to have his Notes
purchased by Issuer either in whole or in part (subject to prorationing as
hereinafter described in the event the Net 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 Net Proceeds Offer, shall
include such disclosures as are required by law and shall specify (i) that the
Net Proceeds Offer is being made pursuant to this Section 4.13; (ii) the
purchase price (including the amount of accrued interest, if any) for each Note
and the Net Proceeds Offer Payment Date; (iii) that any Note not tendered or
accepted for payment will continue to accrue interest in accordance with the
terms thereof; (iv) that, unless Issuer defaults on making the payment, any Note
accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue
interest on and after the Purchase Date; (v) that Holders electing to have Notes
purchased pursuant to the Net Proceeds Offer will be required to surrender their
Notes to the Paying Agent at the address specified in the notice at least three
Business Days prior to the Net Proceeds Offer Payment Date and must complete any
form letter of transmittal proposed by Issuer and acceptable to the Trustee and
the Paying Agent; (vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than one Business Day prior to the Net
Proceeds Offer Payment Date, a telex, facsimile transmission or
63
-56-
letter setting forth the name of the Holder, the principal amount of Notes the
Holder delivered for purchase, the Note certificate number (if any) and a
statement that such Holder is withdrawing its election to have such Notes
purchased; (vii) that if Notes in a principal amount in excess of the aggregate
principal amount which Issuer has offered to purchase are tendered pursuant to
the Net Proceeds Offer, Issuer shall purchase Notes on a pro rata basis among
the Notes tendered (with such adjustments as may be deemed appropriate by Issuer
so that only Notes in denominations of $1,000 or integral multiples of $1,000
shall be acquired); (viii) that Holders whose Notes are purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; and (ix) the instructions that Holders must follow in
order to tender their Notes.
Not later than the date upon which written notice of a Net Proceeds
Offer is delivered to the Trustee as provided below, Issuer shall deliver to the
Trustee an Officers' Certificate as to (i) the Net Proceeds Offer Amount, (ii)
the allocation of the Net Cash Proceeds from the Asset Sale pursuant to which
such Net Proceeds Offer is being made, and (iii) the compliance of such
allocation with the provisions of this Section 4.13. Upon the expiration of the
period for which the Net Proceeds Offer remains open (the "Net Proceeds Offer
Period"), Issuer shall deliver to the Trustee for cancellation the Notes or
portions thereof which have been properly tendered to and are to be accepted by
Issuer. Not later than 10:00 a.m. (New York City time) on the Net Proceeds Offer
Payment Date, Issuer shall irrevocably deposit with the Trustee or with a paying
agent (or, if Issuer is acting as Paying Agent, segregate and hold in trust) an
amount in cash sufficient to pay the Net Proceeds Offer Amount for all Notes
properly tendered to and accepted by Issuer. The Trustee shall, on the Net
Proceeds Offer Payment Date, mail or deliver payment to each tendering Holder in
the amount of the purchase price.
Holders electing to have a Note purchased will be required to
surrender the Note, together with all necessary endorsements and other
appropriate materials duly completed, to Issuer at the address specified in the
notice at least three Business Days prior to the Net Proceeds Offer Payment
Date. Holders will be entitled to withdraw their election in whole or in part if
the Trustee or Issuer receives not later than one Business Day prior to the Net
Proceeds Offer Payment Date, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Note (which shall be $1,000
or an integral multiple thereof) which was delivered for purchase by the Holder,
the aggregate principal amount of such Note (if any) that remains subject to the
original notice of the Net Proceeds Offer and that has been or will be delivered
64
-57-
for purchase by Issuer and a statement that such Holder is withdrawing his
election to have such Note purchased. If at the expiration of the Net Proceeds
Offer Period the aggregate principal amount of Notes surrendered by Holders
exceeds the Net Proceeds Offer Amount, Issuer shall select the Notes to be
purchased on a pro rata basis (to the extent practicable) based on the aggregate
principal amount of Notes tendered by each Holder (with such adjustments as may
be deemed appropriate by Issuer so that only securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose Notes
are purchased only in part will be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered. To the extent that the
aggregate amount of principal and accrued interest of Notes validly tendered and
not withdrawn pursuant to a Net Proceeds Offer is less than the Net Proceeds
Offer Amount, Issuer may use such surplus for general corporate purposes. Upon
completion of a Net Proceeds Offer, the aggregate unutilized Net Proceeds Offer
Amount with respect to the applicable Asset Sale or Asset Sales shall be reset
to zero. A Net Proceeds Offer shall remain open for a period of 20 Business Days
or such longer period as may be required by law.
A Note 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.
Issuer shall comply with the requirements of Section 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer.
Section 4.14. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. Issuer shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (x) pay dividends or make any other
distributions on or in respect of its Capital Stock; (y) make loans or advances
or to pay any Indebtedness or other obligation owed to, or enter into guarantees
for the benefit of, Issuer or any other Restricted Subsidiary; or (z) transfer
any of its property or assets to Issuer or any other Restricted Subsidiary,
except for (a) such encumbrances or restrictions existing under or by reason of
(1) applicable law; (2) this Indenture; (3) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired, as such instrument is in effect
on the date of acquisition or as thereafter amended in a manner no less
favorable
65
-58-
to the Holders; (4) agreements existing on the Issue Date (including the U.S.
Credit Facility and the Foreign Credit Facility) as in effect on the Issue Date
or as thereafter amended in a manner no less favorable to the Holders; or (5) an
agreement governing Permitted Refinancings of Indebtedness incurred pursuant to
an agreement referred to in clause (2), (3) or (4) above; provided, however,
that the provisions relating to such encumbrance or restriction contained in any
such Indebtedness are no less favorable to the Holders than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (3) or (4); (b) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of any Restricted
Subsidiary; (c) customary covenants in any agreement governing Purchase Money
Indebtedness that restrict the transfer of property acquired with the proceeds
of such Purchase Money Indebtedness; (d) covenants in security agreements
securing Indebtedness of a Restricted Subsidiary, to the extent that the Liens
securing such Indebtedness were otherwise incurred in accordance with Section
4.11, that restrict the transfer of property subject to such Liens; and (e)
customary restrictions with respect to a Restricted Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary.
SECTION 4.15. Limitation on Issuance or Sale of Capital Stock of
Restricted Subsidiaries. Issuer shall not sell, and shall not cause or permit
any Restricted Subsidiary, directly or indirectly, to issue or sell, any Capital
Stock of a Restricted Subsidiary, except (i) to Issuer or a Wholly Owned
Restricted Subsidiary; (ii) the sale of all of the Capital Stock of a Restricted
Subsidiary in accordance with Section 4.13; or (iii) in the case of issuance of
Capital Stock by a non-Wholly Owned Restricted Subsidiary if, after giving
effect to such issuance, Issuer maintains its direct or indirect percentage of
beneficial and economic ownership of such non-Wholly Owned Restricted
Subsidiary.
SECTION 4.16. Limitation on Sale and Leaseback Transactions. Issuer
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale and Leaseback Transaction; provided, however, that Issuer may enter into a
Sale and Leaseback Transaction if (i) Issuer would have (a) incurred
Indebtedness (other than Permitted Indebtedness) in an amount equal to the
Attributable Debt relating to such Sale and Leaseback Transaction in compliance
with Section 4.9 and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.11, (ii) the gross cash proceeds of such Sale and Leaseback
Transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the
66
-59-
property that is the subject of such Sale and Leaseback Transaction and (iii)
the transfer of assets in such Sale and Leaseback Transaction is permitted by,
and Issuer applies the proceeds of such transaction in compliance with, Section
4.13.
SECTION 4.17. Limitation on Preferred Stock of Restricted
Subsidiaries. Issuer will not permit any Restricted Subsidiary to issue any
Preferred Stock (other than to Issuer or to a Wholly Owned Restricted
Subsidiary) or permit any Person (other than Issuer or a Wholly Owned Restricted
Subsidiary) to own any Preferred Stock of any Restricted Subsidiary.
SECTION 4.18. Designation of Unrestricted Subsidiaries. (a) Issuer
may designate any Subsidiary of Issuer (other than Decora or any of its
Subsidiaries and, following the German Holdings Revocation, other than German
Holdings and its Subsidiaries) as an "Unrestricted Subsidiary" under this
Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the time of
or after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation,
Issuer could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under Section 4.9(a); and
(iii) Issuer would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to Section 4.10(I) in an
amount (the "Designation Amount") equal to the fair market value of
Issuer's proportionate interest in the net worth of such Subsidiary on
such date calculated in accordance with GAAP.
All Subsidiaries of Unrestricted Subsidiaries shall be
Unrestricted Subsidiaries.
German Holdings and its Subsidiaries shall be deemed to have been
designated Unrestricted Subsidiaries as of the Issue Date. On January 1, 2001,
the Designation of German Holdings and its Subsidiaries as Unrestricted
Subsidiaries shall be deemed to have been revoked (such Revocation, the "German
Holdings Revocation") in accordance with paragraph (c) below. Notwithstanding
the foregoing, in the event that the Consolidated Fixed Charge Coverage Ratio
after giving effect to the German Holdings Revocation (assuming that German
Holdings and its Subsidiaries had been Restricted Subsidiaries since the
beginning of the Four Quarter Period) is less than the Consolidated Fixed Charge
Coverage Ratio before giving effect to the German Holdings Revocation (the
"Revocation Condition"), the German Hold-
67
-60-
ings Revocation shall not be deemed to have been effected on such date, but
shall be deemed to be effected at the end of the first fiscal quarter thereafter
that the Revocation Condition is satisfied. Issuer shall not cause or suffer
German Holdings or any of its Subsidiaries to incur Indebtedness for the primary
purpose of avoiding the Revocation Condition being satisfied. At no time
following the German Holdings Revocation shall German Holdings or any of its
Subsidiaries be Designated as Unrestricted Subsidiaries.
(b) Issuer shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, at any time (x) provide credit support
for, subject any of its properties or assets (other than the Equity Interests of
any Unrestricted Subsidiary) to the satisfaction of, or guarantee, any
Indebtedness of any Unrestricted Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any Indebtedness of any Unrestricted Subsidiary;
provided, however, that the foregoing shall not prohibit any agreement in effect
on the Issue Date as in effect on the Issue Date or as thereafter amended in a
manner not less favorable to the Holders.
(c) Issuer may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") only if:
(i) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
(d) All Designations and Revocations must be evidenced by
resolutions of the Board of Directors of Issuer, delivered to the Trustee
certifying compliance with the foregoing provisions.
SECTION 4.19. Limitation on Capital Expenditures. Issuer will not
permit or suffer the aggregate amount of capital expenditures of Issuer and the
Restricted Subsidiaries and German Holdings and its Subsidiaries, as determined
on a consolidated basis in accordance with GAAP, (i) for the fiscal year ending
March 31, 1999 to exceed $10.5 million or (ii) for
68
-61-
any fiscal year thereafter to exceed the sum of 5.5% of net sales of Issuer and
the Restricted Subsidiaries and German Holdings and its Subsidiaries for the
fiscal year immediately preceding such fiscal year, as determined on a
consolidated basis in accordance with GAAP; provided, however, that if the
actual amount of such capital expenditures in any fiscal year is less than the
amount permitted under this Section 4.19 for such fiscal year, the unused amount
(not to exceed 25% of such permitted amount) may be carried over to the
immediately succeeding year, but not any subsequent year.
SECTION 4.20. Impairment of Security Interest. Issuer shall not, and
shall not permit any of its Subsidiaries to, take or omit to take any action
which action or omission might or would have the result of affecting or
impairing the security interest in favor of the Trustee, on behalf of itself and
the Holders of the Notes, with respect to the Collateral, and Issuer shall not
grant to any Person (other than the Trustee on behalf of itself and the Holders
of the Notes) any interest whatsoever in the Collateral other than Liens
permitted by this Indenture and the Security Documents.
SECTION 4.21. Amendment to Pledge Agreements. Except as expressly
permitted under the terms of the applicable Security Document, Issuer shall not,
and shall not permit or consent to any amendment, modification or supplement of,
the Security Documents in any way which would be adverse to the Holders or which
would constitute a Default.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.1. Merger, Consolidation and Sale of Assets. (a) Issuer
shall not, in a single transaction or series of related transactions,
consolidate or merge with or into any Person, or sell, assign, transfer, lease,
convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to
sell, assign, transfer, lease, convey or otherwise dispose of) all or
substantially all of Issuer's assets (determined on a consolidated basis for
Issuer and the Restricted Subsidiaries) whether as an entirety or substantially
as an entirety to any Person unless:
(i) either (1) Issuer shall be the surviving or continuing
corporation or (2) the Person (if other than Issuer) formed by such
consolidation or into which Issuer is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of Issuer and the Restricted Subsidiaries
substantially as an entirety (the "Surviving En-
69
-62-
tity");
(x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the
District of Columbia; and
(y) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered
to the Trustee, the due and punctual payment of the principal of and
interest on all of the Notes and the performance of every covenant
of the Transaction Documents on the part of Issuer to be performed
or observed;
(ii) other than in a consolidation or merger solely between Issuer
and a Wholly Owned Restricted Subsidiary, immediately after giving effect
to such transaction and the assumption contemplated by clause (i)(2)(y)
above (including giving effect to any Indebtedness (including Acquired
Indebtedness) incurred or anticipated to be incurred in connection with or
in respect of such transaction), Issuer or such Surviving Entity, as the
case may be,
(1) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of Issuer immediately prior to such
transaction and
(2) shall be able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.9(a) (if
Issuer shall not be the Surviving Entity, all references to Issuer
and the Restricted Subsidiaries in the definitions used to determine
the Consolidated Fixed Charge Coverage Ratio shall be to the
Surviving Person and its Subsidiaries after giving effect to such
transaction (excluding any Unrestricted Subsidiaries));
(iii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect
to any Indebtedness (including Acquired Indebtedness) incurred or
anticipated to be incurred in connection with or in respect of such
transaction), no Default shall have occurred and be continuing;
(iv) Issuer or the Surviving Entity shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is
re-
70
-63-
quired in connection with such transaction, such supplemental indenture
comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have
been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of Issuer the Capital Stock of which constitutes
all or substantially all of the properties and assets of Issuer, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
Issuer.
(c) Each Guarantor (other than any Guarantor whose Guarantee is to
be released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with Section 4.13) will not, and
Issuer will not cause or permit any Guarantor to, consolidate with or merge with
or into any Person other than Issuer or any other Guarantor unless: (i) the
entity formed by or surviving any such consolidation or merger (if other than
the Guarantor) or to which such sale, lease, conveyance or other disposition
shall have been made is a corporation organized and existing under the laws of
the United States or any State thereof or the District of Columbia; (ii) such
entity assumes by supplemental indenture all of the obligations of the Guarantor
on the Guarantee; and (iii) immediately after giving effect to such transaction
and the use of any net proceeds therefrom on a pro forma basis, Issuer could
satisfy the provisions of clause (ii) of the first paragraph of this covenant.
Any merger or consolidation of a Guarantor with and into Issuer (with Issuer
being the surviving entity) or another Guarantor that is a Wholly Owned
Restricted Subsidiary need only comply with clause (iv) of Section 5.1(a).
(d) Upon any consolidation, combination or merger or any transfer of
all or substantially all of the assets of Issuer or a Guarantor in accordance
with the foregoing, in which Issuer or such Guarantor is not the Surviving
Entity, the Surviving Entity shall succeed to, and be substituted for, and may
exercise every right and power of, Issuer or such Guarantor under this
Indenture, the Notes, the Registration Rights Agreement and the Security
Documents with the same effect as if such Surviving Entity had been named as
such herein and therein; and thereafter, except in the case of (a) a lease or
(b) any sale, assignment, conveyance, transfer, lease or other disposition to a
Restricted Subsidiary of Issuer or such Guarantor, Issuer shall be discharged
from all obligations and covenants under this Indenture, the Notes, the
Registration Rights Agreement and the Security Documents and such Guarantor
shall be dis-
71
-64-
charged from all obligations and covenants under this Indenture, the Guarantee
of such Guarantor, the Registration Rights Agreement and the Security Documents,
as the case may be.
For all purposes of this Indenture and the Notes (including the
provisions of this Article 5 and Sections 4.9, 4.10 and 4.11), Subsidiaries of
any Surviving Person shall, upon such transaction or series of related
transactions, become Restricted Subsidiaries unless and until designated as
Unrestricted Subsidiaries pursuant to and in accordance with Section 4.18, and
all Indebtedness, and all Liens on property or assets, of Issuer and the
Restricted Subsidiaries in existence immediately prior to such transaction or
series of related transactions will be deemed to have been incurred upon such
transaction or series of related transactions.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default. Any of the following shall
constitute an Event of Default:
(i) the failure to pay interest on any Notes when the same becomes
due and payable and the default continues for a period of 30 days;
(ii) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer);
(iii) (x) a default in the observance or performance of Section 5.1
or Issuer's obligation to effect a Change of Control Offer pursuant to
Section 4.8 or (y) a default in the observance or performance of any other
covenant or agreement contained in this Indenture or any Security Document
which default continues for a period of 30 days after Issuer receives
written notice specifying the default (and demanding that such default be
remedied) from the Trustee or Issuer and the Trustee receiving such notice
from Holders of at least 25% of the outstanding principal amount of the
Notes;
(iv) default under any mortgage, indenture or other investment or
agreement under which there may be issued or by which there may be secured
or evidenced Indebtedness of Issuer or any Restricted Subsidiary, whether
such Indebtedness now exists or is incurred after the Issue Date, which
default (x) is caused by a failure to pay when due
72
-65-
principal or interest on such Indebtedness within the applicable express
grace period, (y) results in the acceleration of such Indebtedness prior
to its express final maturity or (z) results in the commencement of
judicial proceedings to foreclose upon, or to exercise remedies under
applicable law or applicable security documents to take ownership of, the
property or assets securing such Indebtedness and, in each case, the
principal amount of such Indebtedness, together with any other
Indebtedness with respect to which an event described in clause (x), (y)
or (z) has occurred and is continuing, aggregates $2.5 million or more;
(v) one or more judgments in an aggregate amount in excess of $2.5
million shall have been rendered against Issuer or any Restricted
Subsidiary and such judgments remain undischarged, unpaid or unstayed for
a period of 60 days after such judgment or judgments become final and
non-appealable;
(vi) Issuer or any Significant Subsidiary:
(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;
(D) makes a general assignment for the benefit of its
creditors; or
(E) 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 Issuer or any Significant Subsidiary
in an involuntary case;
(B) appoints a Custodian of Issuer or any Significant
Subsidiary or for any substantial part of the property of Issuer or
any Significant Subsidiary; or
(C) orders the winding up or liquidation of Issuer or any
Significant Subsidiary of Issuer;
73
-66-
(or any similar relief is granted under any foreign laws) and the
order or decree remains unstayed and in effect for 60 days;
(viii) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void and unenforceable or
any of the Guarantees is found to be invalid or any of the Guarantors
denies its liability under its Guarantee (other than by reason of release
of a Guarantor in accordance with the terms of this Indenture); or
(ix) any of the Security Documents shall cease to be in full force
and effect or cease to give the Trustee the Liens, rights, powers and
privileges purported to be created thereby.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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.
Issuer shall deliver to the Trustee, promptly after the occurrence
thereof, written notice in the form of an Officers' Certificate of any Default
(provided that such officers shall provide such certification at least annually
whether or not they know of any Default) that has occurred and, if applicable,
describe such Default and the status thereof.
SECTION 6.2. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (vi) or (vii) above with respect to Issuer)
shall occur and be continuing, the Trustee or the Holders of at least 25% in
principal amount of outstanding Notes may declare the principal of and accrued
interest on all the Notes to be due and payable by notice in writing to Issuer
and the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration" (the "Acceleration Notice"), and the same shall become
immediately due and payable. If an Event of Default specified in clause (vi) or
(vii) above with respect to Issuer occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if
74
-67-
the rescission would not conflict with any judgment or decree, (ii) if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration,
(iii) to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid, (iv) if Issuer has paid
the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances, and any other amounts due the Trustee
under Section 7.7 and (v) in the event of the cure or waiver of an Event of
Default of the type described in clause (vi) of the description above of Events
of Default, the Trustee shall have received an Officers' Certificate and an
Opinion of Counsel that such Event of Default has been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
SECTION 6.3. 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 Notes or to enforce the performance of any
provision of the Notes or this Indenture and may take any action under the
Security Documents as may be required or permitted thereunder.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are, to the extent permitted by law,
cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Notes 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 Note or (ii) a
Default in respect of a provision that under Section 9.2 cannot be amended
without the consent of each Holder 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
principal amount of the outstanding Notes 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, in each case, whether
75
-68-
under law, this Indenture, the Security Documents or otherwise. 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 any other Holder (it being understood that the
Trustee shall have no duty to make such determination) or that 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 Holders 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 Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice stating that
an Event of Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy;
(3) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Notes have not given the Trustee a direction inconsistent with such
request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal, premium (if any) or interest on the Notes held by such
Holder, on or after the respective due dates therefor, 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 except to the extent
that the institution or prosecution of such suit or the entry of judgment
therein would, un-
76
-69-
der applicable law, result in the surrender, impairment, waiver or loss of the
Lien of this Indenture and the Security Documents upon the Collateral.
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
Issuer 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 Holders allowed in
any judicial proceedings relative to Issuer, 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 and then for
amounts due under the Pledge Agreement and the other Security Documents;
SECOND: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
THIRD: to Issuer.
The Trustee may, upon prior written notice to Issuer, fix a record
date and payment date for any payment to Holders pursuant to this Section. At
least 15 days before such record date, Issuer shall mail to each Holder and the
Trustee a notice that states the record date, the payment date and amount to be
paid.
77
-70-
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 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 Notes.
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 specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, 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
78
-71-
paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; 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 Sections 6.2 and 6.5 hereof.
(d) 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 and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
(c) Before the Trustee acts or refrains from acting, the Trustee may
consult with counsel, and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(d) 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 reasonable to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(e) Prior to the occurrence of an Event of Default
79
-72-
hereunder and after the cure or waiver of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, Officers' Certificate, or other request, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Notes then outstanding; provided,
however, that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigations, in the opinion of the Trustee, is not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such examination
shall be paid by Issuer or, if advanced by the Trustee, shall be repaid by
Issuer on demand.
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(g) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, or where information is required or
necessary to be furnished by Issuer in order for the Trustee to act, the Trustee
(unless otherwise evidence by herein specifically prescribed), shall not be
liable for any action it takes or omits to take in good faith in reliance upon
an Officers' Certificate, or for any action taken or omitted to be taken by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture.
(h) The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the part
of Issuer, except as otherwise specifically set forth in this Indenture, but the
Trustee may require of Issuer full information and advice as to the performance
of the covenants, conditions and agreements contained herein.
(i) Except for (i) a default under Section 6.1(i), 6.1(ii) or 4.1,
(ii) the failure of Issuer to file any financial statements, documents or
certificates specifically required to be filed with the Trustee pursuant to the
provisions of this Indenture or (iii) any other event of which the Trustee
80
-73-
has "actual knowledge" and which event constitutes a Default under this
Indenture, the Trustee shall not be deemed to have notice of any Default or
event unless specifically notified in writing by Issuer or the Holders of not
less than 25% in aggregate principal amount of the Notes then outstanding; as
used herein, the term "actual knowledge" means the actual fact of knowing,
without a duty to make any investigation with regard thereto.
(j) The Trustee shall not be required to give any note, bond or
surety in respect of the execution of the trusts and powers under this
Indenture.
(k) The permissive rights of the Trustee to perform acts enumerated
in this Indenture shall not be construed as a duty.
(l) The Trustee shall not be liable for any interest on any money
received by it except as the Trustee may agree in writing with Issuer.
(m) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with Issuer or its respective Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. 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 Notes, it shall not be accountable for Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
Issuer in this Indenture or in any document issued in connection with the sale
of the Notes or in the Notes other than the Trustee's certificate of
authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Holder notice of the Default within 30 days after it
is known by a Responsible Officer or written notice is received by the Trustee.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the mandatory redemption provisions of such
Note, if any), the Trustee may withhold the notice if and so long as a committee
of its
81
-74-
Responsible Officers in good faith determines that withholding the notice is in
the interests of Holders.
SECTION 7.6. Reports by Trustee to Holders. Within 60 days after
each May 1 beginning with May 1, 1999, the Trustee shall mail to each Holder a
brief report dated as of May 1 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b). Prior to delivery to the
Holders, the Trustee shall deliver to Issuer a copy of any report it delivers to
Holders pursuant to this Section 7.6.
SECTION 7.7. Compensation and Indemnity. Issuer shall pay to the
Trustee from time to time reasonable compensation for its services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Issuer 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 reasonable compensation
and expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. Except during the occurrence of an Event of Default,
the Trustee shall provide Issuer reasonable notice of any expenditure not in the
ordinary course of business. Issuer 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 notify Issuer promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify Issuer shall not relieve
Issuer of its obligations hereunder. Issuer shall defend the claim and the
Trustee shall cooperate in the defense of such claim. The Trustee may have
separate counsel at the expense of Issuer. Issuer need not reimburse any expense
or indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own willful misconduct, negligence or bad faith. Issuer
need not pay for any settlement made without its written consent.
To secure Issuer's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes 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 Notes.
Issuer's payment obligations pursuant to this Section and any Lien
arising hereunder or under the Security Documents
82
-75-
shall survive the discharge of this Indenture and the resignation or removal of
the Trustee. When the Trustee incurs expenses after the occurrence of an Event
of Default specified in Section 6.1(vi) or (vii) with respect to Issuer, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at any
time upon 30 days notice to Issuer. The Holders of a majority in principal
amount of the outstanding Notes may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. Issuer shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by Issuer or by the Holders of a
majority in principal amount of the outstanding Notes 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), Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Issuer. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trus-
83
-76-
tee.
Any resignation or removal of the Trustee pursuant to this Indenture
shall be deemed to be a resignation or removal of the Trustee in its capacity as
Trustee under the Security Documents and any appointment of a successor Trustee
pursuant to this Indenture shall be deemed to be appointment of a successor
Trustee under the Security Documents and such successor shall assume all of the
obligations of the Trustee in its capacity as Trustee under the Security
Documents.
Notwithstanding the replacement of the Trustee pursuant to this
Section, Issuer's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
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, so long as such corporation is
eligible under this Article 7 and TIA Section 310(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 Notes 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 Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes 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 Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
Issuer are outstanding if the requirements for such exclusion set forth in TIA
Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a),
84
-77-
excluding any creditor relationship listed in TIA Section 311(b). A Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Notes; Defeasance.
(a) This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights or registration of transfer or
exchange of the Notes pursuant to Section 2.6) as to all outstanding Notes when
(i) either (a) all the Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by Issuer and thereafter repaid to Issuer or discharged from such
trust) have been delivered to the Trustee for cancellation or (b) all Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable and Issuer has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of and interest on the Notes to the date of deposit
together with irrevocable instructions from Issuer directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (ii) Issuer has paid all other sums payable under the Transaction
Documents by Issuer; and (iii) Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions precedent
under this Indenture relating to the satisfaction and discharge of this
Indenture have been complied with. Upon satisfaction of such conditions, the
Trustee shall, if requested by Issuer, acknowledge satisfaction and discharge of
this Indenture.
(b) Subject to Sections 8.1(c) and 8.2, Issuer at any time may
terminate (i) all its obligations under the Notes and this Indenture ("legal
defeasance option") or (ii) its obligations under Sections 4.4 through 4.21,
inclusive, and Section 5.1(a)(ii) and the operation of Sections 6.1(iii),
6.1(iv), 6.1(v), 6.1(vi) (but only with respect to Restricted Subsidiaries),
6.1(vii) (but only with respect to Restricted Subsidiaries), 6.1(viii) and
6.1(ix) ("covenant defeasance option"). Issuer may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
85
-78-
If Issuer exercises its legal defeasance option, payment of the
Notes may not be accelerated because of an Event of Default. If Issuer exercises
its covenant defeasance option, payment of the Notes may not be accelerated due
to a failure to comply with any of Sections 4.4 through 4.21, inclusive, Section
5.1(a)(ii) or the operation of Sections 6.1(iii), 6.1(iv), 6.1(v), 6.1(vi) (but
only with respect to Restricted Subsidiaries), 6.1(vii) (but only with respect
to Restricted Subsidiaries), 6.1(viii) or 6.1(ix). If Issuer exercises its legal
defeasance option or its covenant defeasance option, each Guarantor will be
released from all of its obligations under Article 11.
Upon satisfaction of the conditions set forth herein and upon
request of Issuer, the Trustee shall acknowledge in writing the discharge of
those obligations that Issuer terminates.
(c) Notwithstanding clauses (a) and (b) above, Issuer'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 Notes have been paid in full. Thereafter, Issuer's obligations
in Sections 7.7 (except in respect of Liens on the Collateral), 8.4 and 8.5
shall survive.
SECTION 8.2. Conditions to Defeasance. In order to exercise either
legal defeasance or covenant defeasance:
(i) Issuer must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders cash in U.S. dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and interest on the Notes on
the stated date for payment thereof or on the applicable Redemption Date,
as the case may be;
(ii) in the case of legal defeasance, Issuer shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (x) Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or (y)
since the Issue Date, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
legal 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 legal defeasance had not occurred;
86
-79-
(iii) in the case of covenant defeasance, Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred;
(iv) no Default shall have occurred and be continuing on the date of
such deposit or insofar as Events of Default under Section 6.1(vi) or
(vii) are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(v) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under this Indenture or
any other material agreement or instrument to which Issuer or any of its
Subsidiaries is a party or by which Issuer or any of its Subsidiaries is
bound;
(vi) Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by Issuer with the
intent of preferring the Holders over any other creditors of Issuer or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of Issuer or others;
(vii) Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the legal defeasance or the covenant
defeasance have been complied with;
(viii) Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and
(ix) Issuer shall have paid or duly provided for payment under terms
mutually satisfactory to Issuer and the Trustee all amounts then due to
the Trustee pursuant to Section 7.7.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (ii) above with respect to a legal defeasance need not be delivered if
all Notes not therefore deliv-
87
-80-
ered to the Trustee for cancellation (x) have become due and payable, (y) will
become due an payable on the maturity date within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of Issuer.
Before or after a deposit, Issuer may make arrangements satisfactory
to the Trustee for the redemption of Notes 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 Eight. It shall apply the deposited money and the money from U.S.
Government Obligations either directly or through the Paying Agent (including
Issuer 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 Notes.
SECTION 8.4. Repayment to Issuer. Upon request of Issuer, the
Trustee shall promptly turn over to Issuer any money or securities held by it at
any time which, in the opinion of a nationally recognized firm of independent
accountants expressed in a certification delivered to the Trustee, is in excess
of the amounts required to be maintained by the Trustee pursuant to Section 8.2
hereof.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to Issuer upon written request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
and, thereafter, Holders entitled to the money must look to Issuer for payment
as general creditors.
SECTION 8.5. Indemnity for Government Obligations. Issuer 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 Notes; 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, Issuer's obligations under this
Indenture and the Notes and the Guarantors' obligations
88
-81-
under this Indenture and the Guarantees 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
Issuer has made any payment of interest on or principal of any Notes following
the reinstatement of their obligations, Issuer shall be subrogated to the rights
of the Holders of such Notes 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 Issuer promptly after receiving a
written request therefor at any time, if such reinstatement of Issuer's
obligations has occurred and continues to be in effect.
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders. Issuer and the Trustee may
amend this Indenture or the Notes without notice to or consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for the assumption by a successor corporation of the
obligations of Issuer under this Indenture in the event of any transaction
in compliance with Article 5 in which Issuer is not the Surviving Person;
(iii) to provide for uncertificated Notes in addition to or in place
of certificated Notes; provided, however, that the uncertificated Notes
are issued in registered form for purposes of Section 163(f) of the Code
or in a manner such that the uncertificated Notes are as described in
Section 163(f)(2)(B) of the Code;
(iv) to add Guarantees with respect to the Notes;
(v) to release any Guarantor from its Guarantee when permitted by
this Indenture;
(vi) to add security for the Notes;
(vii) to add to the covenants of Issuer for the benefit of the
Holders or to surrender any right or power herein conferred upon Issuer
hereunder or under the Pledge Agreements or other Security Documents;
89
-82-
(viii) to make any change that does not adversely affect the rights
of any Holder; or
(ix) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA.
After an amendment under this Section becomes effective, Issuer
shall mail to Holders a notice briefly describing such amendment. The failure to
give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section.
SECTION 9.2. With Consent of Holders. Issuer and the Trustee may
amend this Indenture or the Notes with the consent of the Holders of a majority
in principal amount of the Notes then outstanding (including consents obtained
in connection with a tender offer or exchange for the Notes) and any past
default or compliance with any provisions may also be waived with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
However, without the consent of each Holder of outstanding Notes affected
thereby, no amendment may:
(i) reduce the amount of Notes whose Holders must consent to an
amendment;
(ii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including Defaulted Interest, on any Notes;
(iii) reduce the principal of or change or have the effect of
changing the fixed maturity of any Note, or change the date on which any
Note may be subject to redemption or repurchase, or reduce the redemption
or repurchase price therefor;
(iv) make any Note payable in money other than that stated in the
Notes;
(v) make any change in the provisions of this Indenture protecting
the right of each Holder to receive payment of principal of and interest
on such Note on or after the due date thereof or to bring suit to enforce
such payment;
(vi) waive a Default in the payment of principal or interest on any
Note (except that Holders of at least a majority in aggregate principal
amount of the then outstanding Notes may (x) rescind an acceleration of
the Notes that resulted from a non-payment default and
90
-83-
(y) waive the payment default that resulted from such acceleration);
(vii) amend in any material respect the obligation of Issuer to make
and consummate a Change of Control Offer in the event of a Change of
Control or modify any of the provisions or definitions with respect
thereto;
(viii) subordinate the Notes or any Guarantee to any other
obligation of Issuer or any Guarantor;
(ix) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture; or
(x) other than in compliance with this Indenture, consent to a
release of the security interest in the Collateral or make any change in
the provisions of this Indenture or any Security Document relating to the
security interest of the Trustee in the Collateral in a manner adverse to
the Holders.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under this Section becomes effective, Issuer
shall mail to Holders a notice briefly describing such amendment. The failure to
give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Notes 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 Note shall bind the Holder
and every subsequent Holder of that Note or portion of the Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
or waiver is not made on the Note. An amendment or waiver becomes effective once
the requisite number of consents are received by Issuer or the Trustee. After an
amendment or waiver becomes effective, it shall bind every Holder.
Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent or take any
other action described above or required or permitted to be taken pursuant to
this Indenture.
91
-84-
If a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 120 days after such
record date.
SECTION 9.5. Notation on or Exchange of Notes. If an amendment
changes the terms of a Note, the Trustee may require the Holder of the Note to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Note regarding the changed terms and return it to the Holder.
Alternatively, if Issuer or the Trustee so determines, Issuer in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or to
issue a new Note shall not affect the validity of such amendment.
SECTION 9.6. Trustee to Sign Amendments. The Trustee shall sign any
amendment or waiver authorized pursuant to this Article 9; provided, however,
that the Trustee may, but shall not be obligated to, execute any amendment or
waiver that adversely affects 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 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
GUARANTEES
SECTION 10.1. Guarantees. Each Guarantor hereby unconditionally and
irrevocably guarantees, jointly and severally, to each Holder and to the Trustee
and its successors and assigns as primary obligor and not merely as a surety, on
an unsecured senior basis the performance and punctual payment when due, whether
at Stated Maturity, by acceleration or otherwise, of all obligations of Issuer
under this Indenture and the Notes whether for payment of principal of or
interest on the Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by the Guarantors being herein called the "Guaranteed
Obligations"). The Guarantors will agree to pay, in addition to the amount
stated above, any and all expenses (including reasonable counsel fees and
expenses) incurred by
92
-85-
the Trustee or the Holders in enforcing any rights under the Guarantees. Each
Guarantor further agrees that the Guaranteed Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Guarantor and that such Guarantor will remain bound under this Article 10
notwithstanding any extension or renewal of any Guaranteed Obligations.
Each Guarantor waives presentation to, demand of, payment from and
protest to Issuer of any of the Guaranteed Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder
shall not be affected by (a) the failure of any Holder or the Trustee to assert
any claim or demand or to enforce any right or remedy against Issuer or any
other Person under this Indenture, the Notes or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes 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 Guarantor.
Each Guarantor further agrees that its Guarantee herein constitutes
a guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Guaranteed
Obligations.
Except as expressly set forth in Sections 8.2, 10.2 and 10.6, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Notes or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Guaranteed
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or
93
-86-
might in any manner or to any extent vary the risk of such Guarantor or would
otherwise operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Guaranteed Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of Issuer or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of Issuer to pay any Guaranteed
Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any
Guaranteed Obligation, each 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 Issuer to the Holders and the
Trustee.
Each 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. Each Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Guaranteed Obligations hereby may be
accelerated as provided in Article 6 for the purposes of such Guarantor's
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations, and (y)
in the event of any declaration of acceleration of Guaranteed Obligations as
provided in Article 6, the Obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purposes of this
Section.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section.
SECTION 10.2. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
obligations guaranteed hereunder by any Guarantor shall not exceed the maximum
amount that can be hereby guaranteed without rendering this Indenture,
94
-87-
as it relates to such Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally. To effectuate the foregoing intention, the
obligations of each Guarantor shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations
hereunder, result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal, state
or foreign law. Each Guarantor that makes a payment or distribution under a
Guarantee shall be entitled to a contribution from each other Guarantor in an
amount based on the consolidated net worth of each Guarantor.
SECTION 10.3. Successors and Assigns. This Article 10 shall be
binding upon each Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.4. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article 10 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 10 at law,
in equity, by statute or otherwise.
SECTION 10.5. Modification. No modification, amendment or waiver of
any provision of this Article 10, nor the consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.6. Release of Guarantor. If all of the Capital Stock of a
Guarantor is sold by the Company or any Sub-
95
-88-
sidiary in a transaction constituting an Asset Sale (or which, but for the
provisions of clause (i) of the definition of such term, would constitute an
Asset Sale), and, if required by this Indenture, (x) the Net Cash Proceeds from
such Asset Sale are used in accordance with Section 4.13 or (y) the Company
delivers to the Trustee an Officers' Certificate to the effect that the Net Cash
Proceeds from such Asset Sale will be used in accordance with Section 4.13
within the time limits specified by such Section, then such Guarantor shall be
released and discharged from its Guarantee upon such use in the case of clause
(x) or upon such delivery in the case of clause (y).
SECTION 10.7. Execution of Supplemental Indenture for Future
Guarantors. Each Subsidiary which is required to become a Guarantor pursuant to
Section 4.5 shall, and Issuer shall cause each such Subsidiary to, promptly
execute and deliver to the Trustee a supplemental indenture in the form of
Exhibit H hereto pursuant to which such Subsidiary shall become a Guarantor
under this Article 10 and shall guarantee the Guaranteed Obligations.
Concurrently with the execution and delivery of such supplemental indenture,
Issuer 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 Guarantee of such Guarantor is a valid
and legally binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
ARTICLE 11
COLLATERAL
SECTION 11.1. Pledge of Collateral.
(a) In order to secure the due and punctual payment of principal of
and interest on the Notes when and as the same shall be due and payable, whether
on an Interest Payment Date, at maturity, by acceleration, repurchase,
redemption or otherwise, and interest on the overdue principal of and interest
(to the extent permitted by law), if any, on the Notes and performance of all
other obligations of Issuer to the Holders or the Trustee under the Transaction
Documents, the Company and the Trustee have simultaneously with the execution of
this Indenture entered into the Pledge Agreements, pursuant to which the Company
has granted to the Trustee for the benefit of the Trustee and the Holders a
first priority Lien on and security interest in the Collateral, and in the event
any Collateral is
96
-89-
subject to an Asset Sale will supplement the existing Pledge Agreements or enter
into Pledge Agreements or other Security Documents, pursuant to which the
Company or the applicable Guarantor will grant to the Trustee for the benefit of
the Trustee and the Holders a first priority Lien on and security interest in
the Replacement Assets replacing the Collateral subject to such Asset Sale,
which Replacement Assets shall constitute Collateral.
(b) Each Holder, by accepting a Note, consents and agrees to all of
the terms and provisions of the Security Documents, as the same may be in effect
from time to time or may be amended from time to time in accordance with the
provisions of the Security Documents and this Indenture, and authorizes and
directs the Trustee to act as secured party with respect thereto.
(c) As set forth in and governed by the Security Documents, as among
the Holders of Notes, the Collateral as now or hereafter constituted shall be
held for the equal and ratable benefit of the Holders of the Notes without
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance, sale or otherwise, as security for the Notes.
SECTION 11.2. Recording; Priority; Opinions, Etc.
(a) Issuer shall at its sole cost and expense perform any and all
acts and execute any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing statement and
continuation statement or other statement) for filing under the provisions of
the UCC and the rules and regulations thereunder, or any other statute, rule or
regulation of any applicable federal, state or local jurisdiction, which are
necessary or advisable and shall do such other acts and execute such other
documents as may be required under the Security Documents, from time to time, in
order to grant, perfect and maintain in favor of the Trustee for the benefit of
the Trustee and the Holders a valid and perfected first priority Lien on the
Collateral and to fully preserve and protect the rights of the Trustee and the
Holders under this Indenture and the Security Documents.
Issuer shall from time to time promptly pay and satisfy all
financing and continuation statement recording and/or filing fees, charges and
taxes relating to this Indenture and the Security Documents, any amendments
thereto and any other instruments of further assurance. Without limiting the
generality of the foregoing covenant, in the event at any time the Trustee shall
determine that additional transfer or similar taxes are required to be paid to
perfect or continue any Lien
97
-90-
on any Collateral, Issuer shall pay such taxes promptly upon demand by the
Trustee.
(b) Issuer shall, with respect to (i) below, promptly after the
initial issuance of the Notes, and with respect to (ii) below, upon
qualification of this Indenture under the TIA, furnish to the Trustee:
(i) Opinion(s) of Counsel either (a) to the effect that, in the
opinion of such counsel, this Indenture and the grant of a security
interest in the Collateral intended to be made by the Security Documents
and all other instruments of further assurance, including, without
limitation, financing statements, have been properly recorded and filed to
the extent necessary to perfect the Lien on the Collateral created by the
Security Documents and reciting the details of such action, and stating
that as to the Liens created pursuant to the Security Documents, such
recordings and filings are the only recordings and filings necessary to
give notice thereof and that no re-recordings or refilings are necessary
to maintain such notice (other than as stated in such opinion), or (b) to
the effect that, in the opinion of such counsel, no such action is
necessary to perfect such Lien;
(ii) on May 1 in each year beginning with May 1, 1999, an Opinion
of Counsel, dated as of such date, either (a) to the effect that, in the
opinion of such counsel, such action has been taken with respect to the
recordings, registerings, filings, re-recordings, re-registerings and
refilings of all financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of
the Security Documents and reciting with respect to such Liens the details
of such action or referencing prior Opinions of Counsel in which such
details are given, and stating that all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the rights of the Holders and the Trustee
hereunder and under the Security Documents with respect to the Liens, or
(b) to the effect that, in the opinion of such counsel, no such action is
necessary to maintain such Liens.
SECTION 11.3. Release of Collateral. The Trustee shall not release
Collateral from the Lien of the Security Documents unless such release is in
accordance with the provisions of this Section 11.3 and of the Security
Documents. To the extent applicable, Issuer shall cause TIA Section 314(d)
relating to the release of property or Liens to be complied with.
(a) Satisfaction and Discharge; Defeasance. Issuer
98
-91-
shall be entitled to obtain a full release of all of the Collateral from the
Lien of this Indenture and the Security Documents upon compliance with all of
the conditions precedent for satisfaction and discharge of this Indenture or for
defeasance pursuant to Section 8.1. Upon delivery by Issuer to the Trustee of an
Officers' Certificate and an Opinion of Counsel, each to the effect that all of
the conditions precedent have been complied with (which may be the same
Officers' Certificate and Opinion of Counsel required by Article 8), the Trustee
shall take all necessary action, at the request and expense of Issuer, to
release and reconvey to Issuer all of the Collateral, and shall deliver such
Collateral in its possession to Issuer including, without limitation, the
execution and delivery of releases or waivers whenever necessary.
(b) Sales of Collateral. Collateral constituting assets subject to
an Asset Sale may be released from the Lien of this Indenture and the Security
Documents if such Asset Sale complies with this Indenture, including
applications of the Net Cash Proceeds in compliance with Section 4.13 and
Article 12.
Upon compliance with the conditions set forth in (b) above, and the
delivery by Issuer of such other documents that the Trustee may reasonably
require, the Trustee shall execute, acknowledge (if applicable) and deliver to
Issuer such counterpart within 10 Business Days after receipt by the Trustee of
a Release Notice, as applicable, and the satisfaction of the applicable
requirements of this Section 11.3.
At any time when a Default shall have occurred and be continuing, no
release of Collateral pursuant to the provisions of this Indenture or the
Security Documents shall be effective as against the Holders.
SECTION 11.4. Trust Indenture Act Requirements. The release of any
Collateral from the Security Documents or the release of, in whole or in part,
the Liens created by the Security Documents, will not be deemed to impair the
Lien of the Security Documents in contravention of the provisions hereof if and
to the extent the Collateral or Liens are released pursuant to the Security
Documents and pursuant to the terms hereof. The Trustee and each of the Holders
acknowledge that a release of Collateral or Liens strictly in accordance with
the terms of the Security Documents and the terms hereof will not be deemed for
any purpose to be an impairment of the Liens created pursuant to the Security
Documents in contravention of the terms of this Indenture. Without limitation,
Issuer and each other obligor on the Notes shall cause TIA Section 314(d)
relating to the release of property or securities from the Liens of each hereof
and of the Security Documents to be complied with. Any certificate or opinion
required by TIA Section 314(d) may be made by an
99
-92-
Officer of Issuer, except in cases which TIA Section 314(d) requires that such
certificate or opinion be made by an independent person.
SECTION 11.5. Suits To Protect Collateral. Subject to the provisions
of the Security Documents, the Trustee shall have power to institute and to
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Collateral by any acts which may be unlawful or in violation
of any of the Security Documents or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders in the Collateral (including power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the Collateral or be
prejudicial to the interests of the Holders or the Trustee).
SECTION 11.6. Purchaser Protected. In no event shall any purchaser
in good faith of any property purported to be released hereunder be bound to
ascertain the authority of the Trustee to execute the release or to inquire as
to the satisfaction of any conditions required by the provisions hereof for the
exercise of such authority or to see to the application of any consideration
given by such purchaser or other transferee; nor shall any purchaser or other
transferee of any property or rights permitted by this Article 11 to be sold be
under obligation to ascertain or inquire into the authority of Issuer to make
any such sale or other transfer.
SECTION 11.7. Powers Exercisable by Receiver or Trustee. In case the
Collateral shall be in the possession of a receiver or trustee, lawfully
appointed, the powers conferred in this Article 11 upon Issuer with respect to
the release, sale or other disposition of such property may be exercised by such
receiver or trustee, and an instrument signed by such receiver or trustee shall
be deemed the equivalent of any similar instrument of Issuer or of any officer
or officers thereof required by the provisions of this Article 11.
SECTION 11.8. Determinations Relating to Collateral. In the event
(i) the Trustee shall receive any written request from Issuer under the Security
Documents for consent or approval with respect to any matter or thing relating
to any Collateral or Issuer's obligations with respect thereto (including,
without limitation, the determination as to whether any portion of the
Collateral constitutes released Collateral) or (ii) there shall be due to or
from the Trustee under the provisions of the Security Documents any performance
or the de-
100
-93-
livery of any instrument or (iii) the Trustee shall become aware of any
nonperformance by Issuer of any covenant or any breach of any representation or
warranty of Issuer set forth in the Security Documents, then, in each such
event, the Trustee shall be entitled to hire experts, consultants, agents and
attorneys to advise the Trustee on the manner in which the Trustee should
respond to such request or render any requested performance or response to such
nonperformance or breach. The Trustee shall be fully protected in the taking of
any action recommended or approved by any such expert, consultant, agent or
attorney or agreed to by a majority of Holders pursuant to Section 6.5.
SECTION 11.9. Form and Sufficiency of Release. In the event that
Issuer has sold, exchanged, or otherwise disposed of or proposes to sell,
exchange or otherwise dispose of any portion of the Collateral which under the
provisions of Section 11.3 may be sold, exchanged or otherwise disposed of by
Issuer, and Issuer requests the Trustee to furnish a written disclaimer, release
or quitclaim of any interest in such property under the Security Documents, the
Trustee shall promptly execute such an instrument promptly after satisfaction of
the conditions set forth herein for delivery of such release. Notwithstanding
the preceding sentence, all purchasers and grantees of any property or rights
purporting to be released herefrom shall be entitled to rely upon any release
executed by the Trustee hereunder as sufficient for the purposes of this
Indenture and as constituting a good and valid release of the property therein
described from the Lien of this Indenture and the Security Documents.
SECTION 11.10. Release upon Termination of Issuer's Obligations. In
the event that Issuer delivers an Officers' Certificate certifying that the
provisions of Sections 8.1 or 8.2 have been complied with, the Trustee shall (i)
execute and deliver such releases, termination statements and other instruments
as Issuer may reasonably request evidencing the termination of the Liens created
by the Security Documents and (ii) not be deemed to hold the Liens for the
benefit of the Holders.
SECTION 11.11. Perfection with Respect to Certain Collateral.
Notwithstanding anything to the contrary in this Article 11, if the Lien on and
security interest in any Collateral (including any Collateral consisting of
Replacement Assets) is governed by the law of any jurisdiction other than any
jurisdiction in the United States, and such law does not permit "perfection" of
a security interest, then, as to such Collateral, references in this Article 11
to perfection (including in any Opinion of Counsel) shall not apply but shall be
replaced by references to "validity," "made valid" or like appropriate term;
provided, however, that the foregoing shall not relieve
101
-94-
Issuer of its obligations to perform any and all such acts and execute such
documents as are necessary or advisable to perfect, in favor of the Trustee for
the benefit of the Trustee and the Holders, the Lien on and security interest in
such Collateral to the extent the law of any jurisdiction in the United States
or any other jurisdiction that permits perfection of a security interest may
apply.
ARTICLE 12
APPLICATION OF TRUST MONEYS
SECTION 12.1. "Trust Moneys" Defined. All cash or Cash Equivalents
received by the Trustee:
(a) upon the release of Collateral from the Lien of this Indenture
and/or the Security Documents, including investment earnings thereon; or
(b) as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Trustee or any collection,
recovery, receipt, appropriation or other realization of or from all or
any part of the Collateral pursuant to this Indenture or any of the
Security Documents or otherwise; or
(c) for application under this Article 12 as elsewhere provided in
this Indenture (including, without limitation, and subject to, Section
4.13) or the Security Documents, or whose disposition is not elsewhere
otherwise specifically provided for herein or in any Security Document;
(all such moneys being herein sometimes called "Trust Moneys"; provided,
however, that Trust Moneys shall not include any property deposited with the
Trustee pursuant to Section 3.5 or 4.13 or Article 8 or delivered to or received
by the Trustee for application in accordance with Section 6.10 hereof) shall be
held by the Trustee for the benefit of the Holders as a part of the Collateral
and, upon any entry upon or sale or other disposition of the Collateral or any
part thereof pursuant to enforcement of the Security Documents, such Trust
Moneys shall be applied in accordance with Section 6.10; but, prior to any such
entry, sale or other disposition, all or any part of the Trust Moneys may be
withdrawn, and shall be released, paid or applied by the Trustee, from time to
time as provided in this Article 12.
On the Issue Date there shall be established and, at all times
hereafter until this Indenture shall have terminated, there shall be maintained
with the Trustee an account which
102
-95-
shall be entitled the "Collateral Account" (the "Collateral Account"). The
Collateral Account shall be established and maintained by the Trustee at the
Corporate Trust Office of the Trustee. All Trust Moneys which are received by
the Trustee shall be deposited in the Collateral Account and thereafter shall be
held, applied and/or disbursed by the Trustee in accordance with the terms of
this Article 12.
SECTION 12.2. Withdrawal of Net Cash Proceeds Following an Asset
Sale. To the extent that any Trust Moneys consist of Trust Moneys received by
the Trustee pursuant to the provisions of Section 4.13 and Issuer has made a Net
Proceeds Offer which is not fully subscribed to by the Holders, the Trust Moneys
remaining after completion of the Net Proceeds Offer may be withdrawn by Issuer
and shall be paid by the Trustee to Issuer (or as otherwise directed by Issuer)
upon a Company Order to the Trustee and upon receipt by the Trustee of the
following:
(a) A notice which shall (A) refer to this Section 12.2 and (B)
describe with particularity the Asset Sale from which such Trust Moneys were
held as Collateral, the amount of Trust Moneys applied to the purchase of Notes
pursuant to the Net Proceeds Offer and the remaining amount of Trust Moneys to
be released to Issuer;
(b) An Officer's Certificate certifying that (A) the release of the
Trust Moneys complies with the terms and conditions of Section 4.13, (B) there
is no Default or Event of Default in effect or continuing on the date hereof,
(C) the release of the Trust Moneys will not result in a Default or Event of
Default hereunder, and (D) all conditions precedent and covenants herein
provided relating to such release have been complied with;
(c) All documentation required under TIA Section 314(d); and
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Collateral Agent and the Trustee conform to
the requirements of this Indenture and that all conditions precedent herein
provided for relating to such application of Trust Moneys have been complied
with.
SECTION 12.3. Withdrawal of Trust Moneys for Replacement Assets. To
the extent that any Trust Moneys consist of Net Cash Proceeds received by the
Trustee pursuant to the provisions of Section 4.13 and Issuer intends to invest
such Net Cash Proceeds in Replacement Assets consistent with Section 4.13 (the
"Released Trust Moneys"), such Trust Moneys may be
103
-96-
withdrawn by Issuer and shall be paid by the Trustee to Issuer (or as otherwise
directed by Issuer) to reimburse Issuer for expenditures made or to pay costs
incurred in connection with such Replacement Assets upon a Company Order to the
Trustee and upon receipt by the Trustee of the following:
(a) If the Replacement Assets are Real Property, Issuer shall also
deliver to the Trustee:
(i) an instrument or instruments in recordable form sufficient for
the Lien of any Mortgage to cover such Real Property which, if the Real
Property is a leasehold or easement interest, shall include normal and
customary provisions with respect thereto and evidence of the filing of
all such financing statements and other instruments as may be necessary to
perfect such Liens;
(ii) a policy of title insurance (or a commitment to issue title
insurance) insuring that the Lien of this Indenture and any Mortgage
constitutes a valid and perfected mortgage Lien on such Real Property in
an aggregate amount equal to the fair market value of the Real Property,
together with an Officers' Certificate stating that any specific
exceptions to such title insurance are Liens of the type which are
customary and incurred in the ordinary course of business, together with
such endorsements and other opinions as may be reasonably requested by
Trustee;
(iii) in the event such Real Property has a fair market value in
excess of $250,000, a survey with respect thereto; and
(iv) evidence of payment or a closing statement indicating payments
to be made by Issuer of all title premiums, recording charges, transfer
taxes and other costs and expenses, including reasonable legal fees and
disbursements of counsel for the Trustee (and any local counsel), that may
be incurred to validly and effectively subject the Real Property to the
Lien of any applicable Security Documents and to perfect such Lien.
(b) If the Replacement Assets are personal property, Issuer shall
deliver to the Trustee:
(i) an instrument in recordable form sufficient for the Lien of any
applicable Security Document to cover such personal property; and
(ii) evidence of payment or a closing statement indicating payments
to be made by Issuer of all filing fees, recording charges, transfer taxes
and other costs and ex-
104
-97-
penses, including reasonable legal fees and disbursements of counsel for
the Trustee (and any local counsel), that may be incurred to validly and
effectively subject the Replacement Assets to the Lien of any Security
Document and to perfect such Lien.
(c) all documentation required under TIA Section 314(d); and
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Trustee conform to the requirements of this
Indenture and that all conditions precedent herein relating to such application
of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Indenture, the
Trustee shall apply the Released Trust Moneys as directed and specified by such
Company Order.
SECTION 12.4. Withdrawal of Trust Moneys on Basis of Retirement of
Notes. Except as otherwise required by the Security Documents, the Trustee shall
apply Trust Moneys from time to time to the payment of the principal of and
interest on any Notes, as Issuer shall request in writing, upon receipt by the
Trustee of the following:
(a) Board Resolutions of Issuer directing the application pursuant
to this Section 12.4 of a specified amount of Trust Moneys and, if such
moneys are to be applied to payment, designating the Notes so to be paid
and, if such moneys are to be applied to the purchase of Notes,
prescribing the method of purchase, the price or prices to be paid and the
maximum principal amount of Notes to be purchased and any other provisions
of this Indenture governing such purchase;
(b) cash in the maximum amount of the accrued interest, if any,
required to be paid in connection with any such purchase, which cash shall
be held by the Trustee in trust for such purpose;
(c) an Officers' Certificate, dated not more than five Business Days
prior to the date of the relevant application stating (i) that no Default
or Event of Default exists unless such Default or Event of Default would
be cured thereby, and (ii) that all conditions precedent and covenants
herein provided for relating to such application of Trust Moneys have been
complied with; and
(d) an Opinion of Counsel stating that the documents and the cash or
Cash Equivalents, if any, which have been
105
-98-
or are therewith delivered to and deposited with the Trustee conform to
the requirements of this Indenture and that all conditions precedent
herein provided for relating to such application of Trust Moneys have been
complied with.
Upon compliance with the foregoing provisions of this Section, the
Trustee shall apply Trust Moneys as directed and specified by such Board
Resolution, up to, but not exceeding, the principal amount of the Securities so
paid or purchased, using the cash deposited pursuant to paragraph (b) of this
Section 12.05, to the extent necessary, to pay any accrued interest required in
connection with such purchase.
SECTION 12.5. Investment of Trust Moneys. All or any part of any
Trust Moneys held by the Trustee shall from time to time be invested or
reinvested by the Trustee in any Cash Equivalents pursuant to the written
direction of Issuer, which shall specify the Cash Equivalents in which such
Trust Moneys shall be invested. Unless an Event of Default occurs and is
continuing, any interest on such Cash Equivalents (in excess of any accrued
interest paid at the time of purchase) that may be received by the Trustee shall
be forthwith paid to Issuer. Such Cash Equivalents shall be held by the Trustee
as a part of the Collateral, subject to the same provisions hereof as the cash
used by it to purchase such Cash Equivalents.
The Trustee shall not be liable or responsible for any loss
resulting from such investments or sales except only for its own negligent
action, its own negligent failure to act or its own willful misconduct in
complying with this Section 12.5.
SECTION 12.6. Powers Exercisable by Trustee or Receiver.
In case the Collateral (other than any cash, Cash Equivalents,
securities and other personal property held by, or required to be deposited or
pledged with, the Trustee hereunder or under the Security Documents shall be in
the possession of a receiver or trustee lawfully appointed, the powers
hereinbefore in this Article 12 conferred upon Issuer with respect to the
withdrawal or application of Trust Moneys may be exercised by such receiver or
trustee, in which case a certificate signed by such receiver or trustee shall be
deemed the equivalent of any Officers' Certificate required by this Article 12.
If the Trustee shall be in possession of any of the Collateral hereunder or
under any of the Security Documents, such powers may be exercised by the
Trustee, in its discretion.
SECTION 12.7. Disposition of Notes Retired. All Notes received by
the Trustee and for whose purchase Trust Mon-
106
-99-
eys are applied under this Article 12, if not otherwise canceled, shall be
promptly delivered to the Trustee for cancellation and destruction unless the
Trustee shall be otherwise directed by Issuer. Upon destruction of any Notes,
the Trustee shall issue a certificate of destruction to Issuer.
ARTICLE 13
MISCELLANEOUS
SECTION 13.1. 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.
SECTION 13.2. Notices. Any notice or communication shall be in
writing and delivered in person, by overnight courier or facsimile (if to
Issuer, with receipt confirmed by an Officer) or mailed by first-class mail
addressed as follows:
If to Issuer or any Guarantor:
Decora Industries, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
If to the Trustee:
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Issuer or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed or sent by overnight courier or
facsimile to a Holder shall be sent to the Holder at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so sent within the time prescribed.
Failure to send a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is sent
107
-100-
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 13.3. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA Section 312(b) with other Holders with respect
to their rights under this Indenture or the Notes. Issuer, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section 312(c).
SECTION 13.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Issuer to the Trustee to take or refrain from
taking any action under this Indenture, Issuer 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 Notes need only be executed by one Officer for Issuer) in
form and substance reasonably satisfactory to the Trustee stating that, in
the opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied with;
and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.5. 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
108
-101-
(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 13.6. When Notes Disregarded. In determining whether the
Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by Issuer or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with Issuer 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 Notes which
the Trustee actually knows are so owned shall be so disregarded. Also, subject
to the foregoing, only Notes outstanding at the time shall be considered in any
such determination.
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Trustee shall provide Issuer reasonable notice of such rules. The Registrar and
the Paying Agent may make reasonable rules for their functions.
SECTION 13.8. 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 13.9. Governing Law. This Indenture and the Notes 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 13.10. No Recourse Against Others. No recourse for the
payment of the principal of or interest on any of the Notes or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of Issuer or any Guarantor in this Indenture,
or in any of the Notes or the Guarantees 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
Issuer or any of its Subsidiaries. Each Holder, by accepting a Note, waives and
releases all such liability. The waiver and release shall be part of the
consideration for the issuance of the Notes.
109
-102-
SECTION 13.11. Successors. All agreements of Issuer in this
Indenture and the Notes shall bind Issuer's successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One
signed copy is enough to prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 13.14. Severability Clause. In case any provision in this
Indenture or in the Notes 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.
110
S-1
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
DECORA INDUSTRIES, INC.
By:
----------------------------------------
Name:
Title:
GUARANTOR:
DECORA, INCORPORATED
By:
----------------------------------------
Name:
Title:
TRUSTEE:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
----------------------------------------
Name:
Title:
111
EXHIBIT A
FACE OF NOTE
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $976.37; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $23.63; (3) THE ISSUE DATE IS APRIL 29, 1998; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY ON A BOND EQUIVALENT BASIS) IS
11.5%.
CUSIP No.
DECORA INDUSTRIES, INC.
11% SENIOR SECURED NOTES DUE 2005
DECORA INDUSTRIES, INC., a Delaware corporation ("Issuer"), promises
to pay to [_________], or registered assigns, the principal sum of
[__________________] Dollars on May 1, 2005.
Interest Payment Dates: May 1 and November 1, commencing November 1,
1998.
Record Dates: April 15 and October 15.
To the extent set forth in the Security Documents, payment hereof is
secured, on an equal and ratable basis with all other Notes, by a valid,
perfected first priority security interest in the Collateral (as defined in the
Indenture), the terms of which security interest are more fully set forth in the
Security Documents.
Additional provisions of this Note are set forth on the reverse side
of this Note.
A-1
112
IN WITNESS WHEREOF, Issuer has caused this Note to be signed
manually or by facsimile by a duly authorized officer.
DECORA INDUSTRIES, INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
United States Trust Company of New York, as Trustee, certifies that this is one
of the Notes referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
-------------------------------------
Authorized Signatory
A-2
113
REVERSE OF NOTE
11% SENIOR SECURED NOTES DUE 2005
1. Interest
DECORA INDUSTRIES, INC., a Delaware corporation (such entity, and
its successors and assigns under the Indenture, "Issuer"), promises to pay
interest on the principal amount of this Note at the rate per annum shown above.
Issuer will pay interest semiannually on May 1 and November 1 of each year,
commencing November 1, 1998. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from April 29, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Issuer shall pay interest on overdue principal at 1% per
annum in excess of the rate borne by the Notes, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
Issuer will pay interest on the Notes (except defaulted interest) to
the Persons who are registered holders of Notes at the close of business on the
record date immediately preceding the Interest Payment Date even if Notes are
canceled on registration of transfer or registration of exchange (including
pursuant to an Exchange Offer (as defined in the Registration Rights Agreement))
after the record date. Holders must surrender Notes to a Paying Agent to collect
principal payments. Issuer 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, Issuer may pay principal and
interest by its check payable in such U.S. Legal Tender. Issuer may deliver any
such interest payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, United States Trust Company of New York (the "Trustee"),
will act as Paying Agent and Registrar. Issuer may appoint and change any Paying
Agent, Registrar or co-registrar without notice. Issuer may act as Paying Agent,
Registrar, co-Registrar or transfer agent.
4. Indenture
Issuer issued the Notes under an Indenture dated as of April 29,
1998 (the "Indenture"), among Issuer, the Guaran-
A-3
114
tors party thereto and the Trustee. This Note is one of a duly authorized issue
of Initial Notes of Issuer designated as its 11% Senior Secured Notes due 2005
(the "Initial Notes"). The Notes include the Initial Notes and the Exchange
Notes (as defined in the Indenture) issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The terms of the Notes 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.
Section 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 Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the TIA for a statement of those
terms. Any conflict between this Note and the Indenture will be governed by the
Indenture.
The Notes are secured senior obligations of Issuer limited to
$112,750,000 aggregate principal amount (subject to Section 2.7 of the
Indenture). The Indenture imposes certain limitations on the incurrence of
Indebtedness by Issuer and the Restricted Subsidiaries, the existence of Liens,
the payment of dividends on, and redemption of, the Equity Interests of Issuer,
certain Assets Sales, the issuance or sale of Capital Stock of Restricted
Subsidiaries, investments by Issuer and its Restricted Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
Issuer, and transactions with Affiliates. In addition, the Indenture limits the
ability of Issuer and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium
and interest, if any, on the Notes and all other amounts payable by Issuer under
the Indenture and the Notes when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Notes and the Indenture, the Guarantors have unconditionally guaranteed the
obligations of Issuer under the Indenture and the Notes on an unsecured senior
basis pursuant to the terms of the Indenture.
5. Optional Redemption
(a) Except as set forth in the next paragraph, the Notes may not be
redeemed at the option of Issuer prior to May 1, 2002. Thereafter, the Notes
will be redeemable, at Issuer'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
A-4
115
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that is
on or prior to the date fixed for redemption) if redeemed during the 12-month
period commencing on May 1 of the years set forth below:
Period Percentage
------ ----------
2002 105.750%
2003 103.833%
2004 and thereafter 101.917%
(b) At any time and from time to time on or prior to May 1, 2001,
Issuer may redeem Notes with the net cash proceeds of one or more Public Equity
Offerings at a redemption price equal to 111.50% of the principal amount at
maturity thereof, 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 an Interest Payment Date that is on or prior to the
dated fixed for redemption); provided, however, that at least $73.29 million
aggregate principal amount at maturity of Notes must remain outstanding after
each such redemption (other that any Notes owned by Issuer or any of its
Subsidiaries) and such redemption shall be effected not more than 120 days after
the consummation of any such Public Equity Offering.
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
Notes to be redeemed at the registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Notes (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 Notes (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 Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
7. Change of Control
Upon a Change of Control, each Holder of Notes will have
A-5
116
the right to require Issuer to purchase all or any part of the Notes of such
Holder at a purchase price in cash equal to 101% of the principal amount at
maturity of the Notes to be purchased plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that is
on or prior to the date fixed for redemption) as provided in, and subject to the
terms of, the Indenture.
8. Registration Rights
Pursuant to the Registration Rights Agreement dated April 29, 1998
by and among Issuer, the Guarantors and Lazard Freres & Co. LLC, as initial
purchaser of the Notes (the "Registration Rights Agreement"), Issuer will be
obligated to consummate an exchange offer pursuant to which the holder of this
Note shall have the right to exchange this Note for 11% Senior Secured Notes due
2005, Series B, of Issuer (the "Exchange Notes"), which have been registered
under the Securities Act, in like principal amount and having identical terms as
the Notes. The Holders of the Notes shall be entitled to receive liquidated
damages in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
9. Denominations; Transfer; Exchange
The Notes are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Notes 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 Notes selected for redemption (except, in the case of a Note to
be redeemed in part, the portion of the Note not to be redeemed) or any Notes
for a period of 15 days before a selection of Notes to be redeemed or 15 days
before an Interest Payment Date.
10. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it
for all purposes.
▇-▇
▇▇▇
▇▇. 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 Issuer 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 Issuer
and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, Issuer at any time may terminate some
or all of its obligations under the Notes and the Indenture if Issuer deposits
with the Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Notes 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 Notes may be amended with the consent of the Holders of at
least a majority in principal amount outstanding of the Notes and (ii) any past
default or noncompliance with any provision may be waived with the consent of
the Holders of a majority in principal amount outstanding of the Notes. Subject
to certain exceptions set forth in the Indenture, without the consent of any
Holder, Issuer, the Guarantors and the Trustee may amend the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to comply with Article 5
of the Indenture, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to add Guarantees with respect to the Notes, to release
Guarantors when permitted by the Indenture, to secure the Notes with additional
collateral, to add additional covenants or surrender rights and powers conferred
on Issuer, to make any change that does not adversely affect the rights of any
Holder or to comply with any request of the SEC in connection with qualifying
the Indenture under the TIA.
14. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding may
declare all the Notes to be due and payable. Certain events of bankruptcy or
insolvency with respect to Issuer are Events of Default which will result in the
Notes being due and payable immediately upon the occurrence of such Events of
Default.
Holders may not enforce the Indenture or the Notes
A-7
118
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Notes unless it is offered reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders notice of any continuing Default (except a Default in
payment of principal or interest) if and so long as a committee of its trust
officers determines that withholding notice is in the interest of the Holders.
15. Trustee Dealings with Issuer
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 Notes and may otherwise deal with and collect obligations owed to it
by Issuer or any of its Affiliates and may otherwise deal with Issuer 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 on any of the Notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of Issuer or any Guarantor in the Indenture, or in any of the Notes or
Guarantees or because of the creation of any Indebtedness represented hereby and
thereby, shall be had against any incorporator, stockholder, officer, director,
employee, agent or controlling person of Issuer or any of its Subsidiaries. Each
Holder, by accepting a Note, waives and releases all such liability.
17. Guarantees
This Note will be entitled to the benefits of certain Guarantees, if
any, made 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 the Guarantors, the Trustee and the
Holders.
18. Collateral
In order to secure the due and punctual payment of the principal of
and interest on the Notes and all other amounts payable by Issuer under the
Indenture and the Notes when and as the same will be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of
A-8
119
the Notes and the Indenture, Issuer has granted a security interest in capital
stock of certain of its direct Subsidiaries.
Each Holder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents, as the same may be amended from time to
time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
the Security Documents and the terms and provisions of the Indenture will not be
deemed for any purpose to be an impairment of the security under this Indenture.
19. Governing Law
The Indenture and the Notes 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.
20. Authentication
This Note 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 Note.
21. Abbreviations
Customary abbreviations may be used in the name of a Noteholder 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, Issuer has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
A-9
120
Issuer will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made as follows:
Decora Industries, Inc.
▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
A-10
121
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note 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 Note on the books of
Issuer. The agent may substitute another to act for him.
In connection with any transfer of this Note 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 Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) two years from the Issue Date, the undersigned confirms that
it has not utilized any general solicitation or general advertising in
connection with the transfer:
[Check One]
(1) __ to Issuer 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
(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
A-11
122
(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 Issuer as defined in Rule 144 under
the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of Issuer.
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes 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, Issuer or the Trustee may require, prior to
registering any such transfer of the Notes, 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 Issuer 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 is checked, the Trustee or Registrar
shall not be obligated to register this Note 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.
Dated: Signed:
------------------------ ------------------------------------
Sign exactly as name appears on the
other side of this Note.
Signature Guarantee:
-----------------------------------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-12
123
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note 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
124
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by Issuer pursuant
to Section 4.8 or 4.13 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Note purchased by Issuer
pursuant to Section 4.8 or 4.13 of the Indenture, state the amount: $___________
Date: Your Signature:
------------- -------------------------------------------
(Sign exactly as your name appears on the
other side of the Note.)
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
▇-▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇
FACE OF NOTE
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $976.37; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $23.63; (3) THE ISSUE DATE IS APRIL 29, 1998; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY ON A BOND EQUIVALENT BASIS) IS
11.5%.
CUSIP No.
DECORA INDUSTRIES, INC.
11% SENIOR SECURED NOTES DUE 2005, SERIES B
DECORA INDUSTRIES, INC., a Delaware corporation ("Issuer"), promises
to pay to [______________], or registered assigns, the principal sum of
[_________________________] Dollars on May 1, 2005.
Interest Payment Dates: May 1 and November 1, commencing November 1,
1998.
Record Dates: April 15 and October 15.
To the extent set forth in the Security Documents, payment hereof is
secured, on an equal and ratable basis with all other Notes, by a valid,
perfected first priority security interest in the Collateral (as defined in the
Indenture), the terms of which security interest are more fully set forth in the
Security Documents.
Additional provisions of this Note are set forth on the reverse side
of this Note.
B-1
126
IN WITNESS WHEREOF, Issuer has caused this Note to be signed
manually or by facsimile by a duly authorized officer.
DECORA INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
United States Trust Company of New York, as Trustee, certifies that this is one
of the Notes referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
----------------------------------------
Authorized Signatory
B-2
127
REVERSE OF NOTE
11% SENIOR SECURED NOTES DUE 2005, SERIES B
1. Interest
DECORA INDUSTRIES, INC., a Delaware corporation (such entity, and
its successors and assigns under the Indenture, "Issuer"), promises to pay
interest on the principal amount of this Note at the rate per annum shown above.
Issuer will pay interest semiannually on May 1 and November 1 of each year,
commencing November 1, 1998. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from April 29, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Issuer shall pay interest on overdue principal at 1% per
annum in excess of the rate borne by the Notes, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
Issuer will pay interest on the Notes (except defaulted interest) to
the Persons who are registered holders of Notes at the close of business on the
record date immediately preceding the Interest Payment Date even if Notes are
canceled on registration of transfer or registration of exchange after the
record date. Holders must surrender Notes to a Paying Agent to collect principal
payments. Issuer 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, Issuer may pay principal and interest by
its check payable in such U.S. Legal Tender. Issuer may deliver any such
interest payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, United States Trust Company of New York (the "Trustee"),
will act as Paying Agent and Registrar. Issuer may appoint and change any Paying
Agent, Registrar or co-registrar without notice. Issuer may act as Paying Agent,
Registrar, co-Registrar or transfer agent.
4. Indenture
Issuer issued the Notes under an Indenture dated as of April 29,
1998 (the "Indenture"), among Issuer, the Guaran-
B-3
128
tors party thereto and the Trustee. This Note is one of a duly authorized issue
of Initial Notes of Issuer designated as its 11% Senior Secured Notes due 2005,
Series B (the "Exchange Notes"). The Notes include the Exchange Notes and the
Initial Notes (as defined in the Indenture). The Exchange Notes and the Initial
Notes are treated as a single class of securities under the Indenture. The terms
of the Notes 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. Section
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 Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the TIA for a statement of those
terms. Any conflict between this Note and the Indenture will be governed by the
Indenture.
The Notes are secured senior obligations of Issuer limited to
$112,750,000 aggregate principal amount (subject to Section 2.7 of the
Indenture). The Indenture imposes certain limitations on the incurrence of
Indebtedness by Issuer and the Restricted Subsidiaries, the existence of Liens,
the payment of dividends on, and redemption of, the Equity Interests of Issuer,
certain Assets Sales, the issuance or sale of Capital Stock of Restricted
Subsidiaries, investments by Issuer and its Restricted Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
Issuer, and transactions with Affiliates. In addition, the Indenture limits the
ability of Issuer and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium
and interest, if any, on the Notes and all other amounts payable by Issuer under
the Indenture and the Notes when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Notes and the Indenture, the Guarantors have unconditionally guaranteed the
obligations of Issuer under the Indenture and the Notes on an unsecured senior
basis pursuant to the terms of the Indenture.
5. Optional Redemption
(a) Except as set forth in the next paragraph, the Notes may not be
redeemed at the option of Issuer prior to May 1, 2002. Thereafter, the Notes
will be redeemable, at Issuer's option, in whole or in part, at any time or from
time to time, at the following redemption prices (expressed in percent-
B-4
129
ages 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 an Interest Payment Date that is on or
prior to the date fixed for redemption) if redeemed during the 12-month period
commencing on May 1 of the years set forth below:
Period Percentage
------ ----------
2002 105.750%
2003 103.833%
2004 and thereafter 101.917%
(b) At any time and from time to time on or prior to May 1, 2001,
Issuer may redeem Notes with the net cash proceeds of one or more Public Equity
Offerings at a redemption price equal to 111.50% of the principal amount at
maturity thereof, 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 an Interest Payment Date that is on or prior to the
dated fixed for redemption); provided, however, that at least $73.29 million
aggregate principal amount at maturity of Notes must remain outstanding after
each such redemption (other that any Notes owned by Issuer or any of its
Subsidiaries) and such redemption shall be effected not more than 120 days after
the consummation of any such Public Equity Offering.
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
Notes to be redeemed at the registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Notes (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 Notes (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 Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
B-5
130
7. Change of Control
Upon a Change of Control, each Holder of Notes will have the right to
require Issuer to purchase all or any part of the Notes of such Holder at a
purchase price in cash equal to 101% of the principal amount at maturity of the
Notes to be purchased plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest due on an Interest Payment Date that is on or prior to the
date fixed for redemption) as provided in, and subject to the terms of, the
Indenture.
8. Denominations; Transfer; Exchange
The Notes are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Notes 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 Notes selected for redemption (except, in the case of a Note to
be redeemed in part, the portion of the Note not to be redeemed) or any Notes
for a period of 15 days before a selection of Notes to be redeemed or 15 days
before an Interest Payment Date.
9. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it
for all purposes.
10. 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 Issuer 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 Issuer
and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, Issuer at any time may terminate some
or all of its obligations under the Notes and
B-6
131
the Indenture if Issuer deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Notes to redemption
or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount outstanding of the Notes and (ii) any past
default or noncompliance with any provision may be waived with the consent of
the Holders of a majority in principal amount outstanding of the Notes. Subject
to certain exceptions set forth in the Indenture, without the consent of any
Holder, Issuer, the Guarantors and the Trustee may amend the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to comply with Article 5
of the Indenture, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to add Guarantees with respect to the Notes, to release
Guarantors when permitted by the Indenture, to secure the Notes with additional
collateral, to add additional covenants or surrender rights and powers conferred
on Issuer, to make any change that does not adversely affect the rights of any
Holder or to comply with any request of the SEC in connection with qualifying
the Indenture under the TIA.
13. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding may
declare all the Notes to be due and payable. Certain events of bankruptcy or
insolvency with respect to Issuer are Events of Default which will result in the
Notes being due and payable immediately upon the occurrence of such Events of
Default.
Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it is offered reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default (except a Default in
payment of principal or interest) if and so long as a committee of its trust
officers determines that withholding notice is in the interest of the Holders.
14. Trustee Dealings with Issuer
B-7
132
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 Notes and may otherwise deal with and collect obligations owed to it
by Issuer or any of its Affiliates and may otherwise deal with Issuer or any of
its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
No recourse for the payment of the principal of, premium, if any, or
interest on any of the Notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of Issuer or any Guarantor in the Indenture, or in any of the Notes or
Guarantees or because of the creation of any Indebtedness represented hereby and
thereby, shall be had against any incorporator, stockholder, officer, director,
employee, agent or controlling person of Issuer or any of its Subsidiaries. Each
Holder, by accepting a Note, waives and releases all such liability.
16. Guarantees
This Note will be entitled to the benefits of certain Guarantees, if
any, made 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 the Guarantors, the Trustee and the
Holders.
17. Collateral
In order to secure the due and punctual payment of the principal of
and interest on the Notes and all other amounts payable by Issuer under the
Indenture and the Notes when and as the same will be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Notes and
the Indenture, Issuer has granted a security interest in capital stock of
certain of its direct Subsidiaries.
Each Holder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents, as the same may be amended from time to
time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accor-
B-8
133
dance with the terms and provisions of the Security Documents and the terms and
provisions of the Indenture will not be deemed for any purpose to be an
impairment of the security under this Indenture.
18. Governing Law
The Indenture and the Notes 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 Note 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 Note.
20. Abbreviations
Customary abbreviations may be used in the name of a Noteholder 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, Issuer has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
Issuer will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made as follows:
Decora Industries, Inc.
▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
B-9
134
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note 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 Note on the books of
Issuer. The agent may substitute another to act for him.
Date: Your Signature:
------------- --------------------------------------------
Sign exactly as your name appears on the
other side of this Note.
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-10
135
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by Issuer pursuant
to Section 4.8 or 4.13 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Note purchased by
Issuer pursuant to Section 4.8 or 4.13 of the Indenture, state the amount: $
Date: Your Signature:
------------- --------------------------------------------
Sign exactly as your name appears on the
other side of this Note.
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-11
136
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501 (a) (1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE NOTES (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE TRUSTEE) OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY THEREOF OR
ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE TRUSTEE),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
C-1
137
EXHIBIT D
LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
138
EXHIBIT E
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Decora Industries, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with our proposed purchase of 11% Senior Secured Notes
due 2005 (the "Notes") of Decora Industries, Inc. (the "Company"), we confirm
that:
1. Neither the Company, its subsidiaries nor Lazard Freres & Co.
Inc. (the "Initial Purchaser"), nor any person representing the Company,
its subsidiaries or the Initial Purchaser, has made any representation
with respect to the Company, its subsidiaries or the offer or sale of any
Notes.
2. We have received a copy of the Offering Memorandum dated April
24, 1998 (the "Offering Memorandum") relating to the Notes and such other
information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agree to the matters stated in the
section entitled "Transfer Restrictions" in the Offering Memorandum.
3. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated April 29, 1998 (the "Indenture") between the Company, certain of its
subsidiaries and United States Trust Company of New York as trustee (the
"Trustee") pursuant to which the Notes were issued, and we agree to be
bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
▇-▇
▇▇▇
▇. We understand that the Notes have not been registered under the
Securities Act and, accordingly, may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except
as set forth below. We agree, on our own behalf and on behalf of any
accounts for which we are acting, that we shall not resell or otherwise
transfer any of such Notes within two years after the original issuance of
the Notes except (i) to the Company or any of its subsidiaries, (ii) to a
QIB in a transaction complying with Rule 144A, (iii) to an institutional
"Accredited Investor" (as defined in Rule 501 (a) (1), (2), (3) or (7) of
Regulation D under the Securities Act) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the
Trustee a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of which
letter may be obtained from the Trustee), (iv) outside the United States
in compliance with Rule 904 under the Securities Act, (v) pursuant to the
exemption from registration provided by Rule 144 (if available) or (vi)
pursuant to an effective registration statement under the Securities Act.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Company and to the Trustee such
certifications, legal opinions and other information as the Company and
the Trustee may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Notes purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501 (a) (1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting, are each able to
bear the economic risks of our or their investments.
7. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to which we exercise sole investment discretion and not with
a view to any distribution of the Notes, subject, nevertheless, to the
understanding that the disposition of our property shall at all times be
and remain within our control.
E-2
140
You, Issuer, its subsidiaries and the Trustee 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,
By:
-------------------------------------
Name:
Title:
Notes to Be Purchased:
$ principal amount
Dated:
141
EXHIBIT F
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Decora Industries, Inc. (the "Company")
11% Senior Secured Notes due 2005 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes 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(a)(2) or Rule 904(a)(2)
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 Notes.
You, Issuer and counsel for Issuer are entitled to
F-1
142
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 Transferor]
By:
-------------------------------------
Authorized Signature
F-2
143
EXHIBIT G
GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of this
Note the cash payments in United States dollars of principal of and interest on
this Note in the amounts and at the times when due and interest on the overdue
principal of and interest on this Note, if lawful, and the payment or
performance of all other obligations of Issuer under the Indenture (as defined
below) or the Notes, to the Holder of this Note and the Trustee, all in
accordance with and subject to the terms and limitations of this Note, Article
10 of the Indenture and this Guarantee. This Guarantee will become effective in
accordance with Article 10 of the Indenture and its terms shall be evidenced
therein. The validity and enforceability of any Guarantee shall not be affected
by the fact that it is not affixed to any particular Note. Terms used but not
defined herein shall have the meanings ascribed to them in the Indenture dated
as of April 29, 1998, among Decora Industries, Inc., a Delaware corporation, as
issuer (the "Company"), the Guarantors party thereto and United States Trust
Company of New York, as trustee (the "Trustee"), as amended or supplemented from
time to time (the "Indenture").
The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
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.
G-1
144
IN WITNESS WHEREOF, the Guarantor has caused its Guarantee to be
duly executed.
DECORA INCORPORATED
By:
-------------------------------------
Name:
Title:
G-2
145
EXHIBIT H
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______________.
WHEREAS Decora Industries, Inc. (the "Company"), certain of its
subsidiaries and United States Trust Company of New York, as trustee, are
parties to an Indenture (as such may be amended from time to time, the
"Indenture"), dated as of April 29, 1998, relating to Issuer's 11% Senior
Secured Notes due 2005 (the "Notes");
WHEREAS Section 4.5 of the Indenture requires Issuer to cause each
new Restricted Subsidiary (other than any Foreign Subsidiary) to execute and
deliver to the Trustee a supplemental indenture pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of Issuer's
obligations under Indenture and the Notes.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is acknowledged, the undersigned hereby agrees to guarantee Issuer's
obligations under the Indenture and the Notes on the terms and subject to the
conditions set forth in Article 10 of the Indenture. From and after the date
hereof, the undersigned shall be a Guarantor for all purposes under the
Indenture and the Notes.
H-1
146
IN WITNESS WHEREOF, the undersigned has caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR]
By:
-------------------------------------
Name:
Title:
H-2
147
================================================================================
GUARANTOR PLEDGE AGREEMENT
BY
[ ],
as Pledgor,
TO
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee for the holders of the
11% Senior Secured Notes due 2005
Dated as of [ ]
================================================================================
148
TABLE OF CONTENTS
Page
----
INTRODUCTION ........................................................... 1
RECITALS ............................................................... 1
SECTION 1. PLEDGE ..................................................... 1
1.1. Grant of Pledge............................................... 1
1.2. Delivery of Collateral........................................ 3
1.3. Perfection of Uncertificated Securities Collateral............ 3
1.4. Secured Obligations........................................... 3
1.5. No Release.................................................... 4
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR........ 4
2.1. Ownership..................................................... 4
2.2. Shares Validly Issued......................................... 4
2.3. Perfection upon Delivery...................................... 5
2.4. Government Regulations........................................ 5
2.5. Authorization; Enforceability................................. 5
2.6. No Consents, etc.............................................. 5
2.7. No Conflicts.................................................. 5
2.8. Pledgor's Duties.............................................. 5
2.9. Preservation of Collateral.................................... 6
2.10. Further Assurances; Supplements............................... 6
2.11. Trustee May Perform; Trustee Agent Appointed
Attorney-in-Fact ........................................... 7
2.12. Accuracy of Information....................................... 7
2.13. Indemnification............................................... 7
SECTION 3. SPECIAL PROVISIONS CONCERNING COLLATERAL.................... 7
3.1. Voting Rights, Dividends, Etc. Prior to Event of Default...... 7
3.2. Voting Rights and Dividends After Event of Default............ 8
3.3. Further Assurances for Voting Rights and Dividends............ 8
3.4. Dividends Received in Trust................................... 9
3.5. Transfers and Other Liens; Additional Shares.................. 9
SECTION 4. REMEDIES UPON DEFAULT....................................... 10
4.1. Dispositions of Collateral.................................... 10
4.2. Securities Laws Limitations................................... 11
4.3. Additional Information........................................ 11
4.4. Waivers....................................................... 11
4.5. Deficiency.................................................... 12
4.6. Application of Proceeds....................................... 12
4.7. Expenses...................................................... 12
4.8. No Waiver; Discontinuance of Proceeding....................... 12
SECTION 5. MISCELLANEOUS PROVISIONS.................................... 13
5.1. Entire Agreement.............................................. 13
-i-
149
5.2. Execution in Counterparts..................................... 13
5.3. Survival...................................................... 13
5.4. Headings...................................................... 13
5.5. Severability of Provisions.................................... 13
5.6. Notices....................................................... 13
5.7. Amendments.................................................... 14
5.8. GOVERNING LAW................................................. 14
5.9. CONSENT TO JURISDICTION AND SERVICE OF PROCESS................ 14
5.10. Agents........................................................ 14
5.11. Reasonable Care............................................... 14
5.12. Trustee....................................................... 14
5.13. Continuing Security Interest; Assignment...................... 15
5.14. Obligations Absolute.......................................... 15
5.15. Termination; Release.......................................... 16
Signatures
Schedule A PLEDGED SHARES
Exhibit 1 PLEDGE AMENDMENT
Exhibit 2 Form of Issuer Acknowledgment
-ii-
▇▇▇
-▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
I N T R O D U C T I O N :
GUARANTOR PLEDGE AGREEMENT (this "Agreement"), dated as of [ ],
by and between [ ], a Delaware corporation ("Pledgor"), and UNITED STATES
TRUST COMPANY OF NEW YORK (together with any successors or assigns, the
"Trustee"), in its capacity as trustee under the Indenture (as hereinafter
defined).
R E C I T A L S :
A. Decora Industries, Inc., a Delaware corporation, and the Trustee
have entered into an indenture, dated as of April 29, 1998 (the "Indenture"),
pursuant to which the Pledgor's 11% Senior Secured Notes due 2005 (the "Notes")
will be issued concurrently herewith. Terms not defined herein have the meanings
given to them in the Indenture.
B. Pledgor is the legal and beneficial owner of the Collateral (as
hereinafter defined).
C. In order to secure the performance of the Secured Obligations (as
hereinafter defined), the parties hereto are entering into this Agreement
regarding the terms and conditions of Pledgor's pledge of the Collateral to the
Trustee, for the benefit of itself and the Holders of the Notes from time to
time (the Trustee and such Holders, each a "Secured Party" and collectively, the
"Secured Parties").
A G R E E M E N T:
Pledgor and the Trustee agree as follows:
SECTION 14. PLEDGE
14.1. Grant of Pledge. In order to secure the payment and
performance when due of the Secured Obligations, Pledgor does hereby transfer,
convey, warrant, deliver, pledge, assign, hypothecate and grant to the Trustee,
for the benefit of the Secured Parties, a first priority lien on, continuing
security interest in and pledge of all of Pledgor's present and future right,
title and interest in, to and under the following properties, rights, interests
and privileges (collectively, the "Collateral"):
151
-2-
(a) the shares of capital stock of the issuers set forth on
Schedule A hereto (collectively, the "Current Shares") (which are and
shall remain at all times until this Agreement terminates, certificated
shares);
(b) all additional shares of capital stock of the issuers or the
shares of any other Guarantor of the Notes under the Indenture from time
to time acquired or formed by Pledgor in any manner (collectively, the
"Additional Shares"; together with the Current Shares, the "Pledged
Shares") (which are and shall remain at all times until this Agreement
terminates, certificated shares);
(c) any and all certificates representing the Pledged Shares and
any interest of Pledgor in any securities account pertaining to the
Pledged Shares (collectively, the "Certificates");
(d) all membership interests and/or partnership interests, as
applicable from time to time acquired by Pledgor in any manner in each
Guarantor that is a limited liability company or partnership hereafter
acquired or formed by Pledgor or any Guarantor, together with all rights,
privileges, authority and powers of Pledgor in and to each such limited
liability company or partnership or under the membership or partnership
agreement of each such limited liability company or partnership (the
"Operative Agreements") (collectively, the "Pledged Interests"), and the
certificates, instruments and agreements, if any, representing the Pledged
Interests;
(e) subject to the provisions of Section 3 hereof, all dividends,
cash or proceeds, options, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares or Pledged Interests (collectively, the "Dividends"); and
(f) without affecting the obligations of Pledgor under any
provision prohibiting such action hereunder or under the Indenture, in the
event of any consolidation or merger in which any issuer of Pledged Shares
or Pledged Interests is not the surviving entity, all shares of each class
of the capital stock of the successor corporation or interests or
certificates of the successor limited liability company or partnership
owned by such Pledgor (unless successor is Pledgor itself) formed by or
resulting from such consolidation or merger;
(g) all cash, instruments, securities, funds and
152
-3-
credits of Pledgor from time to time on deposit with the Trustee, all
investments of such funds and all certificates, securities and instruments
evidencing any such investments of such funds, and all interest,
dividends, cash, instruments and other property received as proceeds of,
or in substitution or exchange for, and all collections and claims in
respect of, any and all of the foregoing (collectively, the "Cash
Collateral").
14.2. Delivery of Collateral. All certificates, agreements or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of the Trustee pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Trustee. The Trustee shall have the right, at any time upon
or after the occurrence of an Event of Default and without notice to Pledgor, to
endorse, assign or otherwise transfer to or to register in the name of the
Trustee or any of its nominees any or all of the Collateral. In addition, the
Trustee shall have the right at any time to exchange certificates representing
or evidencing Collateral for certificates of smaller or larger denominations.
14.3. Perfection of Uncertificated Securities Collateral. If any
issuer of Pledged Shares or Pledged Interests is organized in a jurisdiction
which does not permit the use of certificates to evidence equity ownership, or
if any of the Pledged Shares or Pledged Interests are at any time not evidenced
by certificates of ownership, then Pledgor shall, to the extent permitted by
applicable law, record such pledge on the equityholder register or the books of
the issuer, cause the issuer to execute and deliver to Trustee an acknowledgment
of the pledge of such Pledged Shares or Pledged Interests substantially in the
form of Exhibit 2 hereto, execute any customary pledge forms or other documents
necessary or appropriate to complete the pledge and give Trustee the right to
transfer such Pledged Shares or Pledged Interests under the terms hereof and
provide to Trustee an Opinion of Counsel, in form and substance satisfactory to
Trustee, confirming such pledge.
14.4. Secured Obligations. This Agreement secures, and the
Collateral is collateral security for, the payment and performance in full when
due, whether at stated maturity, by acceleration or otherwise (including,
without limitation, the payment of interest and other amounts which would accrue
and become due but for the filing of a petition in bankruptcy (whether or not a
claim is allowed against Pledgor for such interest or other amounts in any such
bankruptcy proceeding) or the operation of the automatic stay under Section
362(a) of the Bankruptcy Law), of (i) all obligations of Pledgor now existing
153
-4-
or hereafter arising under or in respect of the Indenture, the Notes or the
Registration Rights Agreement (including, without limitation, Pledgor's
obligations to pay principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related to
or in respect of the obligations contained therein) and (ii) without duplication
of the amounts described in clause (i), all obligations of Pledgor now existing
or hereafter arising under or in respect of this Agreement, including, without
limitation, with respect to all charges, fees, expenses, commissions,
reimbursements, premiums, indemnities and other payments related to or in
respect of the obligations contained in this Agreement (the obligations
described in clauses (i) and (ii), collectively, the "Secured Obligations").
14.5. No Release. Nothing set forth in this Agreement shall relieve
Pledgor from the performance of any term, covenant, condition or agreement on
Pledgor's part to be performed or observed under or in respect of any of the
Collateral or from any liability to any Person under or in respect of any of the
Collateral or shall impose any obligation on the Trustee to perform or observe
any such term, covenant, condition or agreement in respect of any of the
Collateral on Pledgor's part to be so performed or observed or shall impose any
liability on the Trustee for the operation, control, care, management or repair
of the Collateral or for any act or omission on the part of Pledgor relating to
Pledgor's obligations thereto or for any breach of any representation or
warranty on the part of Pledgor contained in this Agreement, under or in respect
of the Collateral or made in connection herewith or therewith. The provisions
set forth in this Section 1.5 shall survive the termination of this Agreement
and the discharge of the Pledgor's obligations under this Agreement.
SECTION 15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR
Pledgor represents, warrants and covenants (as applicable) as
follows:
15.1. Ownership. Pledgor is as of the date hereof, and, as to
Collateral acquired by it from time to time after the date hereof, Pledgor will
be, the legal, record and beneficial owner of all of the Collateral free and
clear of any Lien or other right, title or interest of any Person other than the
Lien and security interest granted by Pledgor to the Trustee pursuant to this
Agreement.
15.2. Shares Validly Issued. All of the Pledged Shares have been
duly authorized and validly issued and are fully paid and non-assessable.
154
-5-
15.3. Perfection upon Delivery. Upon delivery by Pledgor to the
Trustee of the certificates evidencing the Pledged Shares, duly endorsed to the
Trustee or in blank, the Lien on such Collateral granted to the Trustee pursuant
to this Agreement constitutes and hereafter will constitute a first priority
perfected Lien on such Collateral, superior and prior to the rights of all other
Persons therein and subject to no other Liens.
15.4. Government Regulations. The pledge of the Collateral pursuant
to this Agreement does not violate Regulation T, U or X of the Federal Reserve
Board.
15.5. Authorization; Enforceability. Pledgor has full corporate
power, authority and legal right to pledge and grant a security interest in all
the Collateral pursuant to this Agreement. This Agreement constitutes the legal,
valid and binding obligation of Pledgor, enforceable against Pledgor in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws affecting
creditors' rights generally and to general equitable principles.
15.6. No Consents, etc. No authorization, consent, approval,
license, qualification or formal exemption from, or any filing, declaration or
registration with, any court, governmental agency or regulatory authority, or
with any securities exchange or any other Person, is required in connection with
(i) the execution, delivery or performance by Pledgor of this Agreement, (ii)
the grant of a Lien on (including the priority thereof) the Collateral by
Pledgor in the manner and for the purpose contemplated by this Agreement or
(iii) the exercise of the rights and remedies of the Trustee created hereby,
except (a) those that have been obtained or made concurrently with the execution
hereof, and (b) as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
15.7. No Conflicts. The execution, delivery and performance by
Pledgor of this Agreement do not (or with notice or lapse of time or both, will
not) violate, conflict with or constitute a default under, or result in the
termination of or accelerate the performance required by, or result in there
being declared void, voidable or without further binding effect, any provision
of any other agreement, instrument or document to which Pledgor is a party.
15.8. Pledgor's Duties. Pledgor shall perform, abide by and be
governed by each and all of the terms, provisions, covenants and agreements set
forth in this Agreement and in each and every supplement hereto or amendment
hereof which
155
-6-
may at any time or from time to time be executed and delivered by the parties
hereto or their successors and assigns.
15.9. Preservation of Collateral. All rights, powers and privileges
of the Trustee herein set forth are coupled with an interest and are
irrevocable, subject to the terms and conditions hereof, and Pledgor shall not
take or omit to take any action with respect to the Collateral or otherwise
which is inconsistent with this Agreement, and any such action inconsistent
herewith or therewith shall be void. Pledgor shall not further pledge, encumber,
hypothecate, sell, convey or assign, or grant any option with respect to all or
any part of the Collateral or suffer any of the foregoing to occur by operation
of law or otherwise, except for the Liens and security interests granted by
Pledgor to the Trustee pursuant to this Agreement, and shall promptly take such
action as is reasonably necessary to remove any such other Lien. Pledgor will,
at its expense, warrant and defend the title to the Collateral against all
claims and demands of all third Persons or Persons claiming by, through or under
Pledgor at any time claiming any interest therein adverse to the Trustee.
15.10. Further Assurances; Supplements.
(a) Pledgor agrees that at any time and from time to time, Pledgor
will, at its expense, promptly do, execute, acknowledge and deliver all
and every further act, deed, conveyance, transfer, waiver, subordination,
supplement, opinion of counsel and other instruments, documents and
assurances that may be reasonably necessary or that the Trustee deems
appropriate or advisable, including, without limitation, supplemental or
additional UCC-1 financing statements, for the continued perfection,
preservation and protection of the security interest in the Collateral
granted hereby or to enable the Trustee to exercise and enforce its rights
and remedies hereunder with respect to any Collateral.
(b) Pledgor shall, upon obtaining any Pledged Shares, promptly (and
in any event within five Business Days) deliver to the Trustee a pledge
amendment, duly executed by Pledgor, in substantially the form of Exhibit
1 hereto (each, a "Pledge Amendment"), in respect of the additional
Pledged Shares which are to be pledged pursuant to this Agreement, and
confirming the attachment of the Lien hereby created on and in respect of
such additional shares. Pledgor hereby authorizes the Trustee to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
listed on any Pledge Amendment delivered to the Trustee shall for all
purposes hereunder be considered Collateral.
156
-7-
15.11. Trustee May Perform; Trustee Appointed Attorney-in-Fact. If
Pledgor fails to perform any agreement contained in this Agreement, the Trustee
may itself perform, or cause performance of, such agreement, and the expenses of
the Trustee, including, without limitation, the reasonable fees and expenses of
its counsel and the allocated cost of staff counsel, incurred in connection
therewith shall be payable by Pledgor on demand. Pledgor hereby appoints the
Trustee its attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor, or otherwise, from time to time in the
Trustee's discretion to take any action which the Trustee may take pursuant to
the provisions of this Section.
15.12. Accuracy of Information. All information set forth herein
(including the exhibits hereto) relating to the Collateral is accurate and
complete in all material respects.
15.13. Indemnification. Pledgor hereby agrees to indemnify the
Trustee for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Trustee in any way relating to or arising out of this Agreement or the pledge
and security interest contemplated hereby or the enforcement of any of the terms
hereof or otherwise arising or relating in any manner to the Lien contemplated
hereunder; provided, however, that Pledgor shall not be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Trustee.
SECTION 16. SPECIAL PROVISIONS CONCERNING COLLATERAL
16.1. Voting Rights, Dividends, Etc. Prior to Event of Default. As
long as no Event of Default shall have occurred and be continuing:
(a) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Indenture; provided, however, Pledgor shall not in any event exercise such
rights in any manner which may have an adverse effect on the value of the
Collateral or the security intended to be provided by this Agreement.
(b) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the Lien of this Agreement, any and all dividends and
distributions in respect of the Collateral, but only if and to the extent
made in accordance with the provisions of the Indenture; provided,
157
-8-
however, that any and all such dividends and distributions consisting of
rights or interests in the form of securities shall be forthwith delivered
to the Trustee to hold as Collateral and shall, if received by Pledgor, be
received in trust for the benefit of the Trustee, be segregated from the
other property or funds of Pledgor and be forthwith delivered to the
Trustee as Collateral in the same form as so received (with any necessary
endorsement).
(c) The Trustee shall be deemed without further action or formality
to have granted to Pledgor all necessary consents relating to voting
rights and shall, if necessary, upon written request of Pledgor and at the
sole cost and expense of Pledgor, from time to time execute and deliver
(or cause to be executed and delivered) to Pledgor all such instruments as
Pledgor may reasonably request in order to permit Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to
Section 3.1(a) hereof and to receive the dividends and distributions which
it is authorized to receive and retain pursuant to Section 3.1(b) hereof.
16.2. Voting Rights and Dividends After Event of Default. Upon the
occurrence and during the continuance of an Event of Default:
(a) Upon written notice from the Trustee to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 3.1 above shall
cease, and all such rights shall thereupon become vested in the Trustee,
which shall thereupon have the sole right to exercise such voting and
other consensual rights during the continuance of such Event of Default.
(b) Upon written notice from the Trustee to Pledgor, all rights of
Pledgor to receive the dividends and distributions which it would
otherwise be authorized to receive and retain pursuant to Section 3.1
above shall cease and all such rights shall thereupon become vested in the
Trustee, which shall thereupon have the sole right to receive and hold as
Collateral such dividends and distributions during the continuance of such
Event of Default.
16.3. Further Assurances for Voting Rights and Dividends. In order
to permit the Trustee to receive all dividends and other distributions to which
it may be entitled under Section 3.1(b) above, to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
3.2(a) above, and to receive all dividends and distributions which it may be
entitled to receive under Section 3.2(b)
▇▇▇
-▇-
▇▇▇▇▇, ▇▇▇▇▇▇▇ shall, if necessary, upon written notice from the Trustee, from
time to time execute and deliver to the Trustee appropriate proxies, dividend
payment orders and other instruments as the Trustee may reasonably request.
16.4. Dividends Received in Trust. All dividends and distributions
which are received by Pledgor contrary to the provisions of Section 3.2 above
shall be received in trust for the benefit of the Trustee, shall be segregated
from other funds of Pledgor and shall be forthwith paid over to the Trustee as
Collateral in the same form as so received (with any necessary endorsement).
16.5. Transfers and Other Liens; Additional Shares.
(a) Transfers and Other Liens. Pledgor shall not (i) pledge,
encumber, hypothecate, sell, convey, assign or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral or
suffer any of the foregoing to occur by operation of law or otherwise
except for the Liens and security interests granted by Pledgor to the
Trustee pursuant to this Agreement or (ii) permit any issuer of Pledged
Shares to merge or consolidate unless all the outstanding capital stock of
the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property
is distributed in respect of the outstanding shares of any other
constituent corporation; provided, however, that in the event of an Asset
Sale of any Collateral, pursuant to, and in compliance with, the
provisions of the Indenture, the Trustee shall release the Collateral that
is the subject of such sale to Pledgor free and clear of the Lien and
security interest under this Agreement upon the making of proper
arrangements by the Trustee for the application of the proceeds of such
Asset Sale in accordance with the provisions of the Indenture and the
receipt by the Trustee of an Opinion of Counsel to the effect that such
sale of Collateral was an Asset Sale pursuant to, and in compliance with,
the Indenture and that such release of Collateral is authorized and
permitted hereby.
(b) Additional Shares. Pledgor agrees that it will cause each
issuer of Collateral consisting of capital stock not to issue any stock or
other securities in addition to or in substitution for such Collateral
issued by such issuer, except to Pledgor.
159
-10-
SECTION 17. REMEDIES UPON DEFAULT
17.1. Dispositions of Collateral. If any Event of Default shall have
occurred and be continuing, the Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of New York at
that time, and may also in its sole discretion, without notice except as
specified below, subject to applicable law, at any time or from time to time,
sell, assign and deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale, at any
exchange or broker's board for cash, for immediate or future delivery without
any assumption of credit risk, and for such price or prices and on such terms as
may be reasonable.
At any such sale, unless prohibited by applicable law, the Trustee
on behalf of the Secured Parties may bid for and purchase all or any part of the
Collateral so sold free from any right or equity of redemption of Pledgor. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent
permitted by law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. The Trustee shall give Pledgor not less than five
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Pledged Collateral which is
perishable or threatens to decline speedily in value and is of a type
customarily sold on a recognized market. The notice of such sale shall (1) in
the case of a public sale, state the time and place fixed for such sale, and (2)
in the case of a private sale, state the day after which such sale may be
consummated. Pledgor agrees that such notice constitutes reasonable notice. The
Trustee shall not be obligated to make any sale of the Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Pledgor hereby waives any claims against the Trustee arising
by reason of the fact that the price at which any Collateral may have been sold
at such a private sale was less than the price which might have been obtained at
a public sale, even if the Trustee accepts the first offer received and does not
offer such Collateral to more than one offeree. Neither the Trustee nor any
Secured Party shall be liable for failure to collect or realize upon any or all
of the Collateral or for any delay in so doing nor shall
160
-11-
any of them be under any obligation to take any action whatsoever with regard
thereto.
17.2. Securities Laws Limitations. Pledgor recognizes that, by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, the
Trustee may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable to the Trustee than
those obtainable through a public sale without such restrictions (including,
without limitation, a public offering made pursuant to a registration statement
under the Securities Act), and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Trustee shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if Pledgor would agree to do so.
17.3. Additional Information. If the Trustee determines to exercise
its right to sell any or all of the Collateral, upon written request, Pledgor
shall, and shall cause each issuer of any Collateral to be sold hereunder from
time to time to, furnish to the Trustee all such information as the Trustee may
request in order to determine the number of shares and other instruments
included in the Collateral which may be sold by the Trustee as exempt
transactions under the Securities Act and the rules of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
17.4. Waivers. Pledgor hereby waives, to the extent permitted by
applicable law, notice or judicial hearing in connection with the Trustee's
taking possession or the Trustee's disposition of any Collateral, including,
without limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right which Pledgor would otherwise have under
law, and Pledgor hereby further waives: (a) all damages occasioned by such
taking of possession; (b) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of the Trustee's
rights hereunder; and (c) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law. Any
sale of, or the grant of options to purchase, or any other realization upon, any
Collat-
161
-12-
eral shall operate to divest all right, title, interest, claim and demand,
either at law or in equity, of Pledgor therein and thereto, and shall be a
perpetual bar both at law and in equity against Pledgor and against any and all
Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under Pledgor.
17.5. Deficiency. Notwithstanding any other provision of this
Agreement to the contrary, if, after giving effect to any sale, transfer or
other disposition of any or all of the Collateral pursuant hereto and after the
application of the proceeds hereunder and any Collateral sold, transferred or
otherwise disposed of, any Secured Obligations remain unpaid or unsatisfied,
Pledgor shall remain liable for the unpaid and unsatisfied amount of such
Secured Obligations.
17.6. Application of Proceeds. The proceeds of any sale made under
or by virtue of the provisions of Section 4.13 of the Indenture, together with
any other sums then held by the Trustee pursuant to this Agreement, shall be
applied promptly from time to time by the Trustee as set forth in the Indenture.
17.7. Expenses. Pledgor will upon demand pay to the Trustee the
amount of any and all expenses, including the reasonable fees and expenses of
its counsel and the allocated fees and expenses of staff counsel and the
reasonable fees and expenses of any experts and agents, which the Trustee may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Trustee hereunder or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof. All amounts payable by Pledgor
under this Section 4.7 shall be due upon demand and shall be part of the Secured
Obligations. Pledgor's obligations under this Section shall survive the
resignation or removal of the Trustee, the termination of this Agreement and the
Indenture and the discharge of Pledgor's other obligations hereunder.
17.8. No Waiver; Discontinuance of Proceeding.
(a) No failure on the part of the Trustee to exercise, and no
course of dealing with respect to, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by the Trustee of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are to
the fullest extent permitted by law cumulative and are not exclusive of
162
-13-
any remedies provided by law.
(b) In the event the Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this instrument by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case Pledgor, the Trustee
and each Secured Party shall be restored to their respective former
positions and rights hereunder with respect to the Collateral, and all
rights, remedies and powers of the Trustee shall continue as if no such
proceeding had been instituted.
SECTION 18. Miscellaneous Provisions
18.1. Entire Agreement. This Agreement and the documents and
agreements referred to herein embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof.
18.2. Execution in Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts shall constitute one and the same Agreement.
18.3. Survival. All representations, warranties, covenants and
agreements herein contained on the part of Pledgor shall survive the payment and
performance of all the Secured Obligations and the termination of this
Agreement.
18.4. Headings. The Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
18.5. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
18.6. Notices. All notices or other communications required to be
given hereunder shall be given at the address and in the manner required in the
Indenture.
163
-14-
18.7. Amendments. No amendment, modification, supplement,
termination or waiver of or to any provision of this Agreement, or consent to
any departure by Pledgor therefrom, shall be effective unless in writing and
signed by the Trustee and Pledgor. Any amendment, modification or supplement of
or to any provision of this Agreement, any waiver of any provision of this
Agreement and any consent to any departure by Pledgor from the terms of any
provision of this Agreement shall be effective only in the specific instance and
for the specific purpose for which made or given.
18.8. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO NEW YORK'S PRINCIPLES OF CONFLICTS OF LAWS).
18.9. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, PLEDGOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT SUBJECT
TO RIGHT OF APPEAL. PLEDGOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY AND PLEDGOR
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTHING HEREIN SHALL AFFECT THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF THE TRUSTEE TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER
JURISDICTION.
18.10. Agents. The Trustee may use one or more agents to perform its
obligations hereunder.
18.11. Reasonable Care. The Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equivalent to
that which the Trustee, in its individual capacity, accords its own property, it
being understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any Person with respect to any
Collateral.
18.12. Trustee. The Trustee has been appointed as trustee pursuant
to the Indenture. The actions of the Trustee hereunder and under the other
Security Documents are subject to
164
-15-
the provisions of the Indenture. The Trustee may resign and a successor Trustee
may be appointed in the manner provided in the Indenture. Upon the acceptance of
any appointment as the Trustee by a successor Trustee, that successor Trustee
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Trustee under this Agreement and the other
Security Documents, and the retiring Trustee shall thereupon be discharged from
its duties and obligations under this Agreement and the other Security
Documents. After any retiring Trustee's resignation, the provisions of this
Agreement and the other Security Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement or any other
Security Documents while it was the Trustee.
18.13. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Collateral and shall (i) be
binding upon Pledgor and its successors and assigns and (ii) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee and each Secured Party and each of their successors, transferees and
assigns. No other Person (including, without limitation, any other creditor of
Pledgor) shall have any interest herein or any right or benefit with respect
hereto. Pledgor may not assign its rights under this Agreement without the prior
written consent of the Trustee.
18.14. Obligations Absolute. All obligations of Pledgor
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Pledgor;
(ii) any lack of validity or enforceability of any loan document, or
any other agreement or instrument relating thereto;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture,
or any other agreement or instrument relating thereto;
(iv) any exchange or non-perfection of the Collateral, or any
release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise or any waiver of
165
-16-
any right, remedy, power or privilege under or in respect of any document
relating to the Indenture; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
18.15. Termination; Release. When all of the Secured Obligations
have been paid in full, this Agreement and the other Security Documents shall
terminate. Upon termination of this Agreement and the other Security Documents
or any release of Collateral in accordance with the provisions of the Indenture,
the Trustee shall, upon the request and at the sole cost and the expense of
Pledgor, forthwith assign, transfer and deliver to Pledgor against receipt and
without express or implied recourse to or warranty by the Trustee, such of the
Collateral to be released as may be in possession of the Trustee and as shall
not have been sold or otherwise applied pursuant to the terms hereof, and proper
instruments acknowledging the termination of this Agreement and the other
Security Documents or the release of such Collateral, as the case may be.
166
IN WITNESS WHEREOF, Pledgor and the Trustee have executed this
Agreement as of the day and year first above written.
[ ]
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
167
SCHEDULE A
PLEDGED SHARES
Percentage
of All
Capital or
Other Equity
Class of Certificate Number of Interests of
Issuer Stock Par Value Numbers Shares Issuer
------ -------- --------- ----------- ---------- ------------
168
EXHIBIT 1
This Pledge Amendment, dated _______________, is delivered pursuant
to Section 2.10(b) of the Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Guarantor Pledge
Agreement, dated as of [ ], between the undersigned and UNITED STATES TRUST
COMPANY OF NEW YORK, as Trustee (the "Agreement"); capitalized terms used herein
and not defined have the meanings ascribed to them in the Agreement) and that
the Pledged Shares listed on this Pledge Amendment shall be deemed to be and
shall become part of the Collateral and shall secure all Secured Obligations.
[ ],
as Pledgor
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
169
EXHIBIT 2
FORM OF ISSUER ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of the
Pledge Agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Agreement"; capitalized terms used herein but
not defined herein have the meanings given such terms in the Agreement), dated
as of [_____________], between [___________________] (the "Pledgor") and United
States Trust Company of New York, as Trustee ("Trustee"), (ii) agrees promptly
to note on its books the security interests granted and confirmed under the
Agreement, (iii) agrees that it will comply with instructions of Trustee with
respect to the applicable Collateral without further consent by applicable
Pledgor, (iv) agrees to notify Trustee upon obtaining knowledge of any interest
in favor of any Person in the applicable Collateral that is adverse to the
interest of Trustee therein and (v) waives any right or requirement at any time
hereafter to receive a copy of the Agreement in connection with the registration
of any Collateral thereunder in the name of Trustee or its nominee or the
exercise of voting rights by Trustee or its nominee.
[NAME OF ISSUER]
By:
-------------------------------------
Name:
Title:
Note: This form should be signed by each issuer of uncertificated Pledged
Shares.