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GFSI, Inc.
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SERIES A AND SERIES B
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
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INDENTURE
DATED AS OF FEBRUARY 27, 1997
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FLEET NATIONAL BANK
Trustee
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions..................................................................................... 1
Section 1.02. Other Definitions............................................................................... 14
Section 1.03. Incorporation by Reference of Trust Indenture Act............................................... 14
Section 1.04. Rules of Construction........................................................................... 14
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating................................................................................. 15
Section 2.02. Execution and Authentication.................................................................... 15
Section 2.03. Registrar and Paying Agent...................................................................... 16
Section 2.04. Paying Agent to Hold Money in Trust............................................................. 16
Section 2.05. Holder Lists.................................................................................... 16
Section 2.06. Transfer and Exchange........................................................................... 17
Section 2.07. Replacement Notes............................................................................... 23
Section 2.08. Outstanding Notes............................................................................... 23
Section 2.09. Treasury Notes.................................................................................. 23
Section 2.10. Temporary Notes................................................................................. 23
Section 2.11. Cancellation.................................................................................... 24
Section 2.12. Defaulted Interest.............................................................................. 24
Section 2.13. Record Date..................................................................................... 24
Section 2.14. CUSIP Number.................................................................................... 24
ARTICLE 3
OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE
Section 3.01. Notices to Trustee.............................................................................. 24
Section 3.02. Selection of Notes to be Redeemed or Purchased.................................................. 25
Section 3.03. Notice of Redemption............................................................................ 25
Section 3.04. Effect of Notice of Redemption.................................................................. 26
Section 3.05. Deposit of Redemption Price..................................................................... 26
Section 3.06. Notes Redeemed in Part.......................................................................... 27
Section 3.07. Optional Redemption Provisions.................................................................. 27
Section 3.08. Mandatory Purchase Provisions................................................................... 27
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes................................................................................ 29
Section 4.02. SEC Reports..................................................................................... 29
Section 4.03. Compliance Certificate.......................................................................... 30
Section 4.04. Stay, Extension and Usury Laws.................................................................. 31
Section 4.05. Limitation on Restricted Payments............................................................... 31
Section 4.06. Corporate Existence............................................................................. 33
Section 4.07. Limitation on Incurrence of Indebtedness........................................................ 34
Section 4.08 Limitation on Senior Subordinated Debt.......................................................... 34
Section 4.09. Limitation on Transactions With Affiliates...................................................... 35
Section 4.10. Limitation on Liens............................................................................. 35
Section 4.11. Compliance With Laws, Taxes..................................................................... 36
i
Section 4.12. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.................................................. 36
Section 4.13. Maintenance of Office or Agencies............................................................... 37
Section 4.14. Change of Control............................................................................... 37
Section 4.15. Limitation on Asset Sales....................................................................... 38
Section 4.16. Note Guarantees..................................................................................39
Section 4.17. Designation of Restricted and Non-Restricted Subsidiaries....................................... 39
ARTICLE 5
SUCCESSORS
Section 5.01. Merger or Consolidation......................................................................... 40
Section 5.02. Successor Corporation Substituted............................................................... 40
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................................................... 41
Section 6.02. Acceleration.................................................................................... 42
Section 6.03. Other Remedies.................................................................................. 43
Section 6.04. Waiver of Past Defaults......................................................................... 43
Section 6.05. Control by Majority............................................................................. 44
Section 6.06. Limitation on Suits............................................................................. 44
Section 6.07. Rights of Holders to Receive Payment............................................................ 44
Section 6.08. Collection Suit by Trustee...................................................................... 44
Section 6.09. Trustee May File Proofs of Claim................................................................ 44
Section 6.10. Priorities...................................................................................... 45
Section 6.11. Undertaking for Costs........................................................................... 45
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................................................................... 45
Section 7.02. Rights of Trustee............................................................................... 46
Section 7.03. Individual Rights of Trustee.................................................................... 47
Section 7.04. Trustee's Disclaimer............................................................................ 47
Section 7.05. Notice to Holders of Defaults and Events of Default............................................. 47
Section 7.06. Reports by Trustee to Holders................................................................... 47
Section 7.07. Compensation and Indemnity...................................................................... 48
Section 7.08. Replacement of Trustee.......................................................................... 48
Section 7.09. Successor Trustee by Merger, Etc................................................................ 49
Section 7.10. Eligibility; Disqualification................................................................... 49
Section 7.11. Preferential Collection of Claims Against the Company........................................... 49
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Liability on Notes; Defeasance..................................................... 50
Section 8.02. Conditions to Defeasance........................................................................ 50
Section 8.03. Application of Trust Money...................................................................... 51
Section 8.04. Repayment to the Company........................................................................ 52
Section 8.05. Indemnity for Government Obligations............................................................ 52
Section 8.06. Reinstatement................................................................................... 52
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ARTICLE 9
AMENDMENTS
Section 9.01. Amendments and Supplements Permitted Without Consent of Holders................................. 52
Section 9.02. Amendments and Supplements Requiring Consent of Holders......................................... 53
Section 9.03. Compliance with TIA............................................................................. 54
Section 9.04. Revocation and Effect of Consents............................................................... 54
Section 9.05. Notation on or Exchange of Notes................................................................ 54
Section 9.06. Trustee Protected............................................................................... 54
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate........................................................................ 55
Section 10.02. Liquidation; Dissolution; Bankruptcy............................................................ 55
Section 10.03. Default on Designated Senior Indebtedness....................................................... 55
Section 10.04. Acceleration of Notes........................................................................... 56
Section 10.05. When Distribution Must be Paid Over............................................................. 56
Section 10.06. Notice by Company............................................................................... 57
Section 10.07. Subrogation..................................................................................... 57
Section 10.08. Relative Rights................................................................................. 57
Section 10.09. Subordination may not be Impaired by Company.................................................... 57
Section 10.10. Distribution or Notice to Representative........................................................ 57
Section 10.11. Rights of Trustee as Paying Agent............................................................... 58
Section 10.12. Authorization to Effect Subordination........................................................... 58
Section 10.13. Amendments...................................................................................... 58
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls................................................................... 58
Section 11.02. Notices........................................................................................ 58
Section 11.03. Communication by Holders with Other Holders.................................................... 59
Section 11.04. Certificate and Opinion as to Conditions Precedent............................................. 60
Section 11.05. Statements Required in Certificate or Opinion.................................................. 60
Section 11.06. Rules by Trustee and Agents.................................................................... 60
Section 11.07. Legal Holidays................................................................................. 60
Section 11.08. No Recourse Against Others..................................................................... 60
Section 11.09. Counterparts................................................................................... 61
Section 11.10. Variable Provisions............................................................................ 61
Section 11.11. Governing Law.................................................................................. 61
Section 11.12. No Adverse Interpretation of Other Agreements.................................................. 61
Section 11.13. Successors..................................................................................... 61
Section 11.14. Severability................................................................................... 61
Section 11.15. Table of Contents, Headings, Etc............................................................... 61
ARTICLE 12
GUARANTEE OF NOTES
Section 12.01. Execution and Deliver of Note Guarantee........................................................ 62
Section 12.02. Subordination of Note Guarantee; Guarantors May Consolidate, etc.,
on Certain Terms............................................................................... 62
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EXHIBITS
Exhibit A Form of Note ................................................................................... A-1
Exhibit B Certificate of Transferor ...................................................................... B-1
Exhibit C Certificate of Institutional Accredited Investor ............................................... C-1
Exhibit D Certificate of Regulation S Transferor ......................................................... D-1
Exhibit E Form of Note Guarantee.......................................................................... E-1
Exhibit F Form of Supplemental Indenture.................................................................. F-1
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This Indenture, dated as of February 27, 1997, is between GFSI, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Company's 9 5/8% Series A Senior
Subordinated Notes due 2007 (the "Series A Notes") and the Company's 9 5/8%
Series B Senior Subordinated Notes due 2007 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"Acquisition Agreement" means the agreement, dated as of January 24, 1997,
among Holdings, the Company and the shareholders party thereto, relating to the
purchase and sale of the stock of Winning Ways, Inc.
"Affiliate" means any of the following: (i) any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, (ii) any spouse, immediate family member or other
relative who has the same principal residence as any Person described in clause
(i) above, (iii) any trust in which any such Persons described in clause (i) or
(ii) above has a beneficial interest and (iv) any corporation or other
organization of which any such Persons described above collectively own 50% or
more of the equity of such entity, provided, however that MCIT PLC shall not be
deemed an Affiliate of the Company.
"Affiliated Embroiderers" means the affiliated entities that provide
embroidery services for the Company as of the date of this Indenture.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means the sale, lease, conveyance or other disposition by the
Company or a Restricted Subsidiary of assets or property whether owned on the
date of original issuance of the Notes or thereafter acquired, in a single
transaction or in a series of related transactions; provided that Asset Sales
will not include such sales, leases, conveyances or dispositions in connection
with (i) the sale or disposition of any Restricted Investment, (ii) any Equity
Offering by the Company, (iii) the surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of any kind,
(iv) the sale or lease of inventory, equipment, accounts receivable or other
assets in the ordinary course of business, (v) a sale-leaseback of assets within
one year following the acquisition of such assets, (vi) the grant of any license
of patents, trademarks, registration therefor and other similar intellectual
property, (vii) a transfer of assets by the Company or a Restricted Subsidiary
to the Company or a Restricted Subsidiary, (viii) the designation of a
Restricted Subsidiary as a Non-Restricted Subsidiary pursuant to Section 4.17,
(ix) the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company as permitted under Section 5.01, (x) the sale
or disposition of obsolete equipment or other obsolete assets, (xi) Restricted
Payments permitted by Section 4.05, (xii) the exchange of assets for other
non-cash assets that (a) are useful in the business of the Company and its
Restricted Subsidiaries and (b) have a fair market value at least equal to the
fair market value of the assets being exchanged (as determined by the Board of
Directors in good faith), (xiii) the sale of the corporate aircraft owned by the
Company on the date of this Indenture to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or his designees or
(xiv) the sale, transfer and/or termination of the officers' life insurance
policies in effect on the date of this Indenture.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Company's board of directors or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock, including any
preferred stock.
"Cash Flow" means, for any given period and Person, the sum of, without
duplication, Consolidated Net Income, plus (a) any provision for taxes based on
income or profits to the extent such income or profits were included in
computing Consolidated Net Income, plus (b) Consolidated Interest Expense, to
the extent deducted in computing Consolidated Net Income, plus (c) the
amortization of all intangible assets, to the extent such amortization was
deducted in computing Consolidated Net Income (including, but not limited to,
inventory write-ups, goodwill, debt and financing costs, and Incentive
Arrangements), plus (d) any non-capitalized transaction costs incurred in
connection with actual or proposed financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees, including those
in connection with the Transactions), to the extent deducted in computing
Consolidated Net Income, plus (e) all depreciation and all other non-cash
charges (including, without limitation, those charges relating to purchase
accounting adjustments and LIFO adjustments), to the extent deducted in
computing Consolidated Net Income, plus (f) any interest income, to the extent
such income was not included in computing Consolidated Net Income, plus (g) all
dividend payments on preferred stock (whether or not paid in cash) to the extent
deducted in computing Consolidated Net Income, plus (h) any extraordinary or
nonrecurring charge or expense arising out of the implementation of SFAS 106 or
SFAS 109 to the extent deducted in computing Consolidated Net Income, plus (i)
to the extent not covered in clause (d) above, fees paid or payable in respect
of the TJC Agreement to the extent deducted in computing Consolidated Net
Income, plus (j) the net loss of any Person, other than those of a Restricted
Subsidiary, to the extent deducted in computing Consolidated Net Income, plus
(k) net losses in respect of any discontinued operations as determined in
accordance with GAAP, to the extent deducted in computing Consolidated Net
Income, minus (l) the portion of Consolidated Net Income attributable to
minority interests in other Persons, except the amount of such portion received
in cash by the Company or its Restricted Subsidiaries; provided, however, that
if any such calculation includes any period during which an acquisition or sale
of a Person or the incurrence or repayment of Indebtedness occurred, then such
calculation for such period shall be made on a Pro Forma Basis.
"Cash Flow Coverage Ratio" means, for any given period and Person, the
ratio of: (i) Cash Flow to (ii) the sum of Consolidated Interest Expense and all
dividend payments on any series of preferred stock of such Person (except
dividends paid or payable in additional shares of Capital Stock (other than
Disqualified Stock) and except for accrued and unpaid dividends with respect to
the Holdings Preferred Stock outstanding on the date of this Indenture), in each
case, without duplication; provided, however, that if any such calculation
includes any period during which an acquisition or sale of a Person or the
incurrence or repayment of Indebtedness occurred, then such calculation for such
period shall be made on a Pro Forma Basis.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the
2
Principals or their Related Parties, (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of shares), (iv) the
consummation of the first transaction (including, without limitation, any merger
or consolidation) the result of which is that any "person" (as defined above)
becomes the "beneficial owner" (as defined above), directly or indirectly, of
more of the Voting Stock of the Company (measured by voting power rather than
number of shares) than is at the time "beneficially owned" (as defined above) by
the Principals and their Related Parties in the aggregate or (v) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors. For purposes of this definition, any transfer of an
equity interest of an entity that was formed following the date of issuance of
the Notes for the purpose of acquiring Voting Stock of the Company will be
deemed to be a transfer of such portion of such Voting Stock as corresponds to
the portion of the equity of such entity that has been so transferred.
"Consolidated Interest Expense" means, for any given period and Person, the
aggregate of the interest expense in respect of all Indebtedness of such Person
and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original issue
discount on any such Indebtedness, all non-cash interest payments, the interest
portion of any deferred payment obligation and the interest component of capital
lease obligations, but excluding amortization of deferred financing fees if such
amortization would otherwise be included in interest expense); provided,
however, that for the purpose of the Cash Flow Coverage Ratio, Consolidated
Interest Expense shall be calculated on a Pro Forma Basis; provided further that
any premiums, fees and expenses (including the amortization thereof) payable in
connection with the Transactions or any other refinancing of Indebtedness shall
be excluded. For purposes of this definition, the Consolidated Interest Expense
of the Company shall include the cash interest expense of Holdings paid in
respect of the Holdings Subordinated Notes.
"Consolidated Net Income" means, for any given period and Person, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that: (a) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such acquisition
shall be excluded and (b) Consolidated Net Income of any Person will not
include, without duplication, any deduction for: (i) any increased amortization
or depreciation resulting from the write-up of assets pursuant to Accounting
Principles Board Opinion Nos. 16 and 17, as amended or supplemented from time to
time, (ii) the amortization of all intangible assets (including amortization
attributable to inventory write-ups, goodwill, debt and financing costs, and
Incentive Arrangements), (iii) any non-capitalized transaction costs incurred in
connection with actual or proposed financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees), (iv) any
extraordinary or nonrecurring charges relating to any premium or penalty paid,
write-off or deferred financing costs or other financial recapitalization
charges in connection with redeeming or retiring any Indebtedness prior to its
stated maturity and (v) any Restructuring Charges; provided, however, that for
purposes of determining the Cash Flow Coverage Ratio, Consolidated Net Income
shall be calculated on a Pro Forma Basis.
"Consolidated Net Worth" with respect to any Person means, as of any date,
the consolidated equity of the common stockholders of such Person (excluding the
cumulated foreign currency translation
3
adjustment), all determined on a consolidated basis in accordance with GAAP, but
without any reduction in respect of the payment of dividends on any series of
such Person's preferred stock if such dividends are paid in additional shares of
Capital Stock (other than Disqualified Stock); provided, however, that
Consolidated Net Worth shall also include, without duplication: (a) the
amortization of all write-ups of inventory, (b) the amortization of all
intangible assets (including amortization of goodwill, debt and financing costs,
and Incentive Arrangements), (c) any non-capitalized transaction costs incurred
in connection with actual or proposed financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees), (d) any
increased amortization or depreciation resulting from the write-up of assets
pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as amended and
supplemented from time to time, (e) any extraordinary or nonrecurring charges or
expenses relating to any premium or penalty paid, write-off or deferred
financing costs or other financial recapitalization charges incurred in
connection with redeeming or retiring any Indebtedness prior to its stated
maturity, (f) any Restructuring Charges and (g) any extraordinary or
non-recurring charge arising out of the implementation of SFAS 106 or SFAS 109;
provided, however, that Consolidated Net Worth shall be calculated on a Pro
Forma Basis.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of Exhibit A attached
hereto (but without including the text referred to in footnotes 1 and 2
thereto).
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to Section 2.06 of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) any Indebtedness outstanding
under the New Credit Agreement and (ii) any other Senior Indebtedness permitted
under this Indenture the principal amount of which is $10.0 million or more and
that has been designated by the Company as "Designated Senior Indebtedness."
"Disqualified Stock" means any Capital Stock that by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), 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 option of the holder thereof, in whole or in part on, or prior to, the
maturity date of the Notes.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500,000,000 or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
"Equity Contribution" means, collectively, (a) a contribution of
$13,600,000 from the Jordan Investors to Holdings in exchange for Holdings
Preferred Stock and approximately 50% of the common stock of Holdings; (b) a
contribution of $13,600,000 from certain members of management of the Company to
Holdings in exchange for Holdings Preferred Stock and approximately 50% of the
common
4
stock of Holdings; and (c) a loan of $25,000,000 from a Jordan Investor to
Holdings in exchange for Holdings Subordinated Notes.
"Equity Interests" means Capital Stock or partnership interests or
warrants, options or other rights to acquire Capital Stock or partnership
interests (but excluding (i) any debt security that is convertible into, or
exchangeable for, Capital Stock or partnership interests and (ii) any other
Indebtedness or Obligation); provided, however, that Equity Interests will not
include any Incentive Arrangements or obligations or payments thereunder.
"Equity Offering" means a public or private offering by the Company for
cash of Equity Interests and all warrants, options or other rights to acquire
Capital Stock, other than (i) an offering of Disqualified Stock or (ii)
Incentive Arrangements or obligations or payments thereunder.
"Exchange Offer" means the offer by the Company to Holders to exchange
Series B Notes for Series A Notes.
"Existing Indebtedness" means the Indebtedness of Winning Ways, Inc. at
December 31, 1996.
"GAAP" means generally accepted accounting principles, consistently
applied, as of the date of original issuance of the Notes. All financial and
accounting determinations and calculations under the Indenture will be made in
accordance with GAAP.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantors" means each Restricted Subsidiary that executes a Note
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the Obligations of
such Persons under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts,
currency swap agreements or similar agreements and (iii) other agreements or
arrangements designed to protect such Person against fluctuations, or otherwise
to establish financial ▇▇▇▇▇▇ in respect of, exchange rates, currency rates or
interest rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means GFSI Holdings, Inc., a Delaware corporation.
"Holdings Preferred Stock" means the 12% cumulative preferred stock due
2009 of Holdings, as in effect on the date of this Indenture.
"Holdings Subordinated Notes" means $25.0 million in aggregate principal
amount of 12% subordinated notes due 2008 of Holdings as in effect on the date
of this Indenture or any Indebtedness of Holdings issued or given in exchange
for, or the proceeds of which are used to, extend, refinance, renew, replace,
substitute or refund such Holdings Subordinated Notes; provided that any such
Indebtedness (i) is issued in a principal amount not exceeding the then
outstanding principal amount of
5
the Holdings Subordinated Notes, (ii) has an interest rate not exceeding 12%,
(iii) is subordinated to other Indebtedness of Holdings to the same extent as
the Holdings Subordinated Notes and (iv) has a Weighted Average Life to Maturity
no less than the Weighted Average Life to Maturity of the Holdings Subordinated
Notes.
"Incentive Arrangements" means any earn-out agreements, stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, subscription and stockholders agreements and other incentive and
bonus plans, including the Incentive Compensation Plan, and similar arrangements
made in connection with acquisitions of Persons or businesses by the Company or
the Restricted Subsidiaries or the retention of consultants, executives,
officers or employees by Holdings, the Company or the Restricted Subsidiaries.
"Incentive Compensation Plan" means the incentive compensation plan for
providing annual cash bonuses that the Company expects to adopt following
consummation of the Transactions.
"Indebtedness" means, with respect to any Person, any indebtedness, whether
or not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the deferred and unpaid balance
of the purchase price of any property (including pursuant to capital leases),
except any such balance that constitutes an accrued expense or a trade payable,
and any Hedging Obligations, if and to the extent such indebtedness (other than
a Hedging Obligation) would appear as a liability upon a balance sheet of such
Person prepared on a consolidated basis in accordance with GAAP and also
includes, to the extent not otherwise included, the guarantee of items that
would be included within this definition; provided, however, that "Indebtedness"
will not include any Incentive Arrangements or obligations or payments
thereunder.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Initial Purchasers" means ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation and ▇▇▇▇▇▇▇▇▇ & Company, Inc.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy or similar case or proceeding, or any reorganization, receivership,
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, or (ii) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company.
"Investment" means any capital contribution to, or other debt or equity
investment in, any Person.
"issue" means create, issue, assume, guarantee, incur or otherwise become
directly or indirectly liable for any Indebtedness or Capital Stock, as
applicable; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition, redesignation of a Non-Restricted
Subsidiary or otherwise) shall be deemed to be issued by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary. For this definition,
the terms "issuing," "issuer," "issuance" and "issued" have meanings correlative
to the foregoing.
"Jordan Investors" means The Jordan Company, affiliates of The Jordan
Company and MCIT PLC.
6
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal corporate
trust office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Marketable Securities" means (a) Government Securities, (b) any
certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution, (c)
commercial paper maturing not more than 270 days after the date of acquisition
of an issuer (other than an Affiliate of the Company) with a rating, at the time
as of which any investment therein is made, of "A-2" (or higher) according to
S&P or "P-2" (or higher) according to Moodys or carrying an equivalent rating by
a nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments, (d) any bankers acceptances or money
market deposit accounts issued by an Eligible Institution and (e) any fund
investing exclusively in investments of the types described in clauses (a)
through (d) above.
"Moodys" means ▇▇▇▇▇'▇ Investors Services, Inc.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however, any gain or
loss, together with any related provision for taxes, realized in connection with
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions).
"Net Proceeds" means, with respect to any Asset Sale, the aggregate amount
of cash proceeds (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in either such
case, only as and when so received) received by the Company or any of its
Restricted Subsidiaries in respect of such Asset Sale, net of: (i) the cash
expenses of such Asset Sale (including, without limitation, the payment of
principal of, and premium, if any, and interest on, Indebtedness required to be
paid as a result of such Asset Sale (other than the Notes) and legal,
accounting, management and advisory and investment banking fees and sales
commissions), (ii) taxes paid or payable as a result thereof, (iii) any portion
of cash proceeds that the Company determines in good faith should be reserved
for post-closing adjustments, it being understood and agreed that on the day
that all such post-closing adjustments have been determined, the amount (if any)
by which the reserved amount in respect of such Asset Sale exceeds the actual
post-closing adjustments payable by the Company or any of its Restricted
Subsidiaries shall constitute Net Proceeds on such date, (iv) any relocation
expenses and pension, severance and shutdown costs incurred as a result thereof,
and (v) any deduction or appropriate amounts to be provided by the Company or
any of its Restricted Subsidiaries as a reserve in accordance with GAAP against
any liabilities associated with the asset disposed of in such transaction and
retained by the Company or such Restricted Subsidiary after
7
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.
"New Credit Agreement" means that certain credit facility, dated as of
February 27, 1997, among the Company, as borrower, The First National Bank of
Chicago, as contractual representative, and the lenders party thereto, together
with all loan documents and instruments thereunder (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including, without limitation, increasing the amount of available
borrowings, letters of credit or other financial accommodations thereunder, all
or any portion of the Obligations under any such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders).
"Non-Restricted Subsidiary" means any Subsidiary of the Company other than
a Restricted Subsidiary.
"Notes" means the Series A Notes and the Series B Notes.
"Obligations" means, with respect to any Indebtedness, all principal,
interest, premiums, penalties, fees, indemnities, expenses (including legal fees
and expenses), reimbursement obligations and other liabilities payable to the
holder of such Indebtedness under the documentation governing such Indebtedness,
and any other claims of such holder arising in respect of such Indebtedness.
"Offering" means the offer and sale of the Notes as contemplated by the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated February 20,
1997, relating to the Company's offering and placement of the Notes.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 11.05
hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Other Permitted Indebtedness" means: (i) Indebtedness of the Company and
its Restricted Subsidiaries existing as of the date of original issuance of the
Notes and all related Obligations as in effect on such date; (ii) Indebtedness
of the Company and its Restricted Subsidiaries in respect of bankers acceptances
and letters of credit (including, without limitation, letters of credit in
respect of workers' compensation claims) issued in the ordinary course of
business, or other Indebtedness in respect of reimbursement-type obligations
regarding workers' compensation claims; (iii) Refinancing Indebtedness, provided
that: (A) the principal amount of such Refinancing Indebtedness shall not exceed
the outstanding
8
principal amount of Indebtedness (including unused commitments) extended,
refinanced, renewed, replaced, substituted or refunded plus any amounts incurred
to pay premiums, fees and expenses in connection therewith, (B) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted or refunded; provided, however, that
this limitation in this clause (B) does not apply to Refinancing Indebtedness of
Senior Indebtedness, and (C) in the case of Refinancing Indebtedness of
Subordinated Indebtedness, such Refinancing Indebtedness shall be subordinated
to the Notes at least to the same extent as the Subordinated Indebtedness being
extended, refinanced, renewed, replaced, substituted or refunded; (iv)
intercompany Indebtedness of and among the Company and its Restricted
Subsidiaries; (v) Indebtedness of the Company and its Restricted Subsidiaries
incurred in connection with making permitted Restricted Payments under clauses
(iii), (iv) (but only to the extent that such Indebtedness is provided by the
Company or a Restricted Subsidiary) or (x) of Section 4.05(b); provided that any
Indebtedness incurred pursuant to this clause (v) is expressly subordinate in
right of payment to the Notes; (vi) Indebtedness of any Non-Restricted
Subsidiary created after the date of original issuance of the Notes, provided
that such Indebtedness is nonrecourse to the Company and its Restricted
Subsidiaries and the Company and its Restricted Subsidiaries have no Obligations
with respect to such Indebtedness; (vii) Indebtedness of the Company and its
Restricted Subsidiaries under Hedging Obligations; (viii) Indebtedness of the
Company and its Restricted Subsidiaries 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, which will not be, and
will not be deemed to be, inadvertent) drawn against insufficient funds in the
ordinary course of business; (ix) Indebtedness of the Company and its Restricted
Subsidiaries in connection with performance, surety, statutory, appeal or
similar bonds in the ordinary course of business; (x) Indebtedness of the
Company and its Restricted Subsidiaries in connection with agreements providing
for indemnification, purchase price adjustments and similar obligations in
connection with the sale or disposition of any of their business, properties or
assets; (xi) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that was
permitted to be incurred by Section 4.07; and (xii) Indebtedness of any Person
at the time it is acquired as a Restricted Subsidiary, provided that such
Indebtedness was not issued by such Person in connection with or in anticipation
of such acquisition.
"Permitted Junior Securities" means Equity Interests in the Company or
subordinated debt securities of the Company that (a) are subordinated to all
Senior Indebtedness (and any debt securities issued in exchange for Senior
Indebtedness) to at least the same extent as the Notes are subordinated to
Senior Indebtedness pursuant to Article 10 of this Indenture, (b) have a
Weighted Average Life to Maturity no shorter than the Weighted Average Life to
Maturity of the Notes and (c) if there are any amounts outstanding under the New
Credit Agreement, have a Weighted Average Life to Maturity at least as long as
the sum of (i) the Weighted Average Life to Maturity of the New Credit Agreement
or any debt securities issued in exchange therefor (whichever is longer) plus
(ii) the positive difference, if any, between the Weighted Average Life to
Maturity of the Notes and the Weighted Average Life to Maturity of the New
Credit Agreement, in each case measured immediately prior to the issuance of
such Permitted Junior Securities.
"Permitted Liens" means: (i) Liens securing Senior Indebtedness of the
Company or any Guarantor that was permitted by the terms of this Indenture to be
incurred; (ii) Liens for taxes, assessments, governmental charges or claims
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (iii) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens arising
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if
9
any, as shall be required in conformity with GAAP shall have been made therefor;
(iv) Liens incurred on deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security; (v) Liens incurred on deposits made to secure the performance
of tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return of money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (vi) easements,
rights-of-way, zoning or other restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Restricted Subsidiaries
incurred in the ordinary course of business; (vii) Liens (including extensions,
renewals and replacements thereof) upon property acquired (the "Acquired
Property") after the date of original issuance of the Notes, provided that: (A)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or issued to finance, refinance or refund, the cost (including the
cost of construction) of the Acquired Property, (B) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of the cost of the
Acquired Property, (C) such Lien does not extend to or cover any property other
than the Acquired Property and any improvements on such Acquired Property, and
(D) the issuance of the Indebtedness to purchase the Acquired Property is
permitted by Section 4.07; (viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (ix) judgment and attachment Liens not
giving rise to an Event of Default; (x) leases or subleases granted to others
not interfering in any material respect with the business of the Company or any
of its Restricted Subsidiaries; (xi) Liens securing Indebtedness under Hedging
Obligations; (xii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements; (xiii) Liens
arising out of consignment or similar arrangements for the sale of goods entered
into by the Company or its Restricted Subsidiaries in the ordinary course of
business; (xiv) any interest or title of a lessor in property subject to any
capital lease obligation or operating lease; (xv) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (xvi) Liens
existing on the date of original issuance of the Notes and any extensions,
refinancings, renewals, replacements, substitutions or refundings thereof;
(xvii) any Lien granted to the Trustee and any substantially equivalent Lien
granted to any trustee or similar institution under any indenture for Senior
Indebtedness permitted by the terms of the Indenture; (xviii) Liens in favor of
the Company or any Restricted Subsidiary; (xix) additional Liens at any one time
outstanding in respect of properties or assets where aggregate fair market value
does not exceed $2.0 million (the fair market value to be determined on the date
such Lien is granted on such properties or assets); and (xx) Liens securing
intercompany Indebtedness issued by any Restricted Subsidiary to the Company or
another Restricted Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principals" means (a) The Jordan Company, Jordan/Zalaznick Capital
Corporation and MCIT PLC, and their respective Affiliates, principals, partners
and employees, family members of any of the foregoing and trusts for the benefit
of any of the foregoing, including, without limitation, Leucadia National
Corporation and Jordan Industries, Inc., and their respective Subsidiaries, (b)
the officers, directors and employees of the Company on the date of issuance of
the Notes and their respective Affiliates and family members and trusts for the
benefit of any of the foregoing. For the purpose of the definition of
"Principals," The Jordan Company, Jordan/Zalaznick Capital Corporation and MCIT
PLC shall be deemed to be Affiliates.
"Post-Petition Interest" means any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law.
10
"Pro Forma Basis" means, for purposes of determining Consolidated Net
Income in connection with the Cash Flow Coverage Ratio (including in connection
with Sections 4.05, 4.17 and 5.01, the incurrence of Indebtedness pursuant to
Section 4.07(a) and Consolidated Net Worth for purposes of Section 5.01), giving
pro forma effect to (x) any acquisition or sale of a Person, business or asset,
related incurrence, repayment or refinancing of Indebtedness or other related
transactions, including any Restructuring Charges which would otherwise be
accounted for as an adjustment permitted by Regulation S-X under the Securities
Act or on a pro forma basis under GAAP, or (y) any incurrence, repayment or
refinancing of any Indebtedness and the application of the proceeds therefrom,
in each case, as if such acquisition or sale and related transactions,
restructurings, consolidations, cost savings, reductions, incurrence, repayment
or refinancing were realized on the first day of the relevant period permitted
by Regulation S-X under the Securities Act or on a pro forma basis under GAAP.
Furthermore, in calculating the Cash Flow Coverage Ratio, (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the
determination 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 determination date; (2) if
interest on any Indebtedness actually incurred on the determination date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the determination date will be deemed to have been in
effect during the relevant period; and (3) notwithstanding clause (1) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to interest rate swaps or similar
interest rate protection Hedging Obligations, shall be deemed to accrue at the
rate per annum resulting after giving effect to the operation of such
agreements.
"Redeemable Preferred Stock" means preferred stock that by its terms or
otherwise is required to be redeemed or is redeemable at the option of the
holder thereof on, or prior to, the maturity date of the Notes.
"Refinancing Indebtedness" means (i) Indebtedness of the Company and its
Restricted Subsidiaries issued or given in exchange for, or the proceeds of
which are used to, extend, refinance, renew, replace, substitute or refund any
Indebtedness permitted under this Indenture or any Indebtedness issued to so
extend, refinance, renew, replace, substitute or refund such Indebtedness, (ii)
any refinancings of Indebtedness issued under the New Credit Agreement, and
(iii) any additional Indebtedness issued to pay premiums and fees in connection
with clauses (i) and (ii).
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of February 27, 1997, by and among the Company and the Initial
Purchasers.
"Related Party" with respect to any Principal means (a) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (b) or trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (a).
"Restricted Investment" means any Investment in any Person; provided that
Restricted Investments will not include: (i) Investments in Marketable
Securities; (ii) any Incentive Arrangements; (iii) Investments in the Company;
or (iv) Investments in any Restricted Subsidiary (provided that any Investment
in a Restricted Subsidiary was made for fair market value (as determined by the
Board of Directors in good faith)). The amount of any Restricted Investment
shall be the amount of cash and the fair market value at the time of transfer of
all other property (as determined by the Board of Directors in good faith)
initially invested or paid for such Restricted Investment, plus all additions
thereto, without
11
any adjustments for increases or decreases in value of or write-ups, write-downs
or write-offs with respect to, such Restricted Investment.
"Restricted Subsidiary" means: (i) any Subsidiary of the Company existing
on the date of original issuance of the Notes, and (ii) any other Subsidiary of
the Company formed, acquired or existing after the date of original issuance of
the Notes that is designated as a "Restricted Subsidiary" by the Company
pursuant to a resolution approved a majority of the Board of Directors,
provided, however, that the term Restricted Subsidiary shall not include any
Subsidiary of the Company that has been redesignated by the Company pursuant to
a resolution approved by a majority of the Board of Directors as a
Non-Restricted Subsidiary in accordance with Section 4.17 unless such Subsidiary
shall have subsequently been redesignated a Restricted Subsidiary in accordance
with clause (ii) of this definition.
"Restructuring Charges" means any charges or expenses in respect of
restructuring or consolidating any business, operations or facilities, any
compensation or headcount reduction, or any other cost savings, of any Persons
or businesses either alone or together with the Company or any Restricted
Subsidiary, as permitted by GAAP or Regulation S-X under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means, with respect to any Person, (i) all
Indebtedness of such Person outstanding under the New Credit Agreement and all
Hedging Obligations with respect thereto, (ii) any other Indebtedness of such
Person permitted to be incurred under the terms of this Indenture, provided,
however, that Senior Indebtedness shall not include any Indebtedness which by
the terms of the instrument creating or evidencing the same is subordinated or
junior in right of payment to any other Senior Indebtedness in any respect, and
(iii) all Obligations (including any Post-Petition Interest) with respect to the
foregoing, in each case whether outstanding on the date of the Indenture or
thereafter incurred. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness will not include (w) any liability for federal, state, local
or other taxes owed or owing by the Company, (x) any Indebtedness of such Person
to any of its Subsidiaries or other Affiliates (other than Indebtedness arising
under the New Credit Agreement), (y) any trade payables or other liability to
trade creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities) or (z) any Indebtedness that
is incurred in violation of this Indenture.
"SFAS 106" means Statement of Financial Accounting Standards No. 106.
"SFAS 109" means Statement of Financial Accounting Standards No. 109.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that would be a "significant subsidiary" as defined in clause (2) of the
definition of such term in Rule 1-02 of Regulation S-X under the Securities Act
and the Exchange Act.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
12
"Subordinated Indebtedness" means all Obligations with respect to
Indebtedness if the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, designates such Obligations as subordinated or
junior in right of payment to Senior Indebtedness.
"Subsidiary" of any Person means any entity of which the Equity Interests
entitled to cast at least a majority of the votes that may be cast by all Equity
Interests having ordinary voting power for the election of directors or other
governing body of such entity are owned by such Person (regardless of whether
such Equity Interests are owned directly by such Person or through one or more
Subsidiaries).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ▇▇.▇▇.
77aaa-77bbbb), as amended, as in effect on the date of original issuance of the
Notes.
"Tax Sharing Agreement" means the tax sharing agreement between the Company
and Holdings, as in effect on the date of this Indenture.
"TJC Agreement" means the Management Consulting Agreement, dated the date
of this Indenture, between the Company and TJC Management Corporation, as in
effect on the date of this Indenture.
"Transactions" means, collectively, the Equity Contribution, the
consummation of the Offering, the execution of the New Credit Agreement, the
consummation by the Company of the acquisition of Winning Ways, Inc. pursuant to
the Acquisition Agreement and the repayment by the Company of the Existing
Indebtedness.
"Transfer Restricted Notes" means securities that bear or are required to
bear the legend set forth in Section 2.06.
"Trustee" means Fleet National Bank until a successor replaces it in
accordance with the applicable provisions of this Indenture, and thereafter
means the successor.
"U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged, provided that no U.S. Government Obligation shall
be callable at the issuer's option.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect the board of directors.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the then outstanding
principal amount of such Indebtedness into (ii) the sum of the product(s)
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other requirement payment of principal,
including payment at final maturity, in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) which will elapse between such
date and the making of such payment.
"▇▇▇▇▇ Noncompetition Agreement" means the agreement, dated the date of
this Indenture, between Holdings and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, relating to certain
covenants not to compete with the business of the Company, as in effect on the
date of this Indenture.
13
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Acceleration Notice" ........................................ 6.02
"Affiliate Transaction" ...................................... 4.09
"Asset Transfer Trigger Date" ................................ 4.15
"Asset Sale Disposition Date" ................................ 4.15
"Change of Control Trigger Date" ............................. 4.14
"covenant defeasance option" ................................. 8.01
"Disposition" ................................................ 5.01
"DTC" ........................................................ 2.03
"Event of Default" ........................................... 6.01
"Excess Proceeds" ............................................ 4.15
"legal defeasance option" .................................... 8.01
"Note Guarantees" ............................................ 4.01
"Notice of Default" .......................................... 6.01
"Offer" ...................................................... 3.08
"Paying Agent" ............................................... 2.03
"Payment Blockage Notice" .................................... 10.03
"Purchase Date" .............................................. 3.08
"Registrar" .................................................. 2.03
"Representative" ............................................. 10.05
"Restricted Payments" ........................................ 4.05
"Successor Corporation" ...................................... 5.01
"Trustee Expenses" ........................................... 6.08
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in, and made a part of, this Indenture. Any terms
incorporated by reference in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them therein.
SECTION 1.04 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it under GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular; and
(5) provisions apply to successive events and transactions.
14
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is part of this Indenture. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made by
the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of an
authorized signatory of the Trustee, and the Trustee's signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The form of Trustee's certificate of authentication to be borne by the Notes
shall be substantially as set forth in Exhibit A.
The Trustee shall, upon a written order of the Company signed by two
Officers directing the Trustee to authenticate the Notes and certifying that all
conditions precedent to the issuance of the Notes contained herein have been
complied with, authenticate Notes for original issuance up to an aggregate
principal amount stated in paragraph 4 of the Notes (the aggregate principal
amount of outstanding Notes may not exceed that amount at any time, except as
provided in Section 2.07).
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. Unless limited by the terms of such 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 the Company or an Affiliate of the Company.
15
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (the "Registrar") where
Notes may be presented for registration of transfer or for exchange and an
office or agency (the "Paying Agent") where Notes may be presented for payment.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar, and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without prior notice to any Holder. The
Company shall notify in writing the Trustee and the Trustee shall notify the
Holders in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company shall
enter into an appropriate agency agreement with any Agent not a party to this
Indenture, and such agreement shall incorporate the TIA's provisions and
implement the provisions of this Indenture that relate to such Agent.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Notes.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes and as
Note Custodian with respect to the Global Notes. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-registrar. If the Company
fails to appoint or maintain a Registrar and Paying Agent, the Trustee shall act
as such, and shall be entitled to appropriate compensation in accordance with
Section 7.07.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the Holders' benefit or
the Trustee all money the Paying Agent holds for redemption or purchase of the
Notes or for the payment of principal of, or premium, if any, or interest on, or
Liquidated Damages, if any, with respect to the Notes, and will promptly notify
the Trustee of any Default by the Company in providing the Paying Agent with
sufficient funds to (i) purchase Notes tendered pursuant to an Offer arising
under Section 4.14, (ii) redeem Notes called for redemption, or (iii) make any
payment of principal, premium, interest or Liquidated Damages due on the Notes.
While any such Default continues, the Trustee may require the Paying Agent to
pay all money it holds to the Trustee and to account for any funds disbursed.
The Company at any time may require the Paying Agent to pay all money it holds
to the Trustee and to account for any funds disbursed. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or any of its Subsidiaries)
shall have no further liability for the money it delivered to the Trustee. If
the Company or any of its Subsidiaries acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the Holders' benefit or the Trustee all
money it holds as Paying Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require that sets forth the names and addresses of, and
the aggregate principal amount of Notes held by, each Holder, and the Company
shall otherwise comply with Section 312(a) of the TIA.
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal amount of
Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such
Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer Restricted Note,
such request shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Note is being delivered to the
Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification to that effect from
such Holder (in substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Note is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or (2) pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act (and based
on an opinion of counsel if the Company so requests) or (3)
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder
(in substantially the form of Exhibit B hereto);
(C) if such Transfer Restricted Note is being transferred to an
institutional "accredited investor," within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a
private placement exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the
Company so requests), a certification to that effect from such
Holder (in substantially the form of Exhibit B hereto) and a
certification from the applicable transferee (in substantially
the form of Exhibit C hereto);
(D) if such Transfer Restricted Note is being transferred pursuant to
an exemption from registration in accordance with Rule 904 under
the Securities Act (and based on an opinion of counsel if the
Company so requests), certifications to that effect from such
Holder (in substantially the form of Exhibits B and D hereto); or
17
(E) if such Transfer Restricted Note is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company
so requests), a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto).
(b) Transfer of a Definitive Note for a Beneficial Interest in a Global
Note. A Definitive Note may not be exchanged for a beneficial interest in a
Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Note, a certification
from the Holder thereof (in substantially the form of Exhibit B
hereto) to the effect that such Definitive Note is being transferred
by such Holder to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A under
the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted Note,
written instructions from the Holder thereof directing the Trustee to
make, or to direct the Note Custodian to make, an endorsement on the
Global Note to reflect an increase in the aggregate principal amount
of the Notes represented by the Global Note,
the Trustee shall cancel such Definitive Note in accordance with Section 2.11
and cause, or direct the Note Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depository and the
Note Custodian, the aggregate principal amount of Notes represented by the
Global Note to be increased accordingly. If no Global Notes are then
outstanding, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02, the Trustee shall authenticate a new
Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
(i) Any Person having a beneficial interest in a Global Note may upon
request exchange such beneficial interest for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depository, from the Depository
or its nominee on behalf of any Person having a beneficial interest in
a Global Note, and, in the case of a Transfer Restricted Note, the
following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a
certification to that effect from such Person (in substantially
the form of Exhibit B hereto); or
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(B) if such beneficial interest is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or (2) pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act (and based
on an opinion of counsel if the Company so requests) or (3)
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor," within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a
private placement exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the
Company so requests), a certification to that effect from such
Holder (in substantially the form of Exhibit B hereto) and a
certification from the applicable transferee (in substantially
the form of Exhibit C hereto);
(D) if such beneficial interest is being transferred pursuant to an
exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company
so requests), certifications to that effect from such Holder (in
substantially the form of Exhibits B and D hereto); or
(E) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company
so requests), a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto).
the Trustee or the Note Custodian, at the direction of the Trustee,
shall, in accordance with the standing instructions and procedures
existing between the Depository and the Note Custodian, cause the
aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and, upon
receipt of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in a
Global Note pursuant to this Section 2.06(d) shall be registered in
such names and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver in
accordance with the standard procedures of the Depository such
Definitive Notes to the Persons in whose names such Notes are so
registered.
(e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provision of this Indenture (other than the provisions set forth in
subsection (f) of this Section 2.06), a Global Note may not be transferred as a
whole except by the Depository to a nominee of the Depository
19
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at any
time:
(i) the Depository for the Notes notifies the Company that the Depository
is unwilling or unable to continue as Depository for the Global Notes
and a successor Depository for the Global Notes is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) The Company, at its sole discretion, notifies the Trustee in writing
that it elects to cause the issuance of Definitive Notes under this
Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02, authenticate and deliver,
Definitive Notes in an aggregate principal amount equal to the principal amount
of the Global Notes in exchange for such Global Notes and registered in such
names as the Depository shall instruct the Trustee or the Company in writing.
(g) Legends.
(i) Except for any Transfer Restricted Note sold or transferred (including
any Transfer Restricted Note represented by a Global Note) as
described in (ii) below, each Note certificate evidencing Global Notes
and Definitive Notes (and all Notes issued in exchange therefor or
substitution thereof) shall bear legends in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF
20
THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Note (including any
Transfer Restricted Note represented by a Global Note) pursuant to an
effective registration statement under the Securities Act, pursuant to
Rule 144 under the Securities Act or pursuant to an opinion of counsel
reasonably satisfactory to the Company and the Registrar that no
legend is required:
(A) in the case of any Transfer Restricted Note that is a Definitive
Note, the Registrar shall permit the Holder thereof to exchange
such Transfer Restricted Note for a Definitive Note that does not
bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Note; and
(B) in the case of any Transfer Restricted Note represented by a
Global Note, such Transfer Restricted Note shall not be required
to bear the legend set forth in (i) above if all other interests
in such Global Note have been or are concurrently being sold or
transferred pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, but such Transfer Restricted Note shall continue
to be subject to the provisions of Section 2.06(c); provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Note that is represented by a Global Note for
a Definitive Note that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B
hereto).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02, the Trustee shall authenticate,
Series B Notes in exchange for Series A Notes accepted for exchange in
the Exchange Offer, which Series B Notes shall not bear the legend set
forth in (i) above, and the Registrar shall rescind any restriction on
the transfer of such Notes, in each case unless the Holder of such
Series A Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A Notes or (C) a
Person who is an affiliate (as defined in Rule 144A) of the Company.
The Company shall identify to the Trustee such Holders of the Notes in
a written certification signed by an Officer of the Company and,
absent certification from the Company to such effect, the Trustee
shall assume that there are no such Holders.
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(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Definitive Notes and Global
Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.07, 4.14, 4.15 and 9.05).
(iii) Neither the Company nor the Registrar shall be required to register
the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed
in part.
(iv) All Definitive Notes and Global Notes issued upon any registration of
transfer or exchange of Definitive Notes or Global Notes in accordance
with this Indenture (including any increase in the aggregate principal
amount of the Notes represented by the Global Note pursuant to
subsection (b) above) shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Definitive Notes or Global Notes surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required to issue Notes and the Registrar
shall not be required to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days before
the day of any selection of Notes for redemption under Section 3.02
and ending at the close of business on the day of selection, or to
register the transfer of or to exchange a Note between a record date
and the next succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of,
premium, if any, accrued and unpaid interest, and Liquidated Damages,
if any, on such Notes, and neither the Trustee, any Agent nor the
Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and Global Notes in
accordance with the provisions of Section 2.02.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the Company's written
order signed by two Officers, shall authenticate a replacement Note if the
Trustee's requirements are met. If the Trustee or the Company requires it, the
Holder must supply an indemnity bond that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company and the Trustee may charge for their expenses in replacing
a Note. Every replacement Note is an additional Obligation of the Company.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes the Trustee has
authenticated except for those it has cancelled, those delivered to it for
cancellation, those representing reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that a bona fide purchaser
holds the replaced Note.
If the entire principal of, and premium, if any, and accrued interest on,
and Liquidated Damages, if any, with respect to any Note is considered paid
under Section 4.01, it ceases to be outstanding and interest and Liquidated
Damages on it cease to accrue.
Subject to Section 2.09, a Note does not cease to be outstanding because
the Company or an Affiliate holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Trust
Officer of the Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that the Company or an Affiliate offers to
purchase or acquires pursuant to an Offer, exchange offer, tender offer or
otherwise shall not be deemed to be owned by the Company or an Affiliate until
legal title to such Notes passes to the Company or such Affiliate, as the case
may be.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee, upon receipt of the Company's written
order signed by two Officers which shall specify the amount of temporary Notes
to be authenticated and the date on which the temporary Notes are to be
authenticated, shall authenticate Definitive Notes and deliver them in exchange
for temporary Notes. Until such exchange, Holders of temporary Notes shall be
entitled to the same rights, benefits and privileges as Definitive Notes.
23
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange, replacement, payment
(including all Notes called for redemption and all Notes accepted for payment
pursuant to an Offer) or cancellation, and the Trustee shall cancel all such
Notes and shall destroy all cancelled Notes (subject to the Exchange Act's
record retention requirements) and deliver a certificate of their destruction to
the Company unless by written order, signed by two Officers of the Company, the
Company shall direct that cancelled Notes be returned to it. The Company may not
issue new Notes to replace any Notes that have been cancelled by the Trustee or
that have been delivered to the Trustee for cancellation. If the Company or an
Affiliate acquires any Notes (other than by redemption or pursuant to an Offer),
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until such Notes are delivered
to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to Holders on a subsequent special record
date, in each case at the rate provided in the Notes and in Section 4.01. The
Company shall fix or cause to be fixed each such special record date and payment
date. As early as practicable prior to the special record date, the Company (or
the Trustee, in the name of and at the expense of the Company) shall mail a
notice that states the special record date, the related payment date and the
amount of interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in section
316(c) of the TIA.
SECTION 2.14. CUSIP NUMBER.
A "CUSIP" number shall be printed on the Notes, and the Trustee shall use
the CUSIP number in notices of redemption, purchase or exchange as a convenience
to Holders, provided that any such notice may state that no representation is
made as to the correctness or accuracy of the CUSIP number printed in the notice
or on the Notes and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in the CUSIP number.
ARTICLE 3
OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Section 3.07, it shall
furnish to the Trustee, at least 40 days prior to the redemption date and at
least 10 days prior to the date that notice of the redemption is to be mailed by
the Company to Holders, an Officers' Certificate stating that the Company has
elected to redeem Notes pursuant to Section 3.07(a) or 3.07(b), as the case may
be, the date notice
24
of redemption is to be mailed to Holders, the redemption date, the aggregate
principal amount of Notes to be redeemed, the redemption price for such Notes
and the amount of accrued and unpaid interest on and Liquidated Damages, if any,
with respect to such Notes as of the redemption date. If the Trustee is not the
Registrar, the Company shall, concurrently with delivery of its notice to the
Trustee of a redemption, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the name of, and the
aggregate principal amount of Notes held by, each Holder.
If the Company is required to offer to purchase Notes pursuant to Section
4.14 or 4.15, it shall furnish to the Trustee, at least two Business Days before
notice of the Offer is to be mailed to Holders, an Officers' Certificate setting
forth that the Offer is being made pursuant to Section 4.14 or 4.15, as the case
may be, the Purchase Date, the maximum principal amount of Notes the Company is
offering to purchase pursuant to the Offer, the purchase price for such Notes,
and the amount of accrued and unpaid interest on and Liquidated Damages, if any,
with respect to such Notes as of the Purchase Date.
The Company will also provide the Trustee with any additional information
that the Trustee reasonably requests in connection with any redemption or Offer.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
If less than all outstanding Notes are to be redeemed or if less than all
Notes tendered pursuant to an Offer are to be accepted for payment, the Trustee
shall select the outstanding Notes to be redeemed or accepted for payment pro
rata, by lot or by a method that complies with the requirements of any stock
exchange on which the Notes are listed and that the Trustee considers fair and
appropriate. If the Company elects to mail notice of a redemption to Holders,
the Trustee shall at least five Business Days prior to the date notice of
redemption is to be mailed, (i) select the Notes to be redeemed from Notes
outstanding not previously called for redemption and (ii) notify the Company of
the names of each Holder of Notes selected for redemption, the principal amount
of Notes held by each such Holder and the principal amount of such Holder's
Notes that are to be redeemed. If less than all Notes tendered pursuant to an
Offer on the Purchase Date are to be accepted for payment, the Trustee shall
select on or promptly after the Purchase Date the Notes to be accepted for
payment. The Trustee shall select for redemption or purchase Notes or portions
of Notes in principal amounts of $1,000 or integral multiples of $1,000; except
that if all of the Notes of a Holder are selected for redemption or purchase,
the aggregate principal amount of the Notes held by such Holder, even if not a
multiple of $1,000, shall be redeemed or purchased. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption or tendered pursuant to an Offer also apply to portions of Notes
called for redemption or tendered pursuant to an Offer. The Trustee shall notify
the Company promptly of the Notes or portions of Notes to be called for
redemption or selected for purchase.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption to each Holder of Notes or portions
thereof that are to be redeemed.
The notice shall identify the Notes or portions thereof to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price for the Notes and separately stating the amount
of unpaid and accrued interest on, and Liquidated Damages, if any,
with respect to, such Notes as of the date of redemption;
25
(3) if any Note is being redeemed in part, the portion of the principal
amount of such Notes to be redeemed and that, after the redemption
date, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price for, and any accrued and unpaid
interest on, and Liquidated Damages, if any, with respect to such
Notes;
(6) that, unless the Company defaults in making such redemption payment,
interest on Notes 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; and
(8) the CUSIP number; provided that no representation is made as to the
correctness or accuracy of the CUSIP number listed in such notice and
printed on the Notes.
At the Company's request, the Trustee shall (at the Company's expense) give
the notice of redemption in the Company's name at least 30 but not more than 60
days before a redemption; provided, however, that the Company shall deliver to
the Trustee, at least 45 days prior to the redemption date and at least 10 days
prior to the date that notice of the redemption is to be mailed to Holders, an
Officers' Certificate that (i) requests the Trustee to give notice of the
redemption to Holders, (ii) sets forth the information to be provided to Holders
in the notice of redemption, as set forth in the preceding paragraph, (iii)
states that the Company has elected to redeem Notes pursuant to Section 3.07(a)
or 3.07(b), as the case may be, and (iv) sets forth the aggregate principal
amount of Notes to be redeemed and the amount of accrued and unpaid interest and
Liquidated Damages, if any, thereon as of the redemption date. If the Trustee is
not the Registrar, the Company shall, concurrently with any such request, cause
the Registrar to deliver to the Trustee a certificate (upon which the Trustee
may rely) setting forth the name of, the address of, and the aggregate principal
amount of Notes held by, each Holder.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Notes called for redemption become due
and payable on the redemption date at the price set forth in the Note. Upon
surrender to the Trustee or Paying Agent, such Notes called for redemption shall
be paid at the redemption price (which shall include accrued interest thereon to
the redemption date) but installments of interest, the maturity of which is on
or prior to the redemption date, shall be payable to Holders of record at the
close of business on the relevant record dates.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
Prior to 10 a.m. on any redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price
of, and accrued interest on, and Liquidated Damages, if any, with respect to all
Notes to be redeemed on that date. The Trustee or the Paying Agent shall return
to the Company any money that the Company deposited with the Trustee or the
Paying Agent
26
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, and Liquidated Damages, if any, with respect to all Notes to be
redeemed.
If the Company complies with the preceding paragraph, interest on the Notes
to be redeemed will cease to accrue on such Notes on the applicable redemption
date, whether or not such Notes are presented for payment. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest and Liquidated Damages, if
any, shall be paid to the Person in whose name such Note was registered at the
close of business on such record date. If any Note called for redemption shall
not be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest will be paid on the
unpaid principal, premium, if any, interest and Liquidated Damages, if any, from
the redemption date until such principal, premium, interest and Liquidated
Damages, if any, is paid, at the rate of interest provided in the Notes and
Section 4.01.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the Company's expense a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION PROVISIONS.
(a) Except as provided in Section 3.07(b), the Notes may not be redeemed at
the option of the Company prior to March 1, 2002. During the twelve-month period
beginning on March 1 of the years indicated below, the Notes will be redeemable
at the option of the Company, in whole or in part, on at least 30 but not more
than 60 days' notice to each Holder of Notes to be redeemed, at the redemption
prices (expressed as percentages of the principal amount) set forth below, plus
any accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date:
Year Percentage
---- ----------
2002........................................................... 104.813
2003........................................................... 103.208
2004........................................................... 101.604
2005 and thereafter............................................ 100.000%
(b) Notwithstanding the foregoing, prior to March 1, 2000, the Company may
(but shall not have the obligation to) redeem up to 40% of the original
aggregate principal amount of the Notes at a redemption price of 110.000% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings; provided that at least 60% of the aggregate principal amount
of Notes originally issued remain outstanding immediately after the occurrence
of any such redemption; and provided, further, that any such redemption shall
occur within 60 days of the date of the closing of any such Equity Offering.
SECTION 3.08. MANDATORY PURCHASE PROVISIONS.
(a) Within 30 days after any Change of Control Trigger Date or Asset Sale
Trigger Date, the Company shall mail a notice to each Holder at such Holder's
registered address stating (i) that an offer ("Offer") is being made pursuant to
Section 4.14 or Section 4.15, as the case may be, the length of time the Offer
shall remain open and the maximum aggregate principal amount of Notes that will
be
27
accepted for payment pursuant to such Offer; (ii) the purchase price for the
Notes (as set forth in Section 4.14 or Section 4.15, as the case may be), the
amount of accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to, such Notes as of the purchase date, and the purchase date (which
shall be no earlier than 30 days and no later than 40 days from the date such
notice is mailed (the "Purchase Date")); (iii) that any Note not accepted for
payment will continue to accrue interest and Liquidated Damages, if any; (iv)
that, unless the Company fails to deposit with the Paying Agent on the Purchase
Date an amount sufficient to purchase all Notes accepted by the Company for
payment, interest shall cease to accrue on such Notes after the Purchase Date;
(v) that Holders electing to tender any Note or portion thereof will be required
to surrender their Note, with a form entitled "Option of Holder to Elect
Purchase" completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the Purchase Date,
provided that Holders electing to tender only a portion of any Note must tender
a principal amount of $1,000 or integral multiples thereof; (vi) that Holders
will be entitled to withdraw their election to tender Notes, if the Paying Agent
receives, not later than the close of business on the third Business Day
preceding the Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have such Note purchased; and (vii) that Holders whose Notes are accepted for
payment in part will be issued new Notes equal in principal amount to the
unpurchased portion of Notes surrendered; provided that only Notes in a
principal amount of $1,000 or integral multiples thereof will be accepted for
payment in part.
(b) On the Purchase Date for any Offer, the Company shall, to the extent
required by this Indenture and such Offer, (i) in the case of an Offer resulting
from a Change of Control, accept for payment all Notes or portions thereof
tendered pursuant to such Offer and, in the case of an Offer resulting from an
Asset Sale, accept for payment the maximum principal amount of Notes or portions
thereof tendered pursuant to such Offer that can be purchased out of Excess
Proceeds from such Asset Sale Trigger Date, (ii) deposit with the Paying Agent
the aggregate purchase price of all Notes or portions thereof accepted for
payment and any accrued and unpaid interest and Liquidated Damages, if any, on
such Notes as of the Purchase Date, and (iii) deliver or cause to be delivered
to the Trustee all Notes tendered pursuant to the Offer.
(c) With respect to any Offer, if less than all of the Notes tendered
pursuant to an Offer are to be purchased by the Company, the Trustee shall
select on the Purchase Date the Notes or portions thereof to be accepted for
payment pursuant to Section 3.02.
(d) Promptly after consummation of an Offer, (i) the Paying Agent shall
mail (or cause to be transferred by book entry) to each Holder of Notes or
portions thereof accepted for payment an amount equal to the purchase price for,
plus any accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to such Notes, (ii) with respect to any tendered Note not accepted for
payment in whole or in part, the Trustee shall return such Note to the Holder
thereof, and (iii) with respect to any Note accepted for payment in part, the
Trustee shall authenticate and mail to each such Holder a new Note equal in
principal amount to the unpurchased portion of the tendered Note.
(e) The Company shall publicly announce the results of the Offer on or as
soon as practicable after the Purchase Date.
(f) The Company shall comply with any tender offer rules under the Exchange
Act which may then be applicable to the Company, including Rule 14e-1, in
connection with an Offer required to be made by the Company to repurchase the
Notes as a result of a Change of Control Trigger Date or an Asset Sale Trigger
Date. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Indenture, the Company shall comply with the
applicable securities laws and
28
regulations and shall not be deemed to have breached its obligations under this
Indenture by virtue thereof.
(g) With respect to any Offer, if the Company deposits prior to 10 a.m. New
York City time with the Paying Agent on the Purchase Date an amount in available
funds sufficient to purchase all Notes accepted by the Company for payment,
interest shall cease to accrue on such Notes after the Purchase Date; provided,
however, that if the Company fails to deposit such amount on the Purchase Date,
interest shall continue to accrue on such Notes until such deposit is made.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
(a) The Company shall pay the principal of, and premium, if any, and
accrued and unpaid interest on the Notes on the dates and in the manner provided
in the Notes. Holders of Notes must surrender their Notes to the Paying Agent to
collect principal payments. Principal of, premium, if any, and accrued and
unpaid interest, and Liquidated Damages, if any, shall be considered paid on the
date due if the Paying Agent (other than the Company or any of its
Subsidiaries), the Global Note Holder or each Holder that has specified an
account, holds, as of 10:00 a.m. New York City time, money the Company deposited
in immediately available funds designated for and sufficient to pay in cash all
principal, premium, if any, and accrued and unpaid interest on, and Liquidated
Damages, if any, then due; provided that, to the extent that the Holders have
not specified accounts, such amounts shall be considered paid on the date due if
the Company mails a check for such amounts on such date. The Paying Agent shall
return to the Company, no later than five (5) days following the date of
payment, any money (including accrued interest) that exceeds the amount of
principal, premium, if any, accrued and unpaid interest, and Liquidated Damages,
if any, paid on the Notes. The Company shall pay all Liquidated Damages, if any,
in the same manner on the dates and in the amounts set forth in the Registration
Rights Agreement. If any Liquidated Damages become payable, the Company shall
not later than three (3) Business Days prior to the date that any payment of
Liquidated Damages is due (i) deliver an Officers' Certificate to the Trustee
setting forth the amount of Liquidated Damages payable to Holders and (ii)
instruct the Paying Agent to pay such amount of Liquidated Damages to Holders
entitled to receive such Liquidated Damages.
(b) To the extent lawful, the Company shall pay interest (including
Post-Petition Interest) on (i) overdue principal and premium at the then
applicable interest rate on the Notes, compounded semiannually and (ii) overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate as set forth in clause (i), compounded
semiannually.
SECTION 4.02. SEC REPORTS.
(a) So long as the Notes are outstanding, whether or not the Company is
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company and the Guarantors shall file with the SEC (unless the SEC will
not accept such filing) the annual reports, quarterly reports and other
documents relating to the Company and its Restricted Subsidiaries that the
Company would have been required to file with the SEC pursuant to Section 13 or
15(d) if the Company were subject to such reporting requirements.
29
(b) The Company and the Guarantors shall provide to the Holders and file
with the Trustee, within 15 days after it files them with the SEC, copies of the
annual reports, quarterly reports and other documents (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. If the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act and the SEC will not
accept such filing as is prescribed in Section 4.02(a), the Company and the
Guarantors shall provide to the Holders and file with the Trustee, within 15
days after it would have been required or permitted, as the case may be, to file
with the SEC, financial statements, including any notes thereto (and with
respect to annual reports, an auditor's report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," both comparable to that which the Company would have
been required to include in such annual reports, quarterly reports and other
documents relating to the Company and its Restricted Subsidiaries if the Company
were subject to the requirements of Section 13 or 15(d) of the Exchange Act.
Subsequent to the qualification of this Indenture under the TIA, the Company
also shall comply with the provisions of section 314(a) of the TIA.
(c) If the Company is required to furnish annual or quarterly reports to
its stockholders pursuant to the Exchange Act, the Company shall cause any
annual report furnished to its stockholders generally and any quarterly or other
financial reports it furnishes to its stockholders generally to be filed with
the Trustee, and the Company shall mail such reports to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar. If the
Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements referred to in Section 4.02(a), including any notes thereto (and with
respect to annual reports, an auditors' report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be so mailed to the Holders within 120 days after
the end of each of the Company's fiscal years and within 60 days after the end
of each of the first three fiscal quarters of each year. The Company shall cause
to be disclosed in a statement accompanying any annual report or comparable
information as of the date of the most recent financial statements in each such
report or comparable information the amount available for payments pursuant to
Section 4.05.
(d) If the Company is not subject to the requirements of Section 13 or
15(d) of the Exchange Act, for so long as any Notes remain outstanding, the
Company shall furnish to the Holders, securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that, to the best of his or her
knowledge, the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company has taken or proposes to take with respect thereto) and that,
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium,
if any, and accrued and unpaid interest on, and Liquidated Damages, if any,
30
with respect to the Notes are prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the financial statements delivered
pursuant to Section 4.02 shall be accompanied by a written statement of the
Company's independent public accountants (who shall be a firm of established
national reputation reasonably satisfactory to the Trustee) that in making the
examination necessary for certification of such financial statements nothing has
come to their attention that would lead them to believe that the Company has
violated any provisions of Section 4.01, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15 or 4.17 or of Article 5 or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that might affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, (i) declare or pay any dividend or make any
distribution on account of the Company's or any Restricted Subsidiary's Equity
Interests (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company and dividends or distributions
payable by a Restricted Subsidiary pro rata to its shareholders; (ii) purchase,
redeem or otherwise acquire or retire for value any Equity Interests of the
Company or any of its Restricted Subsidiaries, other than any such Equity
Interests purchased from the Company or any Restricted Subsidiary for fair
market value determined by the Board of Directors in good faith; (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Subordinated Indebtedness, except a payment of interest
or principal at Stated Maturity; or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments") if, at the time of such
Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof; or
(B) immediately after such Restricted Payment and after giving effect
thereto on a Pro Forma Basis, the Company shall not be able to issue
$1.00 of additional Indebtedness pursuant to Section 4.07(a); or
31
(C) such Restricted Payment, together with the aggregate of all other
Restricted Payments made after the date of original issuance of the
Notes, without duplication, exceeds the sum of: (1) 50% of the
aggregate Consolidated Net Income (including, for this purpose, gains
from Asset Sales and, to the extent not included in Consolidated Net
Income, any gain from a sale or disposition of a Restricted
Investment) of the Company (or, in case such aggregate is a loss, 100%
of such loss) for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing immediately after the
date of original issuance of the Notes and ended as of the Company's
most recently ended fiscal quarter at the time of such Restricted
Payment; plus (2) 100% of the aggregate net cash proceeds and the fair
market value of any property or securities, as determined by the Board
of Directors in good faith, received by the Company from the issue or
sale of Equity Interests of the Company or Holdings (to the extent
contributed to the Company) subsequent to the date of original
issuance of the Notes (other than (x) Equity Interests issued or sold
to a Restricted Subsidiary and (y) Disqualified Stock); plus (3) $5.0
million; plus (4) the amount by which the principal amount of and any
accrued interest on either Senior Indebtedness of the Company or any
Restricted Subsidiary is reduced on the Company's consolidated balance
sheet upon the conversion or exchange (other than by a Restricted
Subsidiary) subsequent to the date of original issuance of the Notes
of any Indebtedness of the Company or any Restricted Subsidiary (not
held by the Company or any Restricted Subsidiary) for Equity Interests
(other than Disqualified Stock) of the Company (less the amount of any
cash, or the fair market value of any other property or securities (as
determined by the Board of Directors in good faith), distributed by
the Company or any Restricted Subsidiary (to Persons other than the
Company or any other Restricted Subsidiary) upon such conversion or
exchange); plus (5) if any Non-Restricted Subsidiary is redesignated
as a Restricted Subsidiary, the value of the Restricted Payment that
would result if such Subsidiary were redesignated as a Non-Restricted
Subsidiary at such time, as determined in accordance with Section
4.17(a); provided, however, that for purposes of this clause (5), the
value of any redesignated Non-Restricted Subsidiary shall be reduced
by the amount that any such redesignation replenishes or increases the
amount of Restricted Investments permitted to be made pursuant to
clause (ii) of Section 4.05(b).
(b) Notwithstanding the foregoing, the following Restricted Payments may be
made: (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration, such payment would comply
with all covenants of this Indenture (including, but not limited to, Section
4.05); (ii) making Restricted Investments at any time, and from time to time, in
an aggregate outstanding amount of $10.0 million after the date of original
issuance of the Notes (it being understood that if any Restricted Investment
after the date of original issuance of the Notes pursuant to this clause (ii) is
sold, transferred or otherwise conveyed to any Person other than the Company or
a Restricted Subsidiary, the portion of the net cash proceeds or fair market
value of securities or properties paid or transferred to the Company and its
Restricted Subsidiaries in connection with such sale, transfer or conveyance
that relates or corresponds to the repayment or return of the original cost of
such a Restricted Investment will replenish or increase the amount of Restricted
Investments permitted to be made pursuant to this clause (ii), so that up to
$10.0 million of Restricted Investments may be outstanding under this clause
(ii) at any given time); provided that, without otherwise limiting this clause
(ii), any Restricted Investment in a Subsidiary made pursuant to this clause
(ii) is made for fair market value (as determined by the Board of Directors in
good faith); (iii) the repurchase, redemption, retirement or acquisition of
Equity Interests of the Company or Holdings from the executives, management,
employees or consultants of the Company or its Restricted Subsidiaries in an
aggregate amount not to exceed $7.5 million; (iv) any loans, advances,
distributions or payments from the Company to its Restricted Subsidiaries, or
any loans, advances,
32
distributions or payments by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, in each case pursuant to intercompany
Indebtedness, intercompany management agreements and other intercompany
agreements and obligations; (v) the purchase, redemption, retirement or other
acquisition of the Notes pursuant to Sections 3.08, 4.14 or 4.15; (vi) the
payment of (a) consulting, financial and investment banking fees under the TJC
Agreement, provided, that no Default or Event of Default shall have occurred and
be continuing or shall occur as a consequence thereof, and the Company's
Obligations to pay such fees under the TJC Agreement shall be subordinated
expressly to the Company's Obligations in respect of the Notes, and (b)
indemnities, expenses and other amounts under the TJC Agreement; (vii) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
of the Company or any Restricted Subsidiary in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary of
the Company) of other Equity Interests of the Company (other than any
Disqualified Stock) or the redemption, repurchase, retirement or other
acquisition of any Equity Interests of any Restricted Subsidiary in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
the Company or a Subsidiary of the Company) of other Equity Interests of such
Restricted Subsidiary; provided that, in each case, any net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition, and any Net Income resulting therefrom, shall be excluded from
Sections 4.05(a)(iv)(C)(1) and (2); (viii) the defeasance, redemption or
repurchase of Subordinated Indebtedness of the Company or any Restricted
Subsidiary with the net cash proceeds from an issuance of permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a Subsidiary of
the Company) of Equity Interests of the Company (other than Disqualified Stock)
or the defeasance, redemption or repurchase of Subordinated Indebtedness of any
Restricted Subsidiary with the net cash proceeds from the substantially
concurrent sale (other than to a Subsidiary of the Company) of Equity Interests
of such Restricted Subsidiary (other than Disqualified Stock); provided that, in
each case, any net cash proceeds that are utilized for any such defeasance,
redemption or repurchase, and any Net Income resulting therefrom, shall be
excluded from Sections 4.05(a)(iv)(C)(1) and (2); (ix) Restricted Investments
made or received in connection with the sale, transfer or disposition of any
business, properties or assets of the Company or any Restricted Subsidiary,
provided, that if such sale, transfer or disposition constitutes an Asset Sale,
the Company complies with Section 4.15; (x) any Restricted Investment
constituting securities or instruments of a Person issued in exchange for trade
or other claims against such Person in connection with a financial
reorganization or restructuring of such person; (xi) payments to Holdings in an
amount sufficient to permit Holdings to make required payments on the Holdings
Subordinated Notes; (xii) payments in connection with the Transactions as set
forth in the Offering Memorandum; (xiii) payments of fees, expenses and
indemnities to the directors of Holdings, the Company and its Restricted
Subsidiaries; (xiv) payments to Holdings in respect of accounting, legal or
other professional or administrative expenses or reimbursements or franchise or
similar taxes and governmental charges incurred by it relating to the business,
operations or finances of the Company and its Restricted Subsidiaries and in
respect of fees and related expenses associated with any registration statements
relating to the Notes filed with the SEC and subsequent ongoing public reporting
requirements with respect to the Notes; (xv) so long as Holdings files
consolidated income tax returns that include the Company, payments to Holdings
pursuant to the Tax Sharing Agreement; (xvi) payments, if any, relating to any
purchase price adjustment pursuant to the terms of the Acquisition Agreement;
(xvii) payments in respect of the ▇▇▇▇▇ Noncompetition Agreement; and (xviii)
shareholder loans in an aggregate principal amount not to exceed $1.0 million.
SECTION 4.06. CORPORATE EXISTENCE.
Subject to Section 4.15 and Article 5, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each of
its Restricted Subsidiaries in accordance with the respective organizational
documents of each of its Restricted Subsidiaries and the rights (charter and
statutory),
33
licenses and franchises of the Company and each of its Restricted Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any Restricted Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders.
SECTION 4.07. LIMITATION ON INCURRENCE OF INDEBTEDNESS.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, issue any Indebtedness (other than the Indebtedness represented by the
Notes) unless the Company's Cash Flow Coverage Ratio for its four full fiscal
quarters next preceding the date such additional Indebtedness is issued would
have been at least 2.0 to 1 determined on a Pro Forma Basis (including, for this
purpose, any other Indebtedness incurred since the end of the applicable four
quarter period) as if such additional Indebtedness and any other Indebtedness
issued since the end of such four quarter period had been issued at the
beginning of such four quarter period.
(b) Section 4.07(a) shall not apply to the issuance of: (i) Indebtedness of
the Company and/or its Restricted Subsidiaries under the New Credit Agreement in
an aggregate principal amount outstanding on such date of issuance not to exceed
the greater of (A) $115.0 million and (B) the sum of: (1) 85% of the book value
of accounts receivable of the Company and its Restricted Subsidiaries on a
consolidated basis and (2) 65% of the book value of the inventories of the
Company and its Restricted Subsidiaries; provided that the aggregate principal
amount of Indebtedness outstanding under this clause (i) together with the
aggregate principal amount of Indebtedness outstanding under clause (iii) below
shall not exceed $140.0 million at any one time outstanding (less the amount of
any permanent reductions as set forth in Section 4.15); (ii) Indebtedness of the
Company and its Restricted Subsidiaries in connection with capital leases, sale
and leaseback transactions, purchase money obligations, capital expenditures or
similar financing transactions relating to: (A) their properties, assets and
rights as of the date of original issuance of the Notes not to exceed $7.5
million in aggregate principal amount at any one time outstanding, or (B) their
properties, assets and rights acquired after the date of original issuance of
the Notes, provided that the aggregate principal amount of such Indebtedness
under this clause (ii)(B) does not exceed 100% of the cost of such properties,
assets and rights; (iii) additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount up to $25.0 million
(all or any portion of which may be issued as additional Indebtedness under the
New Credit Agreement) provided that the aggregate principal amount of
Indebtedness outstanding under this clause (iii) together with the aggregate
principal amount of Indebtedness outstanding under clause (i) above shall not
exceed $140.0 million at any one time outstanding (less the amount of any
permanent reductions as set forth in Section 4.15); and (iv) Other Permitted
Indebtedness.
SECTION 4.08. LIMITATION ON SENIOR SUBORDINATED DEBT.
(a) The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness and senior in any respect in right
of payment to the Notes.
(b) No Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Indebtedness and senior in any respect in right of payment
to the Note Guarantees.
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SECTION 4.09. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) Except as otherwise set forth herein, neither the Company nor any of
its Restricted Subsidiaries shall make any loan, advance, guarantee or capital
contribution to, or for the benefit of, or sell, lease, transfer or dispose of
any properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, an Affiliate (each such transaction
or series of related transactions that are part of a common plan are referred to
as an "Affiliate Transaction"), except in good faith and on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction on an arm's length
basis from an unrelated Person.
(b) The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any Affiliate Transaction involving aggregate payments or other
transfers by the Company and its Restricted Subsidiaries in excess of $5.0
million (including cash and non-cash payments and benefits valued at their fair
market value by the Board of Directors of the Company in good faith) unless the
Company delivers to the Trustee: (i) a resolution of the Board of Directors of
the Company stating that the Board of Directors (including a majority of the
disinterested directors, if any) has, in good faith, determined that such
Affiliate Transaction complies with the provisions of this Indenture, and (ii)
(A) with respect to any Affiliate Transaction involving the incurrence of
Indebtedness, a written opinion of a nationally recognized investment banking or
accounting firm experienced in the review of similar types of transactions, (B)
with respect to any Affiliate Transaction involving the transfer of real
property, fixed assets or equipment, either directly or by a transfer of 50% or
more of the Capital Stock of a Restricted Subsidiary which holds any such real
property, fixed assets or equipment, a written appraisal from a nationally
recognized appraiser, experienced in the review of similar types of transactions
or (C) with respect to any Affiliate Transaction not otherwise described in (A)
and (B) above, a written certification from a nationally recognized professional
or firm experienced in evaluating similar types of transactions, in each case,
stating that the terms of such transaction are fair to the Company or such
Restricted Subsidiary, as the case may be, from a financial point of view.
(c) Notwithstanding Sections 4.09(a) and (b), Section 4.09 will not apply
to: (i) transactions between the Company and any Restricted Subsidiary or
between Restricted Subsidiaries; (ii) payments under the TJC Agreement; (iii)
any other payments or transactions permitted pursuant to Section 4.05; (iv) (A)
payments and transactions under Incentive Arrangements and (B) reasonable
compensation paid to officers, employees or consultants of the Company or any
Restricted Subsidiary as determined in good faith by the Company's Board of
Directors or executives; (v) payments and transactions in connection with the
Transactions and the application of the net proceeds therefrom; (vi) the sale of
the corporate aircraft owned by the Company on the date of issuance of the Notes
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or his designee; or (vii) the sale, transfer and/or
termination of the officers' life insurance policies in effect on the date of
issuance of the Notes.
(d) Notwithstanding Sections 4.09(a) and (b), any Affiliate Transaction
between the Company and Affiliated Embroiderers relating to the provision of
embroidery services in the ordinary course of business shall not be subject to
the provisions of clause (ii) of Section 4.09(b).
SECTION 4.10. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien, other than Permitted Liens, upon any property or asset now owned
or hereafter acquired by them, or any income or profits therefrom, or assign or
convey any right to receive income therefrom unless all payments due under this
Indenture and the
35
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien.
SECTION 4.11. COMPLIANCE WITH LAWS, TAXES.
The Company shall, and shall cause each of its Restricted Subsidiaries to,
comply with all statutes, laws, ordinances, or government rules and regulations
to which it is subject, the non-compliance with which would materially adversely
affect the business, prospects, earnings, properties, assets or condition,
financial or otherwise, of the Company and its Restricted Subsidiaries taken as
a whole.
The Company shall, and shall cause each of its Restricted Subsidiaries to,
pay prior to delinquency all taxes, assessments and governmental levies, except
those contested in good faith by appropriate proceedings.
SECTION 4.12. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective, any encumbrance or restriction on the ability of any
Restricted Subsidiary to: (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any Restricted Subsidiary, or pay any
Indebtedness owed to, the Company or any Restricted Subsidiary, (ii) make loans
or advances to the Company, or (iii) transfer any of its properties or assets to
the Company, except for such encumbrances or restrictions existing under or by
reason of: (A) applicable law, (B) Indebtedness permitted (1) under Section
4.07(a) and (2) under clauses (i), (ii) and (iii) of Section 4.07(b) and clauses
(iv), (vii) and (x) of the definition of "Other Permitted Indebtedness,"
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more restrictive
with respect to the items set forth in clauses (i), (ii) and (iii) of this
Section 4.12(a) than those contained in the New Credit Agreement as in effect on
the date of this Indenture, (C) customary provisions restricting subletting or
assignment of any lease or license of the Company or any Restricted Subsidiary,
(D) customary provisions of any franchise, distribution or similar agreement,
(E) any instrument governing Indebtedness or preferred stock or any other
encumbrance or restriction of a Person acquired by the Company or any Restricted
Subsidiary at the time of such acquisition, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired, (F)
Indebtedness or other agreements existing on the date of original issuance of
the Notes, (G) any Refinancing Indebtedness permitted under Section 4.07,
provided that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive in any material respect with
regard to the interests of the holders of the Notes than those contained in the
agreements governing the Indebtedness being refinanced, (H) any restrictions,
with respect to a Restricted Subsidiary, imposed pursuant to an agreement that
has been entered into for the sale or disposition of the stock, business, assets
or properties of such Restricted Subsidiary, (I) the terms of purchase money or
capital lease obligations, but only to the extent such purchase money
obligations restrict or prohibit the transfer of the property so acquired, or
(J) any instrument governing the sale of assets of the Company or any Restricted
Subsidiary, which encumbrance or restriction applies solely to the assets of the
Company or such Restricted subsidiary being sold in such transaction.
(b) Nothing contained in Section 4.12 shall prevent the Company from
entering into any agreement or instrument providing for the incurrence of
Permitted Liens or restricting the sale or other
36
disposition of property or assets of the Company or any of its Restricted
Subsidiaries that are subject to Permitted Liens.
SECTION 4.13. MAINTENANCE OF OFFICE OR AGENCIES.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or an agency (which may be an office of any Agent) where Notes
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
any change in the location of such office or agency. If at any time the Company
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office.
The Company 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 matter relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, Window #2, New York, New York 10005 as one
such office or agency of the Company in accordance with Section 2.03.
SECTION 4.14. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control (such date being the "Change
of Control Trigger Date"), each Holder of Notes shall have the right to require
the Company to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to an Offer at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus any accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase.
Although the failure of the Company to purchase all Notes tendered in such an
Offer shall be a Default, if the Company is unable to purchase all Notes
tendered in such an Offer, the Company shall nevertheless purchase the maximum
principal amount of Notes that it is able to purchase at that time.
(b) Prior to the mailing of the notice referred to in Section 3.08(a), but
in any event within 30 days following any Change of Control Trigger Date, the
Company shall (i) repay in full and terminate all commitments under Indebtedness
under the New Credit Agreement and all other Senior Indebtedness the terms of
which require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the New Credit Agreement
and all other such Senior Indebtedness and to repay the Indebtedness owed to
each lender which has accepted such offer or (ii) obtain the requisite consents
under the New Credit Agreement and all such other Senior Indebtedness to permit
the repurchase of the Notes. The Company shall first comply with the covenant in
the immediately preceding sentence before it shall be required to repurchase
Notes pursuant to the provisions of this Section 4.14. The Company's failure to
comply with this covenant shall constitute an Event of Default described in
clause (a)(iii) and not in clause (a)(ii) under Section 6.01.
(c) In the event of a Change of Control, the Company shall not offer to
purchase or redeem any Subordinated Indebtedness required or entitled by its
terms to be redeemed or purchased until the
37
Change of Control Offer for the Notes has been consummated and all Notes
tendered pursuant to such Offer have been accepted for payment.
SECTION 4.15. LIMITATION ON ASSET SALES.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate an Asset Sale (including the sale of any
of the Capital Stock of any Restricted Subsidiary) providing for Net Proceeds in
excess of $2.5 million unless at least 75% of the Net Proceeds from such Asset
Sale are applied (in any manner otherwise permitted by this Indenture) to one or
more of the following purposes in such combination as the Company shall elect:
(a) an investment in another asset or business in the same line of business as,
or a line of business similar to that of, the line of business of the Company
and its Restricted Subsidiaries at the time of the Asset Sale or the making of a
capital expenditure otherwise permitted by this Indenture; provided that such
investment occurs within 365 days of the date of such Asset Sale (the "Asset
Sale Disposition Date"), (b) to reimburse the Company or its Restricted
Subsidiaries for expenditures made, and costs incurred, to repair, rebuild,
replace or restore property subject to loss, damage or taking to the extent that
the Net Proceeds consist of insurance proceeds received on account of such loss,
damage or taking, (c) to cash collateralize letters of credit; provided any such
cash collateral released to the Company or its Restricted Subsidiaries upon the
expiration of such letters of credit shall again be deemed to be Net Proceeds
received on the date of such release, (d) the permanent purchase, redemption or
other prepayment or repayment of outstanding Senior Indebtedness of the Company
or Indebtedness of the Company's Restricted Subsidiaries (with a corresponding
reduction in any commitment relating thereto) on or prior to the 365th day
following the Asset Sale Disposition Date or (e) an Offer expiring on or prior
to the Purchase Date.
(b) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate an Asset Sale unless at least 75% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash or Marketable Securities; provided that, solely for purposes
of calculating such 75% of the consideration, the amount of (x) any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto, excluding contingent liabilities and trade
payables) of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes) that are assumed by the
transferee of any such assets and (y) any notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
promptly, but in no event more than 90 days after receipt, converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash and cash equivalents for purposes of this
provision. Any Net Proceeds from any Asset Sale that are not applied or invested
as provided in the first sentence of this paragraph shall constitute "Excess
Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10.0 million
(such date being an "Asset Sale Trigger Date"), the Company shall make an Offer
to all Holders of Notes to purchase the maximum principal amount of the Notes
then outstanding that may be purchased out of Excess Proceeds, at an offer price
in cash in an amount equal to 100% of principal amount thereof plus any accrued
and unpaid interest and Liquidated Damages, if any, to the Purchase Date in
accordance with the procedures set forth in this Indenture.
(d) To the extent that any Excess Proceeds remain after completion of an
Offer, the Company may use such remaining amount for general corporate purposes.
(e) If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis, by
38
lot or by a method that complies with the requirements of any stock exchange on
which the Notes are listed and that the Trustee considers fair and appropriate.
(f) Upon completion of an Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
(g) Notwithstanding the foregoing, to the extent that any or all of the Net
Proceeds of an Asset Sale is prohibited or delayed by applicable local law from
being repatriated to the United States, the portion of such Net Proceeds so
affected will not be required to be applied as described in Section 4.15, but
may be retained for so long, but only for so long, as the applicable local law
prohibits repatriation to the United States. The Company shall promptly take all
reasonable actions required by the applicable local law to permit such
repatriation, and once such repatriation of any affected Net Proceeds is not
prohibited under applicable local law, such repatriation will be immediately
effected and such repatriated Net Proceeds will be applied in the manner set
forth above as if such Asset Sale have occurred on the date of repatriation.
SECTION 4.16 NOTE GUARANTEES.
In the event that the Company or any of its Restricted Subsidiaries shall
acquire or create another Restricted Subsidiary after the date of this
Indenture, then such newly acquired or created Restricted Subsidiary shall
execute and deliver to the Trustee a Note Guarantee in accordance with Section
12.01 hereof.
SECTION 4.17 DESIGNATION OF RESTRICTED AND NON-RESTRICTED SUBSIDIARIES.
(a) From and after the date of original issuance of the Notes, the Company
may designate any existing or newly formed or acquired Subsidiary as a
Non-Restricted Subsidiary; provided that (i) either (A) the Subsidiary to be so
designated has total assets of $1.0 million or less or (B) immediately before
and after giving effect to such designation on a Pro Forma Basis: (1) the
Company could incur $1.00 of additional Indebtedness pursuant to Section 4.07(a)
determined on a Pro Forma Basis; and (2) no Default or Event of Default shall
have occurred and be continuing, and (ii) all transactions between the
Subsidiary to be so designated and its Affiliates remaining in effect are
permitted pursuant to Section 4.09. Any Investment made by the Company or any
Restricted Subsidiary that is redesignated from a Restricted Subsidiary to a
Non-Restricted Subsidiary shall be considered a Restricted Payment (to the
extent not previously included as a Restricted Payment) made on the day such
Subsidiary is designated a Non-Restricted Subsidiary in the amount of the
greater of (i) the fair market value (as determined by the Board of Directors of
the Company in good faith) of the Equity Interests of such Subsidiary held by
the Company and its Restricted Subsidiaries on such date, and (ii) the amount of
the Investments determined in accordance with GAAP made by the Company and any
of its Restricted Subsidiaries in such Subsidiary.
(b) A Non-Restricted Subsidiary may be redesignated as a Restricted
Subsidiary. The Company shall not, and shall not permit any Restricted
Subsidiary to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition, the redesignation of a Non-Restricted
Subsidiary or otherwise, but not including through the creation of a new
Restricted Subsidiary) unless, immediately before and after giving effect to
such action, transaction or series of transactions on a Pro Forma Basis, (i) the
Company could incur at least $1.00 of additional Indebtedness pursuant to
Section 4.07(a) and (ii) no Default or Event of Default shall have occurred and
be continuing.
39
(c) The designation of a Subsidiary as a Restricted Subsidiary or the
removal of such designation is required to be made by a resolution adopted by a
majority of the Board of Directors of the Company stating that the Board of
Directors has made such designation in accordance with this Indenture, and the
Company is required to deliver to the Trustee such resolution together with an
Officers' Certificate certifying that the designation complies with this
Indenture. Such designation will be effective as of the date specified in the
applicable resolution, which may not be before the date the applicable Officers'
Certificate is delivered to the Trustee.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER OR CONSOLIDATION.
(a) The Company shall not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets to,
any Person (any such consolidation, merger or sale being a "Disposition") unless
(i) the successor corporation of such Disposition or the corporation to which
such Disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the successor corporation of such Disposition or the corporation
to which such Disposition shall have been made expressly assumes the Obligations
of the Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Indenture and the Notes; (iii)
immediately after such Disposition, no Default or Event of Default shall exist;
and (iv) the corporation formed by or surviving any such Disposition, or the
corporation to which such Disposition shall have been made, shall (A) have
Consolidated Net Worth (immediately after the Disposition but prior to giving
any pro forma effect to purchase accounting adjustments or Restructuring Charges
resulting from the Disposition) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the Disposition, (B) be permitted
immediately after the Disposition by the terms of this Indenture to issue at
least $1.00 of additional Indebtedness determined on a Pro Forma Basis, and (C)
have a Cash Flow Coverage Ratio, for the four fiscal quarters immediately
preceding the applicable Disposition, and determined on a Pro Forma Basis, equal
to or greater than the actual Cash Flow Coverage Ratio of the Company for such
four quarter period.
(b) Prior to the consummation of any proposed Disposition, the Company
shall deliver to the Trustee an Officers' Certificate to the foregoing effect
and an Opinion of Counsel stating that the proposed Disposition and such
supplemental indenture comply with this Indenture.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any Disposition, the Successor Corporation resulting from such
Disposition shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such Successor has been named as the Company herein; provided, however, that
neither the Company nor any Successor Corporation shall be released from its
Obligation to pay the principal of, premium, if any, and accrued and unpaid
interest on, and Liquidated Damages, if any, with respect to the Notes.
40
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
(a) An Event of Default is:
(i) a default for 30 days in payment of interest on, or Liquidated
Damages, if any, with respect to, the Notes;
(ii) a default in payment when due of principal or premium, if any,
with respect to, the Notes;
(iii) the failure of the Company to comply with any of its other
agreements or covenants in, or provisions of, this Indenture or
the Notes outstanding and the Default continues for the period,
if applicable, and after the notice specified in Section 6.01(b);
(iv) a default by the Company or any Restricted Subsidiary under any
mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any Restricted Subsidiary
(or the payment of which is guaranteed by the Company or any
Restricted Subsidiary), whether such Indebtedness or guarantee
now exists or shall be created hereafter, if (A) either (1) such
default results from the failure to pay principal of or interest
on any such Indebtedness at or after the final maturity thereof
(after giving effect to any extensions thereof) or (2) as a
result of such default the maturity of such Indebtedness has been
accelerated prior to its expressed maturity, and (B) the
principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for
failure to pay principal or interest thereon, or because of the
acceleration of the maturity thereof, aggregates in excess of
$10,000,000;
(v) a failure by the Company or any Restricted Subsidiary to pay
final judgments (not covered by insurance) aggregating in excess
of $5,000,000, which judgments a court of competent jurisdiction
does not rescind, annul or stay within 45 days after their entry;
(vi) in existence when the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
and
41
(vii) in existence when a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the property
of the Company or any Significant Subsidiary, or
(C) orders the liquidation of the Company or any Significant
Subsidiary,
and any such order or decree remains unstayed and in effect for
60 days.
(viii) except as permitted by this Indenture, any Note Guarantee shall
be held in any judicial proceeding unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Note Guarantee.
(b) A Default or Event of Default under Section 6.01(a)(iii) (other than an
Event of Default arising under Section 5.01, which shall be an Event of Default
with the notice but without the passage of time specified in this Section
6.01(b)) is not an Event of Default under this Indenture until the Trustee or
the Holders of at least 25% in principal amount of the Notes then outstanding
notify the Company of the Default, and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify the Default,
demand that it be remedied, and state that the notice is a "Notice of Default."
(c) In the case of any Event of Default pursuant to Sections 6.01(a)(i) and
(ii) occurring by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding payment of
the premium that the Company would have to pay if the Company then had elected
to redeem the Notes pursuant to paragraph 5 of the Notes, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law, anything in this Indenture or in the Notes contained to the contrary
notwithstanding.
(d) The Trustee shall not be charged with knowledge of any Default or Event
of Default unless written notice thereof shall have been given to a Trust
Officer at the Corporate Trust Office of the Trustee by the Company or any other
Person.
(e) The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or an Event of Default
pursuant to Sections 6.01(a)(i) and (ii)) if the Trustee determines that
withholding notice is in their interest.
SECTION 6.02. ACCELERATION.
(a) Upon the occurrence of an Event of Default (other than an Event of
Default under clause Sections 6.01(a)(vi) and (vii)), the Trustee or the holders
of at least 25% in principal amount of the then outstanding Notes may declare
all Notes (i) to be due and payable immediately by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice") and, upon receipt by
the Company of such Acceleration Notice, the principal of, premium, if any, and
any accrued and unpaid interest on, and Liquidated Damages, if
42
any, with respect to all Notes shall be due and payable immediately; or (ii) if
there are any amounts outstanding under the New Credit Agreement, to be due and
payable immediately upon the first to occur of (A) an acceleration under the New
Credit Agreement or (B) five business days after receipt by the Company of such
Acceleration Notice, but only if such Event of Default is then continuing;
provided, however, that if an Event of Default arises under Section 6.01(a)(vi)
or (vii), the principal of, premium, if any, and any accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to all 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 Holders of Notes.
(b) The holders of a majority in principal amount of the Notes then
outstanding, by notice to the Trustee, may rescind any declaration of
acceleration of such Notes and its consequences (if the rescission would not
conflict with any judgment or decree) if all existing Events of Default (other
than the nonpayment of principal of or interest on such Notes that shall have
become due by such declaration) shall have been cured or waived.
(c) If there has been a declaration of acceleration of the Notes because an
Event of Default under Section 6.01(a)(iv) has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if the holders of
the Indebtedness described in Section 6.01(a)(iv) have rescinded the declaration
of acceleration in respect of such Indebtedness within 30 Business Days thereof
and if (i) the annulment of such acceleration would not conflict with any
judgment or decree of a court of competent jurisdiction, (ii) all existing
Events of Default, except non-payment of principal, premium, interest or
Liquidated Damages that shall have become due solely because of the
acceleration, have been cured or waived, and (iii) the Company has delivered an
Officers' Certificate to the Trustee to the effect of clauses (i) and (ii)
above.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of, premium, if any, or any
accrued and unpaid interest on, or Liquidated Damages, if any, with respect to
the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
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. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of all Holders of Notes waive
any existing Default or Event of Default under this Indenture and its
consequences, except a continuing Default in the payment of the principal of,
premium, if any, and interest on, and Liquidated Damages, if any, with respect
to such Notes, which may only be waived with the consent of each Holder of Notes
affected. Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; provided that no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Subject to Section 7.01(e), the Holders of a majority in principal amount
of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it by this Indenture. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
the Trustee determines may be unduly prejudicial to the rights of other Holders
or would involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if (i) the Holder gives to the Trustee notice of a continuing Event of
Default; (ii) the Holders of at least 25% in principal amount of the then
outstanding Notes make a request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense; (iv) the Trustee does not comply with
the request within 60 days after receipt of the request and the offer of
indemnity; and (v) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Holders of the Notes may not enforce this Indenture, except as provided
herein.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium, if any, and any accrued and
unpaid interest on, and Liquidated Damages, if any, with respect to a Note, on
or after a respective due date expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective date, shall not be
impaired or affected without the consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a)(i) or (ii) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for (i) the principal,
premium and Liquidated Damages, if any, and interest remaining unpaid on the
Notes, (ii) interest on overdue principal and premium, if any, and, to the
extent lawful, interest, and (iii) such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel ("Trustee Expenses").
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable to have the claims of the Trustee (including any
claim for Trustee Expenses) and the Holders allowed in any Insolvency or
Liquidation Proceeding or other judicial proceeding relative to the Company (or
any other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute to Holders any money
or other property payable or deliverable on any such claims and each Holder
authorizes any Custodian in any such Insolvency or Liquidation Proceeding or
other judicial proceeding to make such payments to the Trustee, and if the
Trustee shall consent to the
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making of such payments directly to the Holders any such Custodian is hereby
authorized to make such payments directly to the Holders, and to pay to the
Trustee any amount due to it hereunder for Trustee Expenses, and any other
amounts due the Trustee under Section 7.07. To the extent that the payment of
any such Trustee Expenses, and any other amounts due the Trustee under Section
7.07 out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties which
the Holders may be entitled to receive in such proceeding, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any Insolvency or Liquidation Proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Notes for principal,
premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and
Liquidated Damages, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
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 a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07,
or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default occurs (and has not been cured) the Trustee
shall (i) exercise the rights and powers vested in it by this Indenture, and
(ii) use the same degree of care and skill in exercising such rights and powers
as a prudent person would exercise or use under the circumstances in the conduct
of its own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the Trustee's duties shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether they conform to this Indenture's requirements.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own wilful misconduct, except
that:
(i) this paragraph does not limit the effect of Section 7.01(b);
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) 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 it
receives pursuant to Section 6.05.
(d) Whether or not expressly so provided, every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b), (c)
and (e) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money it receives
except as the Trustee may agree in writing with the Company. Money the Trustee
holds in trust need not be segregated from other funds except to the extent
required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document it believes to be genuine and to
have been signed or presented by the proper Person. The Trustee shall not be
obligated to investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may reasonably
require an Officers' Certificate or an Opinion of Counsel, or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and 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.
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(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any Agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take, except to the extent that such action or omission to act constitutes
negligence or wilful misconduct on the part of the Trustee.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer.
SECTION 7.03. 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 the Company or an Affiliate with
the same rights it would have if it were not Trustee. However, if the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as Trustee or resign. Any
Agent may do the same with like rights. The Trustee is also subject to Sections
7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or for any
money paid to the Company or upon the Company's direction under any provisions
hereof, it shall not be responsible for the use or application of any money any
Paying Agent other than the Trustee receives, and it shall not be responsible
for any statement or recital herein or any statement in the Notes or any other
document furnished or issued in connection with the sale of the Notes or
pursuant to this Indenture, other than its certificate of authentication.
SECTION 7.05. NOTICE TO HOLDERS OF DEFAULTS AND EVENTS OF DEFAULT.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Note (including any failure
to redeem Notes called for redemption or any failure to purchase Notes tendered
pursuant to an Offer that are required to be purchased by the terms of this
Indenture), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the Holders' interests.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with May 15, 1997, the Trustee
shall mail to Holders a brief report dated as of such reporting date that
complies with section 313(a) of the TIA (but if no event described in section
313(a) of the TIA has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with section
313(b)(2) of the TIA. The Trustee shall also transmit by mail all reports as
required by section 313(c) of the TIA.
Commencing at the time this Indenture is qualified under the TIA, a copy of
each report at the time of its mailing to Holders shall be filed with the SEC
and each national securities exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any national securities
exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee (in its capacities as Trustee, Paying
Agent and/or Registrar) 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. The Company shall reimburse
the Trustee upon request for all reasonable disbursements, advances, fees and
expenses it incurs or makes in addition to the compensation for its services.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee (in its
capacities as Trustee, Paying Agent and/or Registrar) against any and all
losses, liabilities or expenses the Trustee incurs arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth below. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its Obligations
hereunder. The Company shall defend the claim and the Trustee shall reasonably
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company's Obligations under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any loss or
liability the Trustee incurs through the Trustee's negligence or bad faith.
To secure the Company's payment of its Obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property the
Trustee holds or collects. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(a)(vii) or (viii) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute administrative expenses under any Bankruptcy
Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby created by
so notifying the Company. The Holders of a majority in principal amount of the
then outstanding Notes may remove the Trustee by so notifying the Trustee and
the Company. The Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
(iii) a Custodian or public officer takes charge of the Trustee or its
property; or
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(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee, provided that the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace any successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then 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 Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective and the successor Trustee
shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its appointment to
Holders. The retiring Trustee shall promptly transfer all property it holds as
Trustee to the successor Trustee, provided all sums owing to the retiring
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07. Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the retiring
Trustee's benefit with respect to expenses and liabilities it incurred prior to
being replaced.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times (i) be a corporation organized and doing
business under the laws of the United States of America, of any state thereof,
or the District of Columbia authorized under such laws to exercise corporate
trustee power, (ii) be subject to supervision or examination by federal or state
authority, (iii) have a combined capital and surplus of at least $100,000,000 as
set forth in its most recent published annual report of condition, and (iv)
satisfy the requirements of sections 310(a)(1), (2) and (5) of the TIA. The
Trustee is subject to section 310(b) of the TIA.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to section 311(a) of the TIA, excluding any creditor
relationship listed in section 311(b) of the TIA. A Trustee who has resigned or
been removed shall be subject to section 311(a) of the TIA to the extent
indicated therein.
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ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.
(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation, or (ii)
all outstanding Notes have become due and payable and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity all outstanding
Notes, including interest, premium and Liquidated Damages thereon (other than
Notes replaced pursuant to Section 2.07), and if in either case the Company pays
all other sums payable under this Indenture by the Company, then this Indenture
shall, subject to Sections 8.01(c) and 8.06, cease to be of further effect.
(b) Subject to Sections 8.01(c), 8.02, and 8.06, the Company at any time
may terminate (i) all its obligations under the Notes and this Indenture ("legal
defeasance option") or (ii) its obligations under Sections 4.02, 4.03, 4.05,
4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17, and
the operation of Sections 5.01(a)(iii), 5.01(a)(iv), or 6.01(a)(iii) through
(a)(v) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Notes shall not be accelerated
because of an Event of Default specified in Sections 6.01(a)(iii) through (a)(v)
or because of the Company's failure to comply with Section 5.01(a)(iii) and
5.01(a)(iv).
Upon satisfaction of the conditions set forth herein and upon the Company's
request (and at the Company's expense), the Trustee shall acknowledge in writing
the discharge of those obligations that the Company has terminated.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.04, 7.07, 7.08, 8.04, 8.05 and
8.06, and the Trustee's and the Paying Agent's obligations in Section 8.04 shall
survive until the Notes have been paid in full. Thereafter, the Company's
obligations in Sections 7.07 and 8.05 and the Company's, the Trustee's and the
Paying Agent's obligations in Section 8.04 shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust (the "defeasance trust")
with the Trustee money or U.S. Government Obligations sufficient for
the payment in full of the principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Notes then outstanding, as of the maturity date, the
redemption date or the Purchase Date, as the case may be;
(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants or an investment bank
expressing its opinion that the payments of principal and interest
when due and without reinvestment of the deposited U.S. Government
Obligations plus any deposited money without investment will provide
cash
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at such times and in such amounts as will be sufficient to pay when
due principal of, premium, if any, and any accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to all the Notes to
maturity or redemption, as the case may be;
(3) since the Company's irrevocable deposit provided for in Section
8.02(1), 91 days have passed;
(4) no Default has occurred and is continuing on the date of such deposit
and after giving effect to it;
(5) the deposit does not constitute a default under any other agreement
binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute,
or is qualified as, a regulated investment company under the
Investment Company Act of 1940, as amended;
(7) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (ii) under 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 deposit and defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred (and, in the case of legal
defeasance only, such opinion of counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable federal
income tax law); and
(9) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes contemplated by this Article 8
have been satisfied.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption or purchase of Notes at a future date in
accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article 8. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of, premium, if any,
and any accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Notes.
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SECTION 8.04. REPAYMENT TO THE COMPANY.
After the Notes have been paid in full, the Trustee and the Paying Agent
shall promptly turn over to the Company any excess money or securities they
hold.
The Trustee and the Paying Agent shall pay to the Company upon written
request by the Company any money they hold for the payment of principal,
premium, interest or Liquidated Damages that remains unclaimed for one year
after the date upon which such payment shall have become due; provided, however,
that the Company shall have either caused notice of such payment to be mailed to
each Holder entitled thereto no less than 30 days prior to such repayment or
within such period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York (including, without
limitation, The Wall Street Journal). After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article 8 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 8 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of principal of, premium, if
any, and any accrued and unpaid interest on, and Liquidated Damages, if any,
with respect to any Notes because of the reinstatement of its Obligations, the
Company shall be subrogated to the Holders' rights to receive such payment from
the money or U.S. Government Obligations the Trustee or Paying Agent holds.
ARTICLE 9
AMENDMENTS
SECTION 9.01. AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 9.02, the Company and the Trustee may amend or
supplement this Indenture or the Notes without the consent of any Holder (a) to
cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated
Notes in addition to or in place of certificated Notes; (c) to provide for the
assumption by a Successor Corporation of the Company's Obligations to the
Holders in the event of a Disposition pursuant to Article 5; (d) to comply with
SEC's requirements to effect or maintain the qualification of this Indenture
under the TIA; (e) to comply with Section 12.01; or (f) to make any change that
does not adversely affect any Holder's legal rights under this Indenture.
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Upon the Company's request, after receipt by the Trustee of a resolution of
the Board of Directors authorizing the execution of any amended or supplemental
indenture, the documents described in Section 9.06, the Trustee shall join with
the Company in the execution of any amended or supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be contained in any such amended or
supplemental indenture, but the Trustee shall not be obligated to enter into an
amended or supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT OF HOLDERS.
Subject to Section 6.07, the Company and the Trustee may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Subject to Sections 6.04 and 6.07, the Holders of a majority in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Notes) may also waive
any existing Default or Event of Default (other than a payment Default) and its
consequences or compliance in a particular instance by the Company with any
provision of this Indenture or the Notes.
Upon the Company's request and after receipt by the Trustee of a resolution
of the Board of Directors authorizing the execution of any supplemental
indenture, evidence of the Holders' consent, and the documents described in
Section 9.06, the Trustee shall join with the Company in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but not be obligated
to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to each Holder affected thereby a notice briefly describing
the amendment, supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amended or supplemental indenture or waiver. Without
the consent of each Holder affected, an amendment, supplement or waiver under
this Section may not (1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (2) reduce the rate of or change
the time for payment of interest, including interest as set forth in Section
4.01, or Liquidated Damages on any Note or alter the redemption or purchase
provisions with respect thereto or the price at which the Company is required to
offer to purchase any Note; (3) reduce the principal of or change the fixed
maturity of any Note; (4) make any Note payable in money other than that stated
in the Note; (5) make any change in Section 6.04 or 6.07 or in this sentence of
this Section 9.02; or (6) waive a default in the payment of the principal of, or
premium, if any, or any accrued and unpaid interest on, or Liquidated Damages,
if any, with respect to, or redemption or purchase payment with respect to, any
Note (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes and
a waiver of the payment default that resulted from such acceleration).
Without the consent of the Holders of at least 75% in aggregate principal
amount of the Notes then outstanding, no amendment, supplement or waiver under
this Section may make any change in the provisions under Article 10 of this
Indenture.
53
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended supplemental indenture that complies with the TIA as then in
effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same Indebtedness as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his or her Note or portion of a Note if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officer's
Certificate certifying that the Holders of the requisite principal amount of
Notes have consented to the amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Notes entitled to consent to any amendment
or waiver. If a record date is fixed, then, notwithstanding the provisions of
the immediately preceding paragraph, those Persons who were Holders of Notes at
such record date (or their duly designated proxies), and only those Persons,
shall be entitled to consent to such amendment or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders of
Notes after such record date. No consent shall be valid or effective for more
than 90 days after such record date unless consents from Holders of the
principal amount of Notes required hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every Holder,
unless it is of the type described in any of clauses (1) through (6) of Section
9.02. In such case, the amendment or waiver shall bind each Holder who has
consented to it and every subsequent Holder of a Note that evidences the same
debt as the consenting Holder's Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may (at the Company's expense) place an appropriate notation
about an amendment, supplement or waiver on any Note thereafter authenticated.
The Company in exchange for all Notes may issue and the Trustee shall
authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing such amendment or supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section
7.01, shall be fully protected in relying upon, an Officers' Certificate and
Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or supplemental
indenture until the Board of Directors approves it.
54
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Note is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full in cash or Marketable Securities of all Senior Indebtedness (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed), and that the subordination is for the benefit of the holders of
Senior Indebtedness.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(a) holders of Senior Indebtedness shall be entitled to receive payment in
full in cash or Marketable Securities of all Obligations due in respect of such
Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness) before
Holders shall be entitled to receive any payment with respect to the Notes
(except that Holders may receive (i) Permitted Junior Securities and (ii)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.02 hereof); and
(b) until all Obligations with respect to Senior Indebtedness are paid in
full in cash or Marketable Securities, any distribution to which Holders would
be entitled but for this Article 10 shall be made to holders of Senior
Indebtedness (except that Holders may receive (i) Permitted Junior Securities
and (ii) payments and other distributions made from any defeasance trust created
pursuant to Section 8.02 hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.
(a) The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (x) Permitted Junior Securities and (y) payments and other distributions
made from any defeasance trust created pursuant to Section 8.02 hereof) until
all principal and other Obligations with respect to the Senior Indebtedness have
been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Indebtedness occurs and is continuing
beyond any applicable grace period in the agreement, indenture or
other document governing such Designated Senior Indebtedness; or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity and the
Trustee receives a notice of the default (a "Payment
55
Blockage Notice") from a Person who may give it pursuant to Section
10.12 hereof. If the Trustee receives any such Payment Blockage
Notice, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until at least 360 days shall have
elapsed since the date of receipt by the Trustee of the immediately
prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice (it being understood that any subsequent
action, or any breach of any covenant for a period commencing after
the date of receipt by the Trustee of such Payment Blockage Notice,
that, in either case, would give rise to such a default pursuant to
any provision under which a default previously existed or was
continuing shall constitute a new default for this purpose).
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of: (i) the date upon
which the default is cured or waived, or (ii) in the case of a default referred
to in Section 10.03(a)(ii) hereof, 179 days pass after the applicable Payment
Blockage Notice is received by the Company if the maturity of such Designated
Senior Indebtedness has not been accelerated (or, if such Designated Senior
Indebtedness has been accelerated, such Designated Senior Indebtedness has not
been paid in full in cash or Marketable Securities) and if this Article
otherwise permits the payment, distribution or acquisition at the time of such
payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
(a) In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
their representative (the "Representative") under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in cash or Marketable Securities in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
56
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Indebtedness as
provided in this Article.
SECTION 10.07. SUBROGATION.
After all Senior Indebtedness is paid in full in cash or Marketable
Securities and until the Notes are paid in full, Holders shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A distribution
made under this Article to holders of Senior Indebtedness that otherwise would
have been made to Holders is not, as between the Company and Holders, a payment
by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
(a) This Article defines the relative rights of Holders and holders of
Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the
Company and Holders, the obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on the Notes in accordance with
their terms; (ii) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Indebtedness;
or (iii) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of holders
and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Holders.
(b) If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
57
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article. Only the Company or a Representative may give
the notice. Nothing in this Article 10 shall impair the claims of, or payments
to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the Holders are hereby authorized to file an appropriate claim.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Indebtedness (in accordance
with the provisions thereof).
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts with the
duties imposed by operation of section 318(c) of the TIA, the imposed duties
shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person, mailed by registered or
certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
If to the Company:
GFSI, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: director of finance
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
58
with copies to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
The Jordan Company
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee:
Fleet National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; the date receipt is acknowledged, if mailed by registered or
certified mail; when answered back, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class mail
to his or her address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to section 312(b) of the TIA with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of section 312(c) of the TIA.
59
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set forth
in Section 11.05) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set forth in
Section 11.05) stating that, in the opinion of such counsel, all such
conditions precedent provided for in this Indenture relating to the
proposed action have been complied with.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to section 314(a)(4) of the TIA) shall include:
(1) a statement that the Person 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 Person, he has made such
examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in such Person's opinion, such condition or
covenant has been complied with.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
SECTION 11.08. NO RECOURSE AGAINST OTHERS.
No officer, employee, director, stockholder or Subsidiary of the Company
shall have any liability for any Obligations of the Company under the Notes or
this Indenture, or for any claim based on, in respect of, or by reason of, such
Obligations or the creation of any such Obligation, except, in the case of a
Subsidiary, for an express guarantee or an express creation of any Lien by such
Subsidiary of the Company's Obligations under the Notes. Each Holder by
accepting a Note waives and releases all such
60
liability, and such waiver and release is part of the consideration for the
issuance of the Notes. The foregoing waiver may not be effective to waive
liabilities under the Federal securities law and the SEC is of the view that
such a waiver is against public policy.
SECTION 11.09. COUNTERPARTS.
This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 11.10. VARIABLE PROVISIONS.
The Company initially appoints the Trustee as Paying Agent, Registrar and
authenticating agent.
The first compliance certificate to be delivered by the Company to the
Trustee pursuant to Section 4.03 shall be for the fiscal year ending on June 30,
1997.
SECTION 11.11. GOVERNING LAW.
The internal laws of the State of New York shall govern this Indenture and
the Notes, without regard to the conflict of laws provisions thereof.
SECTION 11.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries, and no other indenture,
loan or debt agreement may be used to interpret this Indenture.
SECTION 11.13. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 11.14. SEVERABILITY.
If 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.
SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
61
ARTICLE 12
GUARANTEE OF NOTES
SECTION 12.01. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
(a) After the date of this Indenture, if the Company, or any of its
Restricted Subsidiaries, shall acquire or create a Restricted Subsidiary, or
redesignate a Non-Restricted Subsidiary to be a Restricted Subsidiary, then such
Restricted Subsidiary shall execute a guarantee (a "Note Guarantee"). Such Note
Guarantee shall be substantially in the form of Exhibit E and shall be
accompanied by a Supplemental Indenture substantially in the form of Exhibit F,
along with such other opinions, certificates and documents as required under
this Indenture; provided, however, that any Subsidiary that has been properly
designated as a Non-Restricted Subsidiary in accordance with Section 4.17 need
not execute a Note Guarantee for so long as it continues to constitute a
Non-Restricted Subsidiary.
(b) Except as provided for under Section 12.02, a Guarantor shall be
subject to the provisions of this Indenture from the date of the Supplemental
Indenture to which its Note Guarantee relates and until such time as it has been
properly designated as a Non-Restricted Subsidiary pursuant to Section 4.17.
SECTION 12.02. SUBORDINATION OF NOTE GUARANTEE; GUARANTORS MAY CONSOLIDATE,
ETC., ON CERTAIN TERMS.
(a) The obligations of each Guarantor under its Note Guarantee pursuant to
this Article 12 shall be subordinated to the prior payment in full in cash or
Marketable Securities of all Senior Indebtedness of each Guarantor (including
such Guarantor's guarantee of the New Credit Agreement) to the same extent that
the Notes are subordinated to Senior Indebtedness of the Company pursuant to
Article 10 of this Indenture. For the purposes of this foregoing sentence, the
Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors in respect of any Note Guarantee only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof.
(b) No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
whether or not affiliated with such Guarantor unless (i) subject to the
provisions of Section 12.02(c), the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes and this
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; (iii) such Guarantor, or any Person formed by or
surviving any such consolidation or merger, would have Consolidated Net Worth
(immediately after giving effect to such transaction), equal to or greater than
the Consolidated Net Worth of such Guarantor immediately preceding the
transaction; and (iv) the Company would be permitted by virtue of the Company's
pro forma Cash Flow Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Cash Flow Coverage test set forth in Section 4.07; provided, that the
requirements of clauses (iii) and (iv) of this paragraph will not apply in the
case of a consolidation with or merger with or into the Company or another
Guarantor.
(c) In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor or any
such designation) or the
62
corporation acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) shall be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture.
(d) In the event that the Company designates a Guarantor to be a
Non-Restricted Subsidiary, then such Guarantor shall be released and relieved of
any obligations under its Note Guarantee; provided that such designation is
conducted in accordance with Section 4.17.
[NEXT PAGE IS SIGNATURE PAGE]
63
Dated as of February 27, 1997 GFSI, INC.
By: /s/ Illegible
-------------------------------
Name:
Title:
Dated as of February 27, 1997 FLEET NATIONAL BANK,
as Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VICE PRESIDENT
64
EXHIBIT A
(Face of Note)
9 5/8% Series [A/B] Senior Subordinated Note due 2007
No. $__________
CUSIP No. [▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇]
GFSI, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on _________, 2007.
Interest Payment Dates:
Record Dates:
Dated: February __, 1997
GFSI, INC.
By:______________________________
Name:
Title:
Trustee's Certificate of Authentication
Dated: February __, 1997
This is one of the
Notes referred to in the
within-mentioned Indenture:
FLEET NATIONAL BANK,
as Trustee
By:_____________________________
(Authorized Signatory)
A-1
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Senior Subordinated Note may not be transferred except 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 or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. The Depository Trust Company shall act as the Depository
until a successor shall be appointed by the Company and the Registrar. Unless
this certificate is presented by an authorized representative of The Depository
Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) ("▇▇▇"), to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be 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.]1
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO
THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Additional provisions of this Senior Subordinated Note are set forth on the
other side of this Senior Subordinated Note.
--------
1. This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
A-2
(Back of Note)
9 5/8% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. GFSI, Inc. (the "Company") promises to pay interest on the
principal amount of the Notes at the rate and in the manner specified below.
Interest on the Notes will accrue at 9 5/8% per annum from the date this Note is
issued until maturity. The Company will pay Liquidated Damages pursuant to
Section 5 of the Registration Rights Agreement referred to below. Interest and
Liquidated Damages, if any, will be payable semiannually in cash in arrears on
March 1 and September 1 of each year, or if any such day is not a Business Day
on the next succeeding Business Day (each, an "Interest Payment Date"). 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 the date of original issuance;
provided that the first Interest Payment Date shall be September 1, 1997. The
Company shall pay interest on overdue principal and premium, if any, from time
to time on demand at the interest rate then in effect and shall pay interest on
overdue installments of interest and Liquidated Damages, if any, (without regard
to any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
holders of Notes at the close of business on the record date for the next
Interest Payment Date even if such Notes are cancelled after such record date
and on or before such Interest Payment Date. Holders must surrender Notes to a
Paying Agent to collect principal payments on such Notes. The Company will pay
principal, premium, if any, interest and Liquidated Damages, if any, in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. The Company will pay principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders or, if no such account
is specified, by mailing a check to each such Holder's registered address;
provided that payment by wire transfer of immediately available funds will be
required with respect to principal, premium, if any, interest and Liquidated
Damages, if any, on all Global Notes.
3. Paying Agent and Registrar. Fleet National Bank (the "Trustee") will
initially act as the Paying Agent and Registrar. The Company may appoint
additional paying agents or co-registrars, and change the Paying Agent, any
additional paying agent, the Registrar or any co-registrar without prior notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated as of
February 27, 1997 (the "Indenture"), among the Company and the Trustee. 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. Code
▇▇.▇▇. 77aaa-77bbbb) as in effect on the date of the original issuance of the
Notes (the "Trust Indenture Act"). The Notes are subject to, and qualified by,
all such terms, certain of which are summarized herein, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms (all
capitalized terms not defined herein shall have the meanings assigned them in
the Indenture). The Notes are unsecured senior obligations of the Company
limited to $125,000,000 in aggregate principal amount.
5. Optional Redemption. (a) Except as described in paragraph 5(b) below,
the Notes may not be redeemed at the option of the Company prior to March 1,
2002. During the twelve-month period beginning November 15 of the years
indicated below, the Notes will be redeemable at the option of the Company, in
whole or in part, on at least 30 but not more than 60 days' notice to each
Holder of Notes
A-3
to be redeemed, at the redemption prices (expressed as percentages of the
principal amount) set forth below, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the date of redemption:
Year Percentage
---- ----------
2002............................................................. 104.813%
2003............................................................. 103.208%
2004............................................................. 101.604%
2005 and thereafter.............................................. 100.000%
(b) Notwithstanding the foregoing, prior to March 1, 2000, the Company may
(but shall not have the obligation to) redeem up to 40% of the original
aggregate principal amount of the Notes at a redemption price of 110.000% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings; provided that at least 60% of the aggregate principal amount
of Notes originally issued remain outstanding immediately after the occurrence
of any such redemption; and provided, further, that any such redemption shall
occur within 60 days of the date of the closing of such Equity Offering.
6. Mandatory Redemption. Subject to the Company's obligation to make an
offer to purchase Notes under certain circumstances pursuant to Sections 4.14
and 4.15 of the Indenture (as described in paragraph 7 below), the Company is
not required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes.
7. Mandatory Offers to Purchase Notes. (a) Upon the occurrence of a Change
of Control (such date being the "Change of Control Trigger Date"), each Holder
of Notes shall have the right to require the Company to purchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to an offer (a "Change of Control Offer") at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus any accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase.
(b) If the Company or any Restricted Subsidiary consummates one or more
Asset Sales and does not use all of the Net Proceeds from such Asset Sales as
provided in the Indenture, the Company will be required, under certain
circumstances, to utilize the Excess Proceeds from such Asset Sales to offer (an
"Asset Sale Offer") to purchase Notes at a purchase price equal to 100% of the
principal amount of the Notes, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. If the Excess Proceeds are
insufficient to purchase all Notes tendered pursuant to any Asset Sale Offer,
the Trustee shall select the Notes to be purchased in accordance with the terms
of the Indenture.
(c) Holders may tender all or, subject to paragraph 8 below, any portion of
their Notes in a Change of Control Offer or Asset Sale Offer (collectively, an
"Offer") by completing the form below entitled "OPTION OF HOLDER TO ELECT
PURCHASE."
(d) The Company shall comply with any tender offer rules under the Exchange
Act which may then be applicable, including Rule 14e-1, in connection with an
offer required to be made by the Company to repurchase the Notes as a result of
a Change of Control or an Asset Sale Trigger Date. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Indenture by virtue thereof.
A-4
8. Notice of Redemption or Purchase. Notice of an optional redemption or an
Offer will be mailed to each Holder at its registered address at least 30 days
but not more than 60 days before the date of redemption or purchase. Notes may
be redeemed or purchased in part, but only in whole multiples of $1,000 unless
all Notes held by a Holder are to be redeemed or purchased. On or after any date
on which Notes are redeemed or purchased, interest ceases to accrue on the Notes
or portions thereof called for redemption or accepted for purchase on such date.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. Holders seeking to transfer or exchange their Notes may be
required, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption or tendered pursuant to an Offer.
Also, it need not exchange or register the transfer of any Notes for a period of
15 Business Days before a selection of Notes to be redeemed or between a record
date and the next succeeding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes, and any
existing Default (except a payment Default) may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder, the Indenture or the Notes may be amended to:
cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in
addition to or in place of certificated Notes; provide for the assumption by
another corporation of the Company's obligations to Holders in the event of a
merger or consolidation of the Company in which the Company is not the surviving
corporation or a sale of substantially all of the Company's assets to such other
corporation; comply with the SEC's requirements to effect or maintain the
qualification of the Indenture under the Trust Indenture Act; provide for
additional Guarantees with respect to the Notes; or, make any change that does
not materially adversely affect any Holder's rights under the Indenture.
12. Defaults and Remedies. Events of Default include: default for 30 days
in payment of interest on, or Liquidated Damages, if any, with respect to, the
Notes; default in payment of principal of, or premium, if any, on the Notes;
failure by the Company for 30 days after notice to it to comply with any of its
other agreements or covenants in, or provisions of, the Indenture or the Notes;
certain defaults under and acceleration prior to maturity of, or failure to pay
at maturity, certain other Indebtedness; certain final judgments that remain
undischarged; certain judicial findings of unenforceability or invalidity as to
any guarantee of the Notes or the disaffirmance or denial by any guarantor of
its guarantee of the Notes; and certain events of bankruptcy or insolvency
involving the Company or any Restricted Subsidiary that is a Significant
Subsidiary. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes may declare all the
Notes to be immediately due and payable in an amount equal to the principal of,
premium, if any, and any accrued and unpaid interest on, and Liquidated Damages,
if any, with respect to such Notes; provided, however, that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, the
principal of, premium, if any, and any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to the Notes becomes due and payable
immediately without further action or notice. Subject to certain exceptions,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power, provided that the
Trustee will be under
A-5
no obligation to exercise any of its rights or powers under the Indenture at the
request of Holders unless such Holders have offered to the Trustee security and
indemnity satisfactory to it. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may withhold from Holders
notice of any continuing default (except a payment Default) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
13. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or any Affiliate, and may otherwise deal with the
Company or any Affiliate, as if it were not Trustee.
14. No Recourse Against Others. No officer, employee, director, stockholder
or Subsidiary of the Company shall have any liability for any Obligations of the
Company under the Notes or the Indenture, or for any claim based on, in respect
of, or by reason of, such Obligations or the creation of any such Obligation,
except, in the case of a Subsidiary, for an express guarantee or an express
creation of any Lien by such Subsidiary of the Company's Obligations under the
Notes. Each Holder by accepting a Note waives and releases all such liability,
and such waiver and release is part of the consideration for the issuance of the
Notes. The foregoing waiver may not be effective to waive liabilities under the
Federal securities law and the SEC is of the view that such a waiver is against
public policy.
15. Additional Rights of Holders of Transfer Restricted Notes. In addition
to the rights provided to Holders of Notes under the Indenture, Holders of
Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of February 27, 1997 among the Company,
and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation and ▇▇▇▇▇▇▇▇▇ & Company,
Inc. (the "Registration Rights Agreement").
16. Successor Substituted. Upon the consolidation or merger by the Company
with or into another corporation, or upon the sale, lease, conveyance or other
disposition of all or substantially all of its assets to another corporation, in
accordance with the Indenture, the corporation surviving any such merger or
consolidation (if not the Company) or the corporation to which such assets were
sold or transferred to shall succeed to, and be substituted for, and may
exercise every right and power of the Company under the Indenture with the same
effect as if such surviving or other corporation had been named as the Company
in the Indenture.
17. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflict of laws provisions thereof.
18. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and have 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 printed on the Notes.
A-6
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, which has in it the text of this Note in larger
type. Request may be made to:
GFSI, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: director of finance
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
A-7
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
as agent to transfer this Note on the books of the
Company. The agent may substitute another to act for him.
Date: Your Signature:_______________________________________
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:_____________________________
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by the Company pursuant to Section
4.14 of the Indenture, check the box: | |
If you elect to have this Note purchased by the Company pursuant to Section
4.15 of the Indenture, check the box: | |
If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.14 or 4.15 of the Indenture, state the amount (multiples
of $1000 only):
$
Date: Your Signature:_______________________________________
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:_____________________________
A-9
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES2
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of this Principal Amount of following such decrease Trustee or Note
Date of Exchange Global Note this Global Note (or increase) Custodian
---------------- ----------- ---------------- ------------- ----------
--------
2. This should be included only if the Note is issued in global form.
A-10
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
-----------------, -------
Re: 9 5/8% Series [A/B] Senior Subordinated Notes due 2007 of GFSI, Inc.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
| | has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or
| | has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and that the transfer of this
Note does not require registration under the Securities Act (as defined below)
because:*
| | Such Note is being acquired for the Transferor's own account without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
| | Such Note is being transferred (i) to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")), in reliance on Rule 144A or (ii) pursuant to an exemption
from registration in accordance with Rule 904 under the Securities Act (and in
the case of clause (ii), based on an opinion of counsel if the Company so
requests and together with a certification in substantially the form of Exhibit
D to the Indenture).
| | Such Note is being transferred (i) in accordance with Rule 144 under
the Securities Act (and based on an opinion of counsel if the Company so
requests) or (ii) pursuant to an effective registration statement under the
Securities Act.
----------
*Check applicable box.
B-1
| | Such Note is being transferred to an institutional accredited investor
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
pursuant to a private placement exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the Company so
requests together with a certification in substantially the form of Exhibit C to
the Indenture).
| | Such Note is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act (and
based on an opinion of counsel if the Company so requests).
[INSERT NAME OF TRANSFEROR]
By:_____________________________________
Name:
Title:
Address:
----------
*Check applicable box.
B-2
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
---------------, -----
___________________, as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
We are delivering this letter in connection with an offering of
$125,000,000 of 9 5/8% Series [A/B] Senior Subordinated Notes due 2007 (the
"Notes") of GFSI, Inc., a Delaware corporation (the "Company"), all as described
in the Offering Memorandum (the "Offering Memorandum") relating to such
offering.
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor");
(ii) any purchase of Notes will be for our own account or for the
account of one or more other Institutional Accredited Investors;
(iii) in the event that we purchase any Notes, we will acquire Notes
having a minimum purchase price of at least $100,000 for our own account
and for each separate account for which we are acting;
(iv) we have such sophistication, knowledge and experience in
financial and business matters that we are capable of evaluating the merits
and risks of purchasing Notes;
(v) we are not acquiring Notes with a view to any distribution thereof
in a transaction that would violate the Securities Act or the securities
laws of any state of the United States or any other applicable
jurisdiction; provided that the disposition of our property and the
property of any accounts for which we are acting as fiduciary shall remain
at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
satisfactory and necessary in connection with our decision to purchase
Notes.
We understand that the Notes are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Notes have not been registered under the Securities Act, and we agree, on
our own behalf and on behalf of each account for which we acquire any Notes,
that such Notes may be offered, resold, pledge or otherwise transferred only (i)
to a person whom we reasonably believe to be a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144 under the Securities Act, outside the U.S. in a
transaction meeting the requirements of Rule 904 under the Securities Act, or in
accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company so
requests), (ii) to the Company or (iii) pursuant to an effective registration
statement, and in each case, in accordance with any applicable securities laws
of any State of the United
C-1
States or any other applicable jurisdiction. We understand that the registrar
and the transfer agent will not be required to accept for registration of
transfer any Notes, except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand the Notes purchased by us will be initially in book-entry
form, however, to the extent that the definitive physical certificates are
subsequently issued in exchange therefor, such certificates will bear a legend
reflecting the substance of this paragraph.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
Very truly yours,
[Name of Purchaser]
By:____________________________
Name:
Title:
Address:
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
-----------------, ------
______________________, as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of certain 9 5/8% Series [A/B] Senior
Subordinated Notes due 2007 (the "Notes") of GFSI, Inc., a Delaware corporation
(the "Company"), we represent that:
(i) the offer of the Notes was not made to a person in the United
States;
(ii) at the time the buy order 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;
(iii) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and you 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:____________________________
Name:
Title:
Address:
D-1
EXHIBIT E
FORM OF NOTE GUARANTEE
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture dated as of February 27, 1997, by and
between GFSI, Inc. and Fleet National Bank, as Trustee (the "Indenture"), the
Notes or the obligations of the Company, hereunder or thereunder, that: (a) the
principal of and premium, interest and Liquidated Damages, if any, on the Notes
will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal or, premium and
interest and Liquidated Damages, if any, on the Notes if any, if lawful, and all
other Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of the time of
payment or renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors will be jointly
and severally obligated to pay the same immediately.
The Obligations of the Guarantors to the Holders of the Notes and to the
Trustee pursuant to this Note Guarantee and the Indenture are expressly set
forth in Article 12 of the Indenture. The terms of Article 12 of the Indenture
are incorporated herein by reference.
This is a continuing Note Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its respective successors
and assigns to the extent set forth in the Indenture until full and final
payment of all of the Company's Obligations under the Notes and the Indenture.
The Note Guarantee shall inure to the benefit of the successors and assigns of
the Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Note Guarantee of payment and not of collection.
In certain circumstances more fully described in the Indenture, any
Guarantor may be released from its liability under this Note Guarantee, and any
such release will be effective whether or not noted hereon.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
By:__________________________________
Name:
Title:
E-1
EXHIBIT F
================================================================================
GFSI, Inc.
and
the Guarantors named herein
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SERIES A AND SERIES B
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
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FORM OF SUPPLEMENTAL INDENTURE
AND AMENDMENT -- SUBSIDIARY GUARANTEE
DATED AS OF ________ ___, ____
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FLEET NATIONAL BANK
Trustee
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This SUPPLEMENTAL INDENTURE, dated as of __________ ___, ____, among GFSI,
INC., a Delaware corporation (the "Company"), each of the parties identified
under the caption "Guarantors" on the signature pages hereto (the "Guarantors")
and Fleet National Bank, as Trustee.
RECITALS
WHEREAS, the Company and the Trustee entered into an Indenture, dated as of
February 27, 1997 (the "Indenture"), pursuant to which the Company issued
$125,000,000 in principal amount of 9 5/8% Senior Subordinated Notes due 2007
(the "Notes"); and
WHEREAS, Section 9.01(e) of the Indenture provides that the Company and the
Trustee may amend or supplement the Indenture in order to execute a Note
Guarantee to comply with Section 12.01 thereof without the consent of the
Holders of the Notes; and
WHEREAS, pursuant to Section 12.01 of the Indenture, all Guarantors must
execute a Note Guarantee and Supplemental Indenture.
WHEREAS, all acts and things prescribed by the Indenture, by law and by the
Certificate of Incorporation and the Bylaws of the Company, of the Guarantors
and of the Trustee necessary to make this Supplemental Indenture a valid
instrument legally binding on the Company, the Guarantors and the Trustee, in
accordance with its terms, have been duly done and performed;
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Guarantors and the Trustee
covenant and agree for the equal and proportionate benefit of the respective
Holders of the Notes as follows:
ARTICLE 1
SECTION 1.01. This Supplemental Indenture is supplemental to the Indenture
and does and shall be deemed to form a part of, and shall be construed in
connection with and as part of, the Indenture for any and all purposes.
SECTION 1.02. This Supplemental Indenture shall become effective
immediately upon its execution and delivery be each of the Company, the
Guarantors and the Trustee.
ARTICLE 2
SECTION 2.01. From this date, in accordance with Section 12.01 and by
executing this Supplemental Indenture and the accompanying Note Guarantee (a
copy of which is attached hereto), the Guarantors whose signatures appear below
are subject to the provisions of the Indenture to the extent provided for in
Article 12 thereunder.
SECTION 2.02. The Note Guarantee constitutes a part of the Note as soon as
the certificate of authentication has been executed by the Trustee.
ARTICLE 3
SECTION 3.01. Except as specifically modified herein, the Indenture and the
Notes are in all respects ratified and confirmed (mutatis mutandis) and shall
remain in full force and effect in accordance
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with their terms with all capitalized terms used herein without definition
having the same respective meanings ascribed to them as in the Indenture.
SECTION 3.02. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Supplemental Indenture. This
Supplemental Indenture is executed and accepted by the Trustee subject to all
the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect hereto.
SECTION 3.03. The laws of the State of New York shall govern this
Supplemental Indenture without regard to the conflict of laws provisions
thereof. The Trustee, the Company and each Guarantor agree 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 Supplemental Indenture.
SECTION 3.04. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first written above.
GFSI, INC.
By: _______________________________________
Name:
Title:
GUARANTORS
[_______________________]
By: _______________________________________
Name:
Title:
FLEET NATIONAL BANK, as trustee
By: _______________________________________
Name:
Title:
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