EXHIBIT 4.2
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TUESDAY MORNING CORPORATION
TMI HOLDINGS, INC.
TUESDAY MORNING, INC.
FRIDAY MORNING, INC.
TMIL CORPORATION
Subsidiary Debenture Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK
Debenture Trustee
________________________
Exchange Indenture
Dated as of December 29, 1997
_______________________
13 1/4% Subordinated Exchange Debentures due 2009
13 1/4% Series B Subordinated Exchange Debentures due 2009
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TUESDAY MORNING CORPORATION
Reconciliation and tie between Trust Indenture Act
of 1939 and Exchange Indenture, dated as of December 29, 1997
-------------------------------------------------------------
Trust Indenture Exchange Indenture
Act Section Section
--------------- ------------------
(S) 310(a)(1)................................................. 607
(a)(2)................................................. 607
(b).................................................... 608
(S) 312(c).................................................... 701
(S) 314(a).................................................... 703
(a)(4)................................................. 1004
(c)(1)................................................. 102
(c)(2)................................................. 102
(e).................................................... 102
(S) 315(b).................................................... 601
(S) 316(a)(last sentence)..................................... 101 ("Outstanding")
(a)(1)(A).............................................. 502, 512
(a)(1)(B).............................................. 513
(b).................................................... 508
(c).................................................... 104(d)
(S) 317(a)(1)................................................. 503
(a)(2)................................................. 504
(b).................................................... 1003
(S) 318(a).................................................... 111
__________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Exchange Indenture.
TABLE OF CONTENTS
Page
PARTIES.................................................................................................... 1
RECITALS OF THE COMPANY.................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions................................................................................. 2
Acquired Indebtedness....................................................................... 2
Act......................................................................................... 2
Affiliate................................................................................... 2
Agent Bank.................................................................................. 3
Agent Members............................................................................... 3
Asset Sale.................................................................................. 3
Authenticating Agent........................................................................ 3
Average Life................................................................................ 3
Bankruptcy Law.............................................................................. 3
Board of Directors.......................................................................... 4
Board Resolution............................................................................ 4
Business Day................................................................................ 4
Capital Stock............................................................................... 4
Capitalized Lease Obligation................................................................ 4
Cash Equivalents............................................................................ 4
Certificate of Designation.................................................................. 5
Change in Control........................................................................... 5
Commission.................................................................................. 6
Common Stock................................................................................ 6
Company..................................................................................... 6
Company Request" or "Company Order.......................................................... 6
Consolidated Adjusted Net Income............................................................ 6
Consolidated Fixed Charge Coverage Ratio.................................................... 7
Consolidated Income Tax Expense............................................................. 7
Consolidated Interest Expense............................................................... 7
Consolidated Non-Cash Charges............................................................... 8
Corporate Trust Office...................................................................... 8
Corporation................................................................................. 8
Currency Agreements......................................................................... 8
Custodian................................................................................... 8
Debenture Guarantee......................................................................... 8
Debenture Guarantor Senior Indebtedness..................................................... 8
Debenture Guarantor Senior Subordinated Indebtedness........................................ 9
Debenture Trustee........................................................................... 9
ii
Default...................................................................................... 10
Defaulted Interest........................................................................... 10
Depositary................................................................................... 10
Designated Senior Indebtedness............................................................... 10
Disinterested Director....................................................................... 10
Dollar" or "$................................................................................ 10
Event of Default............................................................................. 10
Exchange Act................................................................................. 10
Exchange Debenture Register" and "Exchange Debenture Registrar............................... 11
Exchange Offer............................................................................... 11
Exchange Offer Registration Statement........................................................ 11
Fair Market Value............................................................................ 11
Generally Accepted Accounting Principles..................................................... 11
Global Exchange Debentures................................................................... 11
guarantee.................................................................................... 11
Headquarters Facility........................................................................ 11
Holder....................................................................................... 11
Indebtedness................................................................................. 12
Initial Exchange Debentures.................................................................. 12
Institutional Accredited Investor............................................................ 12
Interest Payment Date........................................................................ 12
Interest Rate Agreements..................................................................... 13
Investment................................................................................... 13
Issuance Date................................................................................ 13
Junior Subordinated Indebtedness............................................................. 13
Lien ........................................................................................ 13
Management Stock............................................................................. 13
Maturity..................................................................................... 13
Moody's...................................................................................... 14
Net Cash Proceeds............................................................................ 14
New Exchange Debentures...................................................................... 14
Non-Payment Default.......................................................................... 14
Non-U.S. Person.............................................................................. 14
Note Guarantee............................................................................... 14
Notes........................................................................................ 14
Notes Indenture.............................................................................. 15
Officers' Certificate........................................................................ 15
Offshore Exchange Debenture Exchange Date.................................................... 15
Offshore Global Exchange Debenture........................................................... 15
Offshore Physical Exchange Debenture......................................................... 15
Opinion of Counsel........................................................................... 15
Outstanding.................................................................................. 15
Pari Passu Indebtedness...................................................................... 16
Paying Agent................................................................................. 16
iii
Payment Blockage Period...................................................................... 16
Payment Default.............................................................................. 16
Permitted Holders............................................................................ 16
Permitted Indebtedness....................................................................... 17
Permitted Investments........................................................................ 19
Permitted Junior Securities.................................................................. 20
Person....................................................................................... 20
Physical Debentures.......................................................................... 20
Place of Payment............................................................................. 20
Predecessor Exchange Debenture............................................................... 20
Preferred Stock.............................................................................. 21
Private Placement Legend..................................................................... 21
Public Equity Offering....................................................................... 21
Purchase Money Obligations................................................................... 21
Qualified Capital Stock...................................................................... 21
QIB.......................................................................................... 21
Redeemable Capital Stock..................................................................... 21
Redemption Date.............................................................................. 21
Redemption Price............................................................................. 21
Registration Rights Agreement................................................................ 21
Registration Statement....................................................................... 22
Regular Record Date.......................................................................... 22
Regulation S................................................................................. 22
Representative............................................................................... 22
Responsible Officer.......................................................................... 22
Restricted Subsidiary........................................................................ 22
Rule 144A.................................................................................... 22
Sale and Leaseback Transaction............................................................... 22
S&P.......................................................................................... 22
Securities Act............................................................................... 22
Senior Credit Agreement...................................................................... 22
Senior Exchangeable Preferred Stock.......................................................... 23
Senior Indebtedness.......................................................................... 23
Senior Subordinated Indebtedness............................................................. 23
Shelf Registration Statement................................................................. 24
Significant Subsidiary....................................................................... 24
Special Record Date.......................................................................... 24
Stated Maturity.............................................................................. 24
Subordinated Indebtedness.................................................................... 25
Subsidiary................................................................................... 25
Subsidiary Debenture Guarantor............................................................... 25
Trust Indenture Act" or "TIA................................................................. 25
United States................................................................................ 25
Unrestricted Subsidiary...................................................................... 25
U.S. Global Debenture........................................................................ 26
iv
U.S. Government Obligations.................................................................. 26
U.S. Physical Debenture...................................................................... 26
Vice President............................................................................... 26
Voting Stock................................................................................. 26
SECTION 102. Compliance Certificates and Opinions......................................................... 26
SECTION 103. Form of Documents Delivered to Debenture Trustee............................................. 27
SECTION 104. Acts of Holders.............................................................................. 28
SECTION 105. Notices, Etc., to Debenture Trustee, Company, Any Subsidiary
Debenture Guarantor and Agent Bank........................................................... 29
SECTION 106. Notice to Holders; Waiver.................................................................... 30
SECTION 107. Effect of Headings and Table of Contents..................................................... 30
SECTION 108. Successors and Assigns....................................................................... 31
SECTION 109. Separability Clause.......................................................................... 31
SECTION 110. Benefits of Exchange Indenture............................................................... 31
SECTION 111. Governing Law................................................................................ 31
SECTION 112. Legal Holidays............................................................................... 31
SECTION 113. Trust Indenture Act Controls................................................................. 32
SECTION 114. No Recourse Against Others................................................................... 32
SECTION 115. Counterparts................................................................................. 32
ARTICLE TWO
EXCHANGE DEBENTURE FORMS
SECTION 201. Forms Generally.............................................................................. 32
SECTION 202. Form of Debenture Trustee's Certificate of Authentication.................................... 34
SECTION 203. Restrictive Legends.......................................................................... 34
SECTION 204. Form of Certificate to Be Delivered After the Offshore Exchange
Debenture Exchange Date...................................................................... 37
ARTICLE THREE
THE EXCHANGE DEBENTURES
SECTION 301. Amount....................................................................................... 38
SECTION 302. Denominations................................................................................ 39
SECTION 303. Execution, Authentication, Delivery and Dating............................................... 39
SECTION 304. Temporary Exchange Debentures................................................................ 41
SECTION 305. Registration, Registration of Transfer and Exchange.......................................... 41
SECTION 306. Mutilated, Destroyed, Lost and Stolen Exchange Debentures.................................... 43
SECTION 307. Payment of Interest; Interest Rights Preserved............................................... 44
SECTION 308. Persons Deemed Owners........................................................................ 45
SECTION 309. Cancellation................................................................................. 45
SECTION 310. Computation of Interest...................................................................... 46
SECTION 311. Book-Entry Provisions for Global Exchange Debentures......................................... 46
v
SECTION 312. Transfer Provisions.......................................................................... 47
SECTION 313. Form of Accredited Investor Certificate...................................................... 57
SECTION 314. Form of Regulation S Certificate............................................................. 59
SECTION 315. Form of Rule 144A Certificate................................................................ 61
SECTION 316. CUSIP Numbers................................................................................ 62
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Exchange Indenture.............................................. 62
SECTION 402. Application of Trust Money.................................................................... 64
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................................................. 65
SECTION 502. Acceleration of Maturity; Rescission and Annulment............................................ 66
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Debenture Trustee..................... 68
SECTION 504. Debenture Trustee May File Proofs of Claim.................................................... 69
SECTION 505. Debenture Trustee May Enforce Claims Without Possession of Exchange Debentures................ 69
SECTION 506. Application of Money Collected................................................................ 70
SECTION 507. Limitation on Suits........................................................................... 70
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest..................... 71
SECTION 509. Restoration of Rights and Remedies............................................................ 71
SECTION 510. Rights and Remedies Cumulative................................................................ 72
SECTION 511. Delay or Omission Not Waiver.................................................................. 72
SECTION 512. Control by Holders............................................................................ 72
SECTION 513. Waiver of Past Defaults....................................................................... 73
SECTION 514. Waiver of Stay or Extension Laws.............................................................. 73
ARTICLE SIX
THE DEBENTURE TRUSTEE
SECTION 601. Certain Duties and Responsibilities........................................................... 74
SECTION 602. Notice of Defaults............................................................................ 75
SECTION 603. Certain Rights of Debenture Trustee........................................................... 75
SECTION 604. Debenture Trustee Not Responsible for Recitals or Issuance of Exchange Debentures............. 77
SECTION 605. May Hold Exchange Debentures.................................................................. 77
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SECTION 606. Money Held in Trust........................................................................... 77
SECTION 607. Compensation and Reimbursement................................................................ 78
SECTION 608. Corporate Debenture Trustee Required; Eligibility............................................. 79
SECTION 609. Resignation and Removal; Appointment of Successor............................................. 79
SECTION 610. Acceptance of Appointment by Successor........................................................ 81
SECTION 611. Merger, Conversion, Consolidation or Succession to Business................................... 81
SECTION 612. Appointment of Authenticating Agent........................................................... 82
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY DEBENTURE TRUSTEE
AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses................................................ 84
SECTION 702. Disclosure of Names and Addresses of Holders.................................................. 84
SECTION 703. Reports by Debenture Trustee.................................................................. 84
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.......................................... 85
SECTION 802. Subsidiary Debenture Guarantors May Consolidate, Etc., Only on Certain Terms.................. 86
SECTION 803. Successor Substituted......................................................................... 87
ARTICLE NINE
SUPPLEMENTAL EXCHANGE INDENTURES
SECTION 901. Supplemental Exchange Indentures Without Consent of Holders................................... 88
SECTION 902. Supplemental Exchange Indentures with Consent of Holders...................................... 89
SECTION 903. Execution of Supplemental Exchange Indentures................................................. 90
SECTION 904. Effect of Supplemental Exchange Indentures.................................................... 90
SECTION 905. Conformity with Trust Indenture Act........................................................... 90
SECTION 906. Reference in Exchange Debentures to Supplemental Exchange Indentures.......................... 91
SECTION 907. Notice of Supplemental Exchange Indentures.................................................... 91
SECTION 908. Effect on Senior Indebtedness and Senior Subordinated Indebtedness............................ 91
ARTICLE TEN
COVENANTS
vii
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.......................................... 91
SECTION 1002. Maintenance of Office or Agency.............................................................. 92
SECTION 1003. Money for Exchange Debentures Payments to Be Held in Trust................................... 92
SECTION 1004. Corporate Existence.......................................................................... 94
SECTION 1005. Payment of Taxes and Other Claims............................................................ 94
SECTION 1006. Maintenance of Properties.................................................................... 94
SECTION 1007. Statement by Officers as to Default.......................................................... 95
SECTION 1008. Limitation on Indebtedness................................................................... 95
SECTION 1009. Limitation on Restricted Payments............................................................ 96
SECTION 1010. Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries.. ............. 100
SECTION 1011. Limitation on Transactions with Affiliates................................................... 100
SECTION 1012. Limitation on Liens.......................................................................... 101
SECTION 1013. Purchase of Exchange Debentures upon Change in Control....................................... 102
SECTION 1014. Limitation on Sale of Assets................................................................. 103
SECTION 1015. Limitations on Guarantees of Indebtedness by Restricted Subsidiaries......................... 105
SECTION 1016. Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries................................................................................. 106
SECTION 1017. Limitation on Sale and Leaseback Transactions................................................ 107
SECTION 1018. Limitation on Other Subordinated Indebtedness................................................ 107
SECTION 1019. Limitation on Unrestricted Subsidiaries...................................................... 108
SECTION 1020. Reports...................................................................................... 108
SECTION 1021. Waiver of Certain Covenants.................................................................. 108
ARTICLE ELEVEN
REDEMPTION OF EXCHANGE DEBENTURES
SECTION 1101. Redemption................................................................................... 109
SECTION 1102. Applicability of Article..................................................................... 109
SECTION 1103. Election to Redeem; Notice to Debenture Trustee.............................................. 109
SECTION 1104. Selection by Debenture Trustee of Exchange Debentures to Be Redeemed......................... 109
SECTION 1105. Notice of Redemption......................................................................... 110
SECTION 1106. Deposit of Redemption Price.................................................................. 111
SECTION 1107. Exchange Debentures Payable on Redemption Date............................................... 111
SECTION 1108. Exchange Debentures Redeemed in Part......................................................... 112
ARTICLE TWELVE
SUBORDINATION OF EXCHANGE DEBENTURES
SECTION 1201. Exchange Debentures Subordinate to Senior Indebtedness....................................... 112
SECTION 1202. Payment Over of Proceeds upon Dissolution, Etc............................................... 113
viii
SECTION 1203. Suspension of Payment When Designated Senior Indebtedness in Default......................... 114
SECTION 1204. Payment Permitted if No Default.............................................................. 115
SECTION 1205. Subrogation to Rights of Holders of Senior Indebtedness and
Senior Subordinated Indebtedness............................................................. 115
SECTION 1206. Provisions Solely to Define Relative Rights.................................................. 116
SECTION 1207. Debenture Trustee to Effectuate Subordination................................................ 116
SECTION 1208. No Waiver of Subordination Provisions........................................................ 117
SECTION 1209. Distribution or Notice to Representative..................................................... 117
SECTION 1210. Notice to Debenture Trustee.................................................................. 118
SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent............................... 118
SECTION 1212. Rights of Debenture Trustee as a Holder of Senior Indebtedness
and Senior Subordinated Indebtedness; Preservation of Debenture Trustee's Rights............. 119
SECTION 1213. Article Applicable to Paying Agents.......................................................... 119
SECTION 1214. No Suspension of Remedies.................................................................... 119
SECTION 1215. Trust Moneys Not Subordinated................................................................ 119
SECTION 1216. Debenture Trustee Not Fiduciary for Holders of Senior
Indebtedness or Senior Subordinated Indebtedness............................................. 120
ARTICLE THIRTEEN
GUARANTEES
SECTION 1301. Debenture Guarantees......................................................................... 120
SECTION 1302. Severability................................................................................. 122
SECTION 1303. Restricted Subsidiaries...................................................................... 122
SECTION 1304. Subordination of Debenture Guarantees........................................................ 123
SECTION 1305. Limitation of Subsidiary Debenture Guarantors' Liability..................................... 123
SECTION 1306. Contribution................................................................................. 124
SECTION 1307. Subrogation.................................................................................. 124
SECTION 1308. Reinstatement................................................................................ 124
SECTION 1309. Release of a Subsidiary Debenture Guarantor.................................................. 125
SECTION 1309. Benefits Acknowledged........................................................................ 125
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance................................. 125
SECTION 1402. Defeasance and Discharge..................................................................... 125
SECTION 1403. Covenant Defeasance.......................................................................... 126
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.............................................. 127
SECTION 1405. Deposited Money and Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions........................................................ 128
ix
SECTION 1406. Reinstatement................................................................................ 129
TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A - Form of Exchange Debenture
Exchange Indenture, dated as of December 29, 1997, among TUESDAY
MORNING CORPORATION, a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal office
at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and TMI HOLDINGS, INC., a Delaware
corporation, TUESDAY MORNING, INC., a Texas corporation, FRIDAY MORNING, INC., a
Texas corporation and TMIL CORPORATION, a Delaware corporation (collectively,
the "Subsidiary Debenture Guarantors"), and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York banking corporation, as Debenture Trustee (herein called the
"Debenture Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its 13
1/4% Subordinated Exchange Debentures due 2009 (the "Initial Exchange
Debentures"), and its 13 1/4% Series B Subordinated Exchange Debentures due 2009
(the "New Exchange Debentures" and, together with the Initial Exchange
Debentures, the "Exchange Debentures"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Exchange Indenture.
Each Subsidiary Debenture Guarantor has duly authorized the guarantee
the aggregate principal amount of the Initial Exchange Debentures, and upon the
issuance of the New Exchange Debentures, if any, the aggregate principal amount
of the New Exchange Debentures and to provide therefor each Subsidiary Debenture
Guarantor has duly authorized the execution and delivery of this Exchange
Indenture.
Upon the issuance of the New Exchange Debentures, if any, or the
effectiveness of the Shelf Registration Statement (as defined herein), this
Exchange Indenture will be subject to, and shall be governed by the provisions
of the Trust Indenture Act of 1939, as amended, that are required to be part of
or deemed to be part of and to govern the indentures qualified thereunder.
All things necessary have been done to make the Exchange Debentures,
when duly executed and duly issued by the Company and authenticated and
delivered hereunder by the Debenture Trustee or the Authenticating Agent, the
valid obligations of the Company and to make this Exchange Indenture a valid
agreement of the Company, in accordance with their and its terms.
NOW, THEREFORE, THIS EXCHANGE INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Senior Exchangeable Preferred Stock by the holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Exchange Debentures, as follows:
2
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
-----------
For all purposes of this Exchange Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-
liquidating paper", as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the Trust
Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with Generally Accepted Accounting
Principles; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Exchange Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Subsidiary or (b) assumed in connection with the
acquisition of assets from such Person; provided that, for purposes of Section
1008, such Indebtedness shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Restricted Subsidiary.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Capital
Stock or (c) any executive officer or director of any such specified Person or
other Person or (d) with respect to any natural Person, any Person having a
relationship with such Person by blood, marriage or adoption not more remote
than first cousin. For the purposes of this definition, "control," when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether
3
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agent Bank" means Fleet National Bank in its capacity as administrative
agent under the Senior Credit Agreement and any future or successor or
replacement administrative agent under the Senior Credit Agreement.
"Agent Members" has the meaning specified in Section 311.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary; (b) all or substantially all of the properties and
assets of the Company or its Restricted Subsidiaries; or (c) any other
properties or assets of any division or line of business of the Company or any
Restricted Subsidiary, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include any
transfer of properties or assets (i) that is governed by the provisions of
Article Eight, (ii) between or among the Company and Restricted Subsidiaries in
accordance with the terms of this Exchange Indenture, (iii) that consist of
accounts receivable transferred to third parties that are not Affiliates of the
Company or any Subsidiary of the Company in the ordinary course of business,
including by way of the securitization of such receivables, (iv) of the Company
or any Restricted Subsidiary in exchange for properties or assets of
substantially equal value of another Person to be used in the same line of
business being conducted by the Company or any Restricted Subsidiary at the time
of such transfer having a Fair Market Value of less than $1.0 million in any
given fiscal year, (v) to an Unrestricted Subsidiary, if permitted under Section
1009, (vi) consisting of the Headquarters Facility to third parties that are not
Affiliates of the Company or any Subsidiary of the Company or (vii) having a
Fair Market Value of less than $1.0 million in any given fiscal year.
"Authenticating Agent" means any Person authorized by the Debenture Trustee
to act on behalf of the Debenture Trustee to authenticate the Exchange
Debentures.
"Average Life" means, as of the date of determination with respect to any
Indebtedness, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years from the date of determination to the date or dates of
each successive scheduled principal payment (including, without limitation, any
sinking fund requirements) of such Indebtedness multiplied by (ii) the amount of
each such principal payment by (b) the sum of all such principal payments.
"Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
4
"Board of Directors" means, with respect to any Person, the board of
directors of such Person or any duly authorized committee of such board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Debenture Trustee.
"Business Day," when used with respect to any Place of Payment or any other
particular location referred to in this Exchange Indenture or in the Exchange
Debentures, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment or other
location are authorized or obligated by law, regulation or executive order to
close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participation, rights in or other equivalents
(however designated) of such Person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether now outstanding
or issued after the date of the Indenture.
"Capitalized Lease Obligation" means, with respect to any Person, any
obligation of such Person under a lease of (or other agreement conveying the
right to use) any property (whether real, personal or mixed) that is required to
be classified and accounted for as a capital lease obligation under GAAP, and,
for the purpose of this Exchange Indenture, the amount of such obligation at any
date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Cash Equivalents" means: (a) any evidence of Indebtedness with a maturity
of one year or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (b) certificates of deposit or acceptances with a maturity of one year
or less of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than $500 million; (c) commercial paper with a maturity of one year or less
issued by a corporation that is not an Affiliate of the Company and is organized
under the laws of any state of the United States or the District of Columbia and
rated at least A-1 by S&P or any successor rating agency or at least P-1 by
Moody's or any successor rating agency; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (a) and (b) above; and (e) demand and time deposits with a domestic
commercial bank that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500 million.
5
"Certificate of Designation" means the certificate of designations,
preferences and rights of the Senior Exchangeable Preferred Stock filed with the
Secretary of State of the State of Delaware on December 29, 1997.
"Change in Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 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
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total outstanding Voting Stock of the
Company and either (x) the Permitted Holders beneficially own, directly or
indirectly, in the aggregate Voting Stock of the Company that represents a
lesser percentage of the aggregate ordinary voting power of all classes of the
Voting Stock of the Company, voting together as a single class, than such other
person or group and are not entitled (by voting power, contract or otherwise) to
elect directors of the Company having a majority of the total voting power of
the Board of Directors, or (y) such other person or group is entitled to elect
directors of the Company having a majority of the total voting power of the
Board of Directors; (b) the Company consolidates with, or merges with or into,
another Person or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates with,
or merges with or into, the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction (i) where the outstanding Voting Stock of the Company is not
converted or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation of the Company) or is converted into
or exchanged for (A) Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation or (B) Voting Stock (other than Redeemable
Capital Stock) of the surviving or transferee corporation and cash, securities
and other property (other than Capital Stock of the surviving or transferee
corporation) in an amount that could be paid by the Company as a Restricted
Payment as described under Section 1009 and (ii) immediately after such
transaction, no "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Permitted Holders, is the "beneficial
owner" (as defined in Rules 13d-3 and 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 exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total outstanding Voting Stock of the surviving or transferee
corporation and either (x) the Permitted Holders beneficially own, directly or
indirectly, in the aggregate Voting Stock of the surviving or transferee
corporation that represents a lesser percentage of the aggregate ordinary voting
power of all classes of the Voting Stock of the surviving or transferee
corporation, voting together as a single class, than such other person or group
and are not entitled (by voting power, contract or otherwise) to elect directors
of the Surviving Entity having a majority of the total voting power of the Board
of Directors, or (y) such other person or group is entitled to elect directors
of the surviving or transferee having a majority of the total voting power of
the elected
6
Board of Directors; or (c) during any consecutive two year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election to such Board of
Directors, or whose nomination for election by the stockholders of the Company,
was approved by a vote of 66% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (d) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with Article Eight .
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Exchange Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated, whether voting or
non-voting) of such Person's common stock, whether outstanding on the Issuance
Date or issued after the Issuance Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the Person named as the "Company" in the first paragraph of
this Exchange Indenture until a successor Person shall have become such pursuant
to the applicable provisions of this Exchange Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Operating Officer, its Chief
Financial Officer, any Vice President, its Treasurer or an Assistant Treasurer,
and delivered to the Debenture Trustee.
"Consolidated Adjusted Net Income" means, for any period, the consolidated
net income (or loss) of the Company and all Restricted Subsidiaries for such
period as determined in accordance with GAAP, adjusted by excluding, without
duplication, (a) any net after-tax extraordinary gains or losses (less all fees
and expenses relating thereto), (b) any net after-tax gains or losses (less all
fees and expenses relating thereto) attributable to asset dispositions other
than in the ordinary course of business, (c) the portion of net income (or loss)
of any Person (other than the Company or a Restricted Subsidiary), including
Unrestricted Subsidiaries, in which the Company or any Restricted Subsidiary has
an ownership interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any Restricted Subsidiary in cash
dividends or distributions during such period, (d) the net income (or loss) of
any Person combined with the Company or any Restricted Subsidiary on a "pooling
of interests" basis attributable to any period prior to the date of combination,
(e) the net income of any
7
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at the date of
determination permitted, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Restricted Subsidiary or its
stockholders, and (f) for purposes of calculating Consolidated Adjusted Net
Income under Section 1009, any net income (or loss) from any Restricted
Subsidiary while it was an Unrestricted Subsidiary at any time during such
period other than any amounts actually received from such Restricted Subsidiary
during such period.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated Adjusted Net Income and, to the
extent deducted in computing Consolidated Adjusted Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges, in each case, for such period to (b) the Consolidated Interest Expense
for such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and all Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
(1) the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization of
debt discount, (ii) the net cost of Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation and (iv) amortization of debt issuance costs, plus (b) the interest
component of Capitalized Lease Obligations of the Company and its Restricted
Subsidiaries during such period, plus (c) cash dividends due (whether or not
declared) on Preferred Stock by the Company and any Restricted Subsidiary, plus
(d) cash dividends due (whether or not declared) on Redeemable Capital Stock by
the Company and any Restricted Subsidiary, in each case as determined on a
consolidated basis in accordance with GAAP, less (2) interest on the Exchange
Debentures outstanding on the Exchange Date paid in kind with Exchange
Debentures and on Exchange Debentures so issued as payment in kind interest, all
in accordance with the Exchange Indenture as in effect on the Issuance Date;
provided that (x) the Consolidated Interest Expense attributable to interest on
any Indebtedness computed on a pro forma basis and (A) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of the Company, a fixed or floating rate of interest,
shall be computed by applying at the option of the Company, either the fixed or
floating rate, and (y) in making such computation, the Consolidated Interest
Expense attributable to interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period; provided
further that, notwithstanding the foregoing, the interest rate with respect to
any
8
Indebtedness covered by any Interest Rate Agreement shall be deemed to be the
effective interest rate with respect to such Indebtedness after taking into
account such Interest Rate Agreement.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization, depletion and other non-cash expenses of the Company
and any Restricted Subsidiary reducing Consolidated Adjusted Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge that requires an accrual of or reserve for cash charges
for any future period).
"Corporate Trust Office" means the principal corporate trust office of the
Debenture Trustee, at which at any particular time its corporate trust business
shall be administered, which office on the date of execution of this Exchange
Indenture is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"corporation" includes corporations, associations, companies and business
trusts.
"Currency Agreements" means any spot or forward foreign exchange agreements
and currency swap, currency option or other similar financial agreements or
arrangements entered into by the Company or any of its Restricted Subsidiaries
in the ordinary course of business and designed to protect against or manage
exposure to fluctuations in foreign currency exchange rates.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"Debenture Guarantee" means any guarantee of the obligations of the Company
under this Exchange Indenture and the Exchange Debentures by any Restricted
Subsidiary in accordance with the provisions of this Exchange Indenture.
"Debenture Guarantor Senior Indebtedness" of a Subsidiary Debenture
Guarantor means Indebtedness of such Subsidiary Debenture Guarantor consisting
of (i) a guarantee of any Senior Indebtedness under the Senior Credit Agreement
or any other Senior Indebtedness and (ii) the principal of, premium, if any, and
interest on all other Indebtedness of such Subsidiary Debenture Guarantor (other
than the Debenture Guarantee issued by such Subsidiary Debenture Guarantor),
whether outstanding on the Issuance Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to such Debenture Guarantee. Notwithstanding the foregoing, "Debenture
Guarantor Senior Indebtedness" of a Subsidiary Debenture Guarantor shall not
include (i) Indebtedness evidenced by the Debenture Guarantee of such Subsidiary
Debenture Guarantor, (ii) Indebtedness of such Subsidiary Debenture Guarantor
that is expressly subordinated in right of payment to any Debenture Guarantor
Senior Indebtedness of such Subsidiary Debenture Guarantor, (iii) Indebtedness
of such Subsidiary Debenture Guarantor that by operation of law is
9
subordinate to any general unsecured obligations of such Subsidiary Debenture
Guarantor, (iv) Indebtedness of such Subsidiary Debenture Guarantor to the
extent incurred in violation of any covenant of this Exchange Indenture, (v) any
liability for federal, state or local taxes or other taxes, owed or owing by
such Subsidiary Debenture Guarantor, (vi) trade account payables owed or owing
by such Subsidiary Debenture Guarantor, (vii) amounts owed by such Subsidiary
Debenture Guarantor for compensation to employees or for services rendered to
such Subsidiary Debenture Guarantor, (viii) Indebtedness of such Subsidiary
Debenture Guarantor to any Affiliate of the Company, (ix) Redeemable Capital
Stock of such Subsidiary Debenture Guarantor and (x) Indebtedness which when
incurred and without respect to any election under Section 1111(b) of Title 11
of the United States Code is without recourse to such Subsidiary Debenture
Guarantor.
"Debenture Guarantor Senior Subordinated Indebtedness" of a Subsidiary
Debenture Guarantor means Indebtedness of such Subsidiary Debenture Guarantor
consisting of (i) a guarantee of any Senior Subordinated Indebtedness under the
Notes Indenture or any other Senior Subordinated Indebtedness and (ii) the
principal of, premium, if any, and interest on all other Indebtedness of such
Subsidiary Debenture Guarantor (other than the Debenture Guarantee issued by
such Subsidiary Debenture Guarantor), whether outstanding on the Issuance Date
or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to such Debenture
Guarantee. Notwithstanding the foregoing, "Debenture Guarantor Senior
Subordinated Indebtedness" of a Subsidiary Debenture Guarantor shall not include
(i) Indebtedness evidenced by the Debenture Guarantee of such Subsidiary
Debenture Guarantor, (ii) Indebtedness of such Subsidiary Debenture Guarantor
that is expressly subordinated in right of payment to any Debenture Guarantor
Senior Subordinated Indebtedness of such Subsidiary Debenture Guarantor, (iii)
Indebtedness of such Subsidiary Debenture Guarantor that by operation of law is
subordinate to any general unsecured obligations of such Subsidiary Debenture
Guarantor, (iv) Indebtedness of such Subsidiary Debenture Guarantor to the
extent incurred in violation of any covenant of this Exchange Indenture, (v) any
liability for federal, state or local taxes or other taxes, owed or owing by
such Subsidiary Debenture Guarantor, (vi) trade account payables owed or owing
by such Subsidiary Debenture Guarantor, (vii) amounts owed by such Subsidiary
Debenture Guarantor for compensation to employees or for services rendered to
such Subsidiary Debenture Guarantor, (viii) Indebtedness of such Subsidiary
Debenture Guarantor to any Affiliate of the Company, (ix) Redeemable Capital
Stock of such Subsidiary Debenture Guarantor and (x) Indebtedness which when
incurred and without respect to any election under Section 1111(b) of Title 11
of the United States Code is without recourse to such Subsidiary Debenture
Guarantor.
"Debenture Trustee" means the Person named as the "Debenture Trustee" in
the first paragraph of this Exchange Indenture until a successor Debenture
Trustee shall have become such pursuant to the applicable provisions of this
Exchange Indenture, and thereafter "Debenture Trustee" shall mean or include
each Person who is then an Debenture Trustee hereunder.
10
"Debentures" has the meaning stated in the first recital of the Exchange
Indenture and more particularly means any Debentures authenticated and delivered
under this Exchange Indenture.
"Debenture Trustee" means the Person named as "Debenture Trustee" in the
first paragraph of this Exchange Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Exchange Indenture,
and thereafter "Debenture Trustee" shall mean or include each Person who is then
a Debenture Trustee hereunder.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Senior Credit Agreement and (ii) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding of at least
$25,000,000 and that has been specifically designated in the instrument
evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by the
Company.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under this Exchange Indenture, a
member of the Board of Directors who does not have any material direct or
indirect financial interest in or with respect to such transaction or series of
transactions.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Date" means the date on which the shares of Senior Exchangeable
Preferred Stock are exchanged into Exchange Debentures at the option of the
Company.
"Exchange Debenture Register" and "Exchange Debenture Registrar" have the
respective meanings specified in Section 305.
11
"Exchange Debentures" has the meaning specified in the recitals to this
Exchange Indenture.
"Exchange Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Exchange Offer" means the offer by the Company to the Holders of the
Initial Exchange Debentures or Senior Exchangeable Preferred Stock to exchange
all of the Initial Exchange Debentures or Senior Exchangeable Preferred Stock,
as the case may be, for New Exchange Debentures or Senior Exchangeable Preferred
Stock registered under the Securities Act, as provided for in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of this Exchange Indenture.
"Global Exchange Debentures" has the meaning set forth in Section 201.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit.
"Headquarters Facility" means the headquarters facility and warehouse of
the Company as of the Issuance Date located in Dallas, Texas.
"Holder" means the Person in whose name an Exchange Debenture is registered
in the Exchange Debenture Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money (including overdrafts) or for
the deferred purchase price of
12
property or services, excluding any trade payables and other accrued current
liabilities incurred in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit and acceptances issued under letter of
credit facilities, acceptance facilities or other similar facilities, (b) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (c) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables arising in
the ordinary course of business, (d) all Capitalized Lease Obligations of such
Person, (e) all obligations of such Person under or in respect of Interest Rate
Agreements or Currency Agreements, (f) all Indebtedness referred to in (but not
excluded from) the preceding clauses of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition of any other Person, and
(h) all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Exchange Indenture, and if
such price is based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value shall be determined in good
faith by the board of directors of the issuer of such Redeemable Capital Stock.
"Initial Exchange Debentures" has the meaning specified in the recitals to
this Exchange Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act.
"Interest Payment Date," when used with respect to any Exchange Debenture,
means the Stated Maturity of an installment of interest on such Exchange
Debenture.
"Interest Rate Agreements" means any interest rate protection agreements
and other types of interest rate hedging agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
designed to protect against or manage exposure to fluctuations in interest
rates.
13
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee or other extension of credit or capital contribution to
(by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase,
acquisition or ownership by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued or owned by,
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP. In addition, the fair market
value of the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary shall be deemed
to be an "Investment" made by the Company in such Unrestricted Subsidiary at
such time. "Investments" shall exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.
"Issuance Date" means the date on which the Senior Exchangeable Preferred
Stock is originally issued under the Certificate of Designation.
"Junior Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Debenture Guarantor that is subordinated in right of payment to the
Exchange Debentures or the Debenture Guarantee of such Subsidiary Debenture
Guarantor, as the case may be.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Management Stock" means the Capital Stock of the Company and the options
to acquire Capital Stock of the Company owned by ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇ as of the Issuance Date together with Preferred Stock issued as payment in
kind dividends on such Preferred Stock and any shares of Preferred Stock issued
as payment in kind dividends thereon, and such dividends made pursuant to the
terms of the certificate of designation for such Preferred Stock or the
certificate of incorporation, as the case may be, as in effect on the Issuance
Date.
"Maturity" means, with respect to any Exchange Debenture, the date on which
any principal of such Exchange Debenture becomes due and payable as therein or
herein provided, whether at the Stated Maturity with respect to such principal
or by declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations
14
when received in the form of, or stock or other assets when disposed for, cash
or Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of legal counsel and investment banks) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Indebtedness where payment of such Indebtedness is secured by the
assets or properties the subject of such Asset Sale, (iv) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary) owning
a beneficial interest in the assets subject to the Asset Sale and (v)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Debenture Trustee.
"New Exchange Debentures" has the meaning stated in the first recital of
this Exchange Indenture and refers to any New Exchange Debenture containing
terms substantially identical to the Initial Exchange Debenture (except that (i)
such New Exchange Debenture shall not contain terms with respect to transfer
restrictions and shall be registered under the Securities Act, and (ii) certain
provisions relating to an increase in the stated rate of interest thereon shall
be eliminated) that are issued and exchanged for the Initial Exchange Debentures
in accordance with the Exchange Offer, as provided for in the Registration
Rights Agreement and this Exchange Indenture.
"Non-Payment Default" means any event of default (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Non-U.S. Person" means a person who is not a U.S. person as defined in
Regulation S.
"Note Guarantee" means any guarantee of the obligations of the Company
under the Notes Indenture and the Notes by any Restricted Subsidiary (as such
term is defined in the Notes Indenture) in accordance with the provisions of the
Notes Indenture.
"Notes" means the 11% Senior Subordinated Notes due 2007 issued pursuant to
the Notes Indenture.
"Notes Indenture" means the Indenture dated as of December 29, 1997, among
the Company, the guarantors named therein and ▇▇▇▇▇▇ Trust and Savings Bank, as
trustee, with respect to the Notes.
15
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Debenture Trustee.
"Offshore Exchange Debenture Exchange Date" has the meaning set forth in
Section 201.
"Offshore Global Exchange Debenture" has the meaning set forth in Section
201.
"Offshore Physical Exchange Debenture" has the meaning set forth in Section
201.
"Opinion of Counsel" means a written opinion of legal counsel, which and
who may be counsel for the Company, including an employee of the Company, and
who shall be reasonably acceptable to the Debenture Trustee.
"Outstanding," when used with respect to Exchange Debentures, means, as of
the date of determination, all Exchange Debentures theretofore authenticated and
delivered under this Exchange Indenture, except:
(i) Exchange Debentures theretofore cancelled by the Debenture
Trustee or delivered to the Debenture Trustee for cancellation;
(ii) Exchange Debentures, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the necessary
amount has been theretofore deposited with the Debenture Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Exchange Debentures; provided that, if such
Exchange Debentures are to be redeemed, notice of such redemption has been
duly given pursuant to this Exchange Indenture or provision therefor
satisfactory to the Debenture Trustee has been made;
(iii) Exchange Debentures, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected defeasance
and/or covenant defeasance as provided in Article Fourteen; and
(iv) Exchange Debentures which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Exchange Debentures have
been authenticated and delivered pursuant to this Exchange Indenture, other
than any such Exchange Debentures in respect of which there shall have been
presented to the Debenture Trustee proof satisfactory to it that such
Exchange Debentures are held by a bona fide purchaser in whose hands such
Exchange Debentures are valid obligations of the Company;
16
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Exchange Debentures have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, and for
the purpose of making the calculations required by TIA Section 313, Exchange
Debentures owned by the Company or any other obligor upon the Exchange
Debentures or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding (provided that in connection with
any offer by the Company or any obligor to purchase the Exchange Debentures,
Exchange Debentures tendered for purchase will be deemed to be Outstanding and
held by the tendering Holder until the date of purchase), except that, in
determining whether the Debenture Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Exchange Debentures which a
Responsible Officer of the Debenture Trustee actually knows to be so owned shall
be so disregarded. Exchange Debentures so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Debenture Trustee the pledgee's right to act with respect to
such Exchange Debentures and that the pledgee is not the Company or any other
obligor upon the Exchange Debentures or any Affiliate of the Company or such
other obligor.
"Pari Passu Indebtedness" means (a) with respect to the Exchange
Debentures, Indebtedness that ranks pari passu in right of payment to the
Exchange Debentures and (b) with respect to any Debenture Guarantee,
Indebtedness that ranks pari passu in right of payment to such Debenture
Guarantee.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (or premium, if any,
on) or interest on any Exchange Debentures on behalf of the Company.
"Payment Blockage Period" has the meaning specified in Section 1203.
"Payment Default" means any default in the payment (whether at stated
maturity, upon scheduled installment, by acceleration or otherwise) of principal
of, or premium, if any, or interest on Designated Senior Indebtedness.
"Permitted Holders" means, as of the date of determination, Madison
Dearborn Capital Partners II, L.P. and its Affiliates.
"Permitted Indebtedness" means any of the following:
(a) (i) Indebtedness of the Company under the Senior Credit Agreement
in an aggregate principal amount at any one time outstanding not to exceed
the sum of (A) $110 million less the amount of any permanent reductions
made by the Company in respect of any term loans under the Senior Credit
Agreement and (B) with respect to revolving borrowings, the greater of (1)
$115 million and (2) 60% of the Eligible Inventory (as
17
defined in the Senior Credit Agreement on the Issuance Date) of the Company
and the Restricted Subsidiaries and (ii) any guarantee by a Subsidiary
Debenture Guarantor of Indebtedness incurred under this clause (a);
(b) Indebtedness of the Company pursuant to the Notes or of any
Restricted Subsidiary (as such term is defined in the Notes Indenture)
pursuant to a Note Guarantee;
(c) Indebtedness of the Company pursuant to the Exchange Debentures or
of any Restricted Subsidiary pursuant to a Debenture Guarantee;
(d) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the date of this Exchange Indenture and listed on Schedule A
hereto;
(e) Indebtedness of the Company owing to any wholly owned Restricted
Subsidiary; provided that any Indebtedness of the Company owing to any such
Restricted Subsidiary is subordinated in right of payment from and after
such time as the Exchange Debentures shall become due and payable (whether
at Stated Maturity, acceleration or otherwise) to the payment and
performance of the Company's obligations under such Exchange Debentures;
provided further that any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or transfer to
the Company or another wholly owned Restricted Subsidiary) shall be deemed
to be an incurrence of such Indebtedness by the Company not permitted by
this clause (e);
(f) Indebtedness of a Restricted Subsidiary owing to the Company or to
another wholly owned Restricted Subsidiary; provided that any such
Indebtedness of any Subsidiary Debenture Guarantor is subordinated in right
of payment to the Debenture Guarantee of such Subsidiary Debenture
Guarantor; provided further that any disposition, pledge or transfer of any
such Indebtedness to a Person (other than a disposition, pledge or transfer
to the Company or a wholly owned Restricted Subsidiary) shall be deemed to
be an incurrence of such Indebtedness by such Restricted Subsidiary not
permitted by this clause (f);
(g) guarantees of any Restricted Subsidiary made in accordance with
the provisions of Section 1015;
(h) obligations of the Company or any Subsidiary Debenture Guarantor
entered into in the ordinary course of business (i) pursuant to Interest
Rate Agreements designed to protect the Company or any Restricted
Subsidiary against fluctuations in interest rates in respect of
Indebtedness of the Company or any Restricted Subsidiary, which obligations
do not exceed the aggregate principal amount of such Indebtedness and (ii)
pursuant to Currency Agreements entered into by the Company or any of its
Restricted Subsidiaries
18
in respect of its (x) assets or (y) obligations, as the case may be,
denominated in a foreign currency;
(i) Indebtedness of the Company or any Subsidiary Debenture Guarantor
in respect of Purchase Money Obligations and Capitalized Lease Obligations
of the Company or any Subsidiary Debenture Guarantor in an aggregate amount
which does not exceed $15,000,000 at any one time outstanding;
(j) Indebtedness of the Company or any Subsidiary Debenture Guarantor
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets, including, without limitation, shares of Capital Stock of
Restricted Subsidiaries;
(k) Indebtedness of the Company or any Subsidiary Debenture Guarantor
represented by (x) letters of credit for the account of the Company or any
Restricted Subsidiary or (y) other obligations to reimburse third parties
pursuant to any surety bond or other similar arrangements, which letters of
credit or other obligations, as the case may be, are intended to provide
security for workers' compensation claims, payment obligations in
connection with self-insurance or other similar requirements in the
ordinary course of business;
(l) Acquired Indebtedness of any Restricted Subsidiary that is
organized outside of the United States of America in an aggregate amount
which, together with any Indebtedness permitted to be incurred pursuant to
this clause (l) and refinanced pursuant to clause (q) below, does not
exceed $10,000,000 at any one time outstanding;
(m) Indebtedness of the Company owing to ▇▇▇▇▇ ▇. ▇▇▇▇▇, under a note
issued pursuant to a written agreement between the Company and ▇▇▇▇▇ ▇.
▇▇▇▇▇ as in effect on the Issuance Date, in consideration for the
repurchase of Common Stock of the Company owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇ at his
retirement, in an aggregate amount not to exceed $15,000,000 outstanding at
any time;
(n) Preferred Stock issued as payment in kind dividends on Preferred
Stock outstanding on the Issuance Date and any shares of Preferred Stock
issued as payment in kind dividends thereon, such dividends made pursuant
to the terms of the certificate of designation for such Preferred Stock or
the certificate of incorporation, as the case may be, as in effect on the
Issuance Date;
(o) Indebtedness of the Company or a Subsidiary Debenture Guarantor
incurred in connection with the Company's Headquarters Facility or the
purchase or construction of a new headquarters facility, in each case, as
permitted under the Senior Credit Agreement as in effect on the Issuance
Date;
19
(p) Indebtedness of the Company or any Subsidiary Debenture Guarantor
not otherwise permitted by the foregoing clauses (a) through (o) in an
aggregate principal amount not in excess of $20,000,000 at any one time
outstanding; and
(q) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
Indebtedness, referred to in clauses (b), (c), (d) and (l) of this
definition, including any successive refinancings, so long as (i) any such
new Indebtedness shall be in a principal amount that does not exceed the
principal amount (or, if such Indebtedness being refinanced provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date of
determination) so refinanced, plus the lesser of the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium
reasonably determined as necessary to accomplish such refinancing, (ii) in
the case of any refinancing by the Company of Pari Passu Indebtedness or
Junior Subordinated Indebtedness, such new Indebtedness is made pari passu
with or subordinate to the Exchange Debentures at least to the same extent
as the Indebtedness being refinanced, (iii) in the case of any refinancing
by any Subsidiary Debenture Guarantor of Pari Passu Indebtedness or Junior
Subordinated Indebtedness, such new Indebtedness is made pari passu with or
subordinate to the Debenture Guarantee of such Subsidiary Debenture
Guarantor at least to the same extent as the Indebtedness being refinanced,
(iv) such new Indebtedness has an Average Life longer than the Average Life
of the Exchange Debentures and a final Stated Maturity later than the final
Stated Maturity of the Exchange Debentures and (v) Indebtedness of the
Company or a Subsidiary Debenture Guarantor may only be refinanced with
Indebtedness of the Company or a Subsidiary Debenture Guarantor and
Indebtedness of a Restricted Subsidiary that is not a Subsidiary Debenture
Guarantor may only be refinanced with Indebtedness of such Restricted
Subsidiary.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents;
(b) Investments in the Company or any wholly owned Restricted
Subsidiary;
(c) intercompany Indebtedness to the extent permitted under clause (e) or
(f) of the definition of "Permitted Indebtedness";
(d) Investments in an amount not to exceed $10,000,000 at any one time
outstanding;
(e) Investments by the Company or any Restricted Subsidiary in another
Person, if as a result of such Investment (i) such other Person becomes a
wholly owned
20
Restricted Subsidiary or (ii) such Person, in one transaction
or a series of related transactions, is merged or consolidated with or
into, or transfers or conveys all or substantially all of its assets to,
the Company or a wholly owned Restricted Subsidiary;
(f) bonds, notes, debentures and other securities received as
consideration for Assets Sales to the extent permitted under Section 1014;
(g) negotiable instruments held for deposit or collection in the
ordinary course of business, except to the extent they would constitute
Investments in Affiliates; or
(h) Investments in the form of the sale (on a "true-sale" non-recourse
basis) or the servicing of receivables transferred from the Company or any
Restricted Subsidiary.
"Permitted Junior Securities" has the meaning specified in Section 1202.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Debentures" has the meaning set forth in Section 201.
"Place of Payment" means the office or agency maintained by the Company
where the principal of (and premium, if any, on) and interest on the Exchange
Debentures are payable as specified in Section 1002.
"Predecessor Exchange Debenture" of any particular Exchange Debenture,
means every previous Exchange Debenture evidencing all or a portion of the same
debt as that evidenced by such particular Exchange Debenture; and, for the
purposes of this definition, any Exchange Debenture authenticated and delivered
under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Exchange Debenture shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Exchange Debenture.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding, or issued after
the Issuance Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Private Placement Legend" has the meaning set forth in Section 203.
"Public Equity Offering" means an offer and sale of common stock (which is
Qualified Capital Stock) of the Company made on a primary basis by the Company
pursuant to a registration statement that has been declared effective by the
Commission pursuant to the Securities Act (other
21
than a registration statement on Form S-8 or otherwise relating to equity
securities issuable under any employee benefit plan of the Company).
"Purchase Money Obligations" means, with respect to any Person,
obligations, other than Capitalized Lease Obligations, incurred or assumed in
the ordinary course of business in connection with the purchase of property to
be used in the business of such Person within 90 days of such purchase, provided
that the amount of any Purchase Money Obligation shall not exceed the purchase
price of the property purchased.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"QIB" means a "Qualified Institutional Buyer" within the meaning of Rule
144A under the Securities Act.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the final
Stated Maturity of the Exchange Debentures or is redeemable at the option of the
holder thereof at any time prior to such final Stated Maturity, or is
convertible into or exchangeable for debt securities at any time prior to such
final Stated Maturity.
"Redemption Date," when used with respect to any Exchange Debenture to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Exchange Indenture.
"Redemption Price," when used with respect to any Exchange Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Exchange Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of December 29, 1997, among the Company, the Subsidiary Debenture
Guarantors and the holders of Senior Exchangeable Preferred Stock.
"Registration Statement" means the Registration Statement as defined in the
Registration Rights Agreement.
"Regular Record Date" has the meaning specified in Section 301.
"Regulation S" means Regulation S under the Securities Act.
22
"Representative" means (i) with respect to the Senior Credit Agreement, the
Agent Bank and (ii) with respect to any other Senior Indebtedness, the indenture
trustee or other trustee, agent or representative for the holders of such Senior
Indebtedness.
"Responsible Officer," when used with respect to the Debenture Trustee,
means any vice president, any assistant secretary, any assistant treasurer, any
trust officer or assistant trust officer, or any other officer of the Debenture
Trustee customarily performing functions similar to those performed by any of
the above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of any Unrestricted Subsidiary ceasing to be
an Unrestricted Subsidiary, such Subsidiary shall be included in the definition
of "Restricted Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing of such property
or asset to the seller or transferor.
"S&P" means Standard and Poor's Ratings Services, a division of The ▇▇▇▇▇▇-
▇▇▇▇, Inc. and its successors.
"Securities Act" means Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Senior Credit Agreement" means the credit agreement dated as of December
29, 1997, among the Company, the several lenders parties thereto, the Subsidiary
Debenture Guarantors, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, as arranger and syndication agent, and Fleet National Bank, as
administrative agent, as such agreement may be amended, renewed, extended,
substituted, restated, refinanced, restructured, supplemented, increased or
otherwise modified from time to time (including, without limitation, any
successive amendments, renewals, extensions, substitutions, restatements,
refinancings, restructurings, supplements or other modifications of the
foregoing); provided that with respect to any agreement providing for the
refinancing of Indebtedness under the Senior Credit Agreement, such agreement
shall be the Senior Credit Agreement under this Exchange Indenture only if a
notice to that effect is delivered by the Company to the Debenture Trustee and
there shall be at any time only one instrument that is the Senior Credit
Agreement under the Exchange Indenture.
23
"Senior Exchangeable Preferred Stock" means the 13 1/4% Senior Exchangeable
Preferred Stock issued by the Company on the Issuance Date and any shares of
Senior Exchangeable Preferred Stock issued as payment in kind dividends thereon
or on shares of Senior Exchangeable Preferred Stock so issued as payment in kind
dividends pursuant to the Certificate of Designation as in effect on the
Issuance Date.
"Senior Indebtedness" means (i) all obligations of the Company, now or
hereafter existing, under or in respect of the Senior Credit Agreement, whether
for principal, premium, if any, interest (including, interest accruing after the
filing of, or which would have accrued but for the filing of, a petition by or
against the Company under Bankruptcy Law, whether or not such interest is
allowed as a claim after such filing in any proceeding under such law) and other
amounts due in connection therewith (including any fees, premiums, expenses and
indemnities) and (ii) the principal of, premium, if any, and interest on all
other Indebtedness of the Company (other than the Exchange Debentures), whether
outstanding on the date of this Exchange Indenture or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Exchange Debentures. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (i) Indebtedness evidenced by the
Exchange Debentures, (ii) Indebtedness of the Company that is expressly
subordinated in right of payment to any Senior Indebtedness of the Company,
(iii) Indebtedness of the Company that by operation of law is subordinate to any
general unsecured obligations of the Company, (iv) Indebtedness of the Company
to the extent incurred in violation of Section 1008, (v) any liability for
federal, state or local taxes or other taxes, owed or owing by the Company, (vi)
trade account payables owed or owing by the Company, (vii) amounts owed by the
Company for compensation to employees or for services rendered to the Company,
(viii) Indebtedness of the Company to any Restricted Subsidiary or any other
Affiliate of the Company, (ix) Redeemable Capital Stock of the Company and (x)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 of the United States Code is without recourse to the
Company or any Restricted Subsidiary.
"Senior Subordinated Indebtedness" means (i) all obligations of the
Company, now or hereafter existing, under or in respect of the Notes, whether
for principal, premium, if any, interest (including interest accruing after the
filing of, or which would have accrued but for the filing of, a petition by or
against the Company under Bankruptcy Law, whether or not such interest is
allowed as a claim after such filing in any proceeding under such law) and (ii)
the principal of, premium, if any, and interest on all other Indebtedness of the
Company (other than the Exchange Debentures), whether outstanding on the date of
this Exchange Indenture or thereafter created, incurred or assumed, for which,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness will be subordinate in right of payment to any
Senior Indebtedness or other general unsecured obligations of the Company,
unless, such instrument expressly provides that such Indebtedness will be
subordinate in right of payment to the Notes or any Indebtedness
24
that is pari passu in right of payment to the Notes. Notwithstanding the
foregoing, "Senior Subordinated Indebtedness" shall not include (i) Indebtedness
evidenced by the Exchange Debentures, (ii) Indebtedness of the Company that is
expressly subordinated in right of payment to any Senior Subordinated
Indebtedness of the Company or the Notes, (iii) Indebtedness of the Company that
by operation of law is subordinate to any general unsecured obligations of the
Company, (iv) Indebtedness of the Company to the extent incurred in violation of
any covenant prohibiting the incurrence of Indebtedness under the Certificate of
Designation or this Exchange Indenture, (v) any liability for federal, state or
local taxes or other taxes, owed or owing by the Company, (vi) trade account
payables owed or owing by the Company, (vii) amounts owed by the Company for
compensation to employees or for services rendered to the Company, (viii)
Indebtedness of the Company to any Restricted Subsidiary or any other Affiliate
of the Company, (ix) Redeemable Capital Stock of the Company and (xi)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 of the United States Code is without recourse to the
Company or any Restricted Subsidiary.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that, together with its Subsidiaries, (i) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated revenues of the Company
and its Restricted Subsidiaries or (ii) as of the end of such fiscal year, was
the owner of more than 10% of the consolidated assets of the Company and its
Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of the Company for such fiscal year.
"Special Record Date" for the payment of any Defaulted Interest on the
Exchange Debentures means a date fixed by the Debenture Trustee pursuant to
Section 307.
"Stated Maturity" means, when used with respect to any Exchange Debenture
or any installment of interest thereon, the date specified in such Exchange
Debenture as the fixed date on which the principal of such Exchange Debenture or
such installment of interest is due and payable, and, when used with respect to
any other Indebtedness, means the date specified in the instrument governing
such Indebtedness as the fixed date on which the principal of such Indebtedness,
or any installment of interest thereon, is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor that is expressly subordinated in right of payment to the
Notes or the Note Guarantee of such Subsidiary Guarantor, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company or
by one or more other Subsidiaries or by the Company and one or more other
Subsidiaries.
25
"Subsidiary Debenture Guarantor" means each of TMI Holdings Inc., Tuesday
Morning Inc., Friday Morning, Inc. and TMIL Corporation and any Restricted
Subsidiary that incurs a Debenture Guarantee; provided that, upon the release
and discharge of any Person from its Debenture Guarantee in accordance with this
Exchange Indenture, such Person shall cease to be a Subsidiary Debenture
Guarantor.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this Exchange Indenture was executed, except as
provided in Section 905.
"United States" means the United States of America (including the states
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
"Unrestricted Subsidiary" means (a) any Subsidiary that at the time of
determination shall be an Unrestricted Subsidiary (as designated by the Board of
Directors of the Company, as provided below) and (b) any Subsidiary of an
Unrestricted Subsidiary; provided, however, that in no event shall any
Subsidiary Debenture Guarantor be an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary but excluding any Subsidiary Debenture
Guarantor) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any Restricted Subsidiary is directly or indirectly liable for any
Indebtedness of such Subsidiary, (ii) no default with respect to any
Indebtedness of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity, (iii) any
Investment in such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of Section 1019, (iv)
neither the Company nor any Restricted Subsidiary has a contract, agreement,
arrangement, understanding or obligation of any kind, whether written or oral,
with such Subsidiary other than those that might be obtained at the time from
Persons who are not Affiliates of the Company, and (v) neither the Company nor
any Restricted Subsidiary has any obligation (1) to subscribe for additional
shares of Capital Stock or other equity interest in such Subsidiary, or (2) to
maintain or preserve such Subsidiary's financial condition or to cause such
Subsidiary to achieve certain levels of operating results. Any such designation
by the Board of Directors of the Company shall be evidenced to the Debenture
Trustee by filing a board resolution with the Debenture Trustee giving effect to
such designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such designation, there would be no Default or Event of Default under
this Exchange Indenture and the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 1008.
"U.S. Global Debenture" has the meaning set forth in Section 201.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y)
26
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian
with respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Physical Debenture" has the meaning set forth in Section 201.
"Vice President," when used with respect to the Company or the Debenture
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"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 at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Debenture
Trustee to take any action under any provision of this Exchange Indenture, the
Company, the Subsidiary Debenture Guarantors and any other obligor on the
Exchange Debentures (if applicable) shall, at the request of the Debenture
Trustee, furnish to the Debenture Trustee an Officers' Certificate in form and
substance reasonably acceptable to the Debenture Trustee stating that all
conditions precedent, if any, provided for in this Exchange Indenture (including
any covenant compliance with which constitutes a condition precedent) relating
to the proposed action have been complied with and, at the request of the
Debenture Trustee, an Opinion of Counsel to the effect that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of any such documents is specifically required by any provision of
this Exchange Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Each certificate or opinion with respect to compliance with a covenant
or condition provided for in this Exchange Indenture (other than pursuant to
Section 1007) shall include:
27
(1) a statement that each individual or firm signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(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 each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it 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 the opinion of each such individual
or such firm, such covenant or condition has been complied with.
SECTION 103. Form of Documents Delivered to Debenture Trustee.
------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any
Subsidiary Debenture Guarantor or other obligor on the Exchange Debentures may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company, any
Subsidiary Debenture Guarantor or other obligor on the Exchange Debentures
stating that the information with respect to such factual matters is in the
possession of the Company, any Subsidiary Debenture Guarantor or other obligor
on the Exchange Debentures, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Exchange Indenture, they may, but need not, be
consolidated and form one instrument.
28
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Exchange Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Debenture Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Exchange Indenture and conclusive in favor of the Debenture Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Debenture Trustee deems sufficient.
(c) The principal amount and serial numbers of Exchange Debentures
held by any Person, and the date of holding the same, shall be proved by the
Exchange Debenture Register.
(d) If the Company shall solicit from the Holders of Exchange
Debentures any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding Exchange
Debentures have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Exchange Debentures shall be computed as of such record
date; provided that no such
29
authorization, agreement or consent by the Holders on such record date shall be
deemed effective unless it shall become effective pursuant to the provisions of
this Exchange Indenture not later than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Exchange Debenture shall bind every
future Holder of the same Exchange Debenture and the Holder of every Exchange
Debenture issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Debenture Trustee or the Company or any Subsidiary Debenture
Guarantor in reliance thereon, whether or not notation of such action is made
upon such Exchange Debenture.
SECTION 105. Notices, Etc., to Debenture Trustee, Company, Any
-------------------------------------------------
Subsidiary Debenture Guarantor and Agent Bank.
---------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other documents provided or permitted by this Exchange
Indenture to be made upon, given or furnished to, or filed with,
(1) the Debenture Trustee by any Holder or by the Company or any
Subsidiary Debenture Guarantor or any other obligor on the Exchange
Debentures shall be sufficient for every purpose hereunder if made, given,
furnished or delivered in writing and mailed, first-class postage prepaid,
or delivered by recognized overnight courier, to or with the Debenture
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(2) the Company or any Subsidiary Debenture Guarantor by the
Debenture Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered in writing, or mailed, first-class postage prepaid,
or delivered by recognized overnight courier, to the Company or such
Subsidiary Debenture Guarantor addressed to it at the address of its
principal office, for the attention of the Chief Financial Officer,
specified in the first paragraph of this Exchange Indenture or at any other
address previously furnished in writing to the Debenture Trustee by the
Company or such Subsidiary Debenture Guarantor, or
(3) the Agent Bank by the Company or any Subsidiary Debenture
Guarantor, the Debenture Trustee or any Holder shall be sufficient for any
purpose hereunder if made, given, furnished or delivered in writing to or
with the Agent Bank addressed to it as set forth in the Senior Credit
Agreement, or at any other address previously furnished in writing to the
Company, the Subsidiary Debenture Guarantors and the Debenture Trustee by
the Agent Bank.
30
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Exchange Indenture provides for notice of any event to
Holders of Exchange Debentures by the Company or the Debenture Trustee, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each such Holder
affected by such event, at its address as it appears in the Exchange Debenture
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Exchange Indenture, then any manner of giving such
notice as shall be satisfactory to the Debenture Trustee shall be deemed to be
sufficient giving of such notice for every purpose hereunder.
Where this Exchange Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Debenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
----------------------
All covenants and agreements in this Exchange Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
-------------------
In case any provision in this Exchange Indenture or in any Exchange
Debenture 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.
31
SECTION 110. Benefits of Exchange Indenture.
------------------------------
Nothing in this Exchange Indenture or in the Exchange Debentures,
express or implied, shall give to any Person, other than the parties hereto, any
Authenticating Agent, any Paying Agent, any Exchange Debenture Registrar and
their successors hereunder and the Holders and, with respect to any provisions
hereof relating to the subordination of the Exchange Debentures or the rights of
holders of Senior Indebtedness or Senior Subordinated Indebtedness, any benefit
or any legal or equitable right, remedy or claim under this Exchange Indenture.
SECTION 111. Governing Law.
-------------
This Exchange Indenture and the Exchange Debentures shall be governed
by and construed in accordance with the law of the State of New York. Upon the
effectiveness of the Shelf Registration Statement or the consummation of the
Exchange Offer, this Exchange Indenture will be subject to the provisions of the
Trust Indenture Act that are required to be part of this Exchange Indenture and
shall, to the extent applicable, be governed by such provisions.
SECTION 112. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity or Maturity of any Exchange Debenture shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision of this
Exchange Indenture or of any Exchange Debenture) payment of principal (and
premium, if any) or interest need not be made at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date or at the Stated Maturity or Maturity; provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Stated Maturity or Maturity, as the case may be.
SECTION 113. Trust Indenture Act Controls.
----------------------------
If any provision of this Exchange Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Exchange Indenture by the TIA, the provision required by the TIA shall control.
SECTION 114. No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or any Subsidiary Debenture Guarantor shall not have any liability for any
obligations of the Company or such Subsidiary Debenture Guarantor under the
Exchange Debentures, any Debenture Guarantee or this Exchange Indenture, as
applicable, or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting an Exchange Debenture and the
32
related Debenture Guarantee, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Exchange Debentures and the Debenture Guarantees.
SECTION 115. Counterparts.
------------
This Exchange Indenture may be executed in any number of counterparts,
each of which shall be original; but such counterparts shall together constitute
but one and the same instrument.
ARTICLE TWO
EXCHANGE DEBENTURE FORMS
SECTION 201. Forms Generally.
---------------
The Initial Exchange Debentures shall be known as the "13 1/4%
Subordinated Exchange Debentures due 2009" and the New Exchange Debentures shall
be known as the "13 1/4% Series B Subordinated Exchange Debentures due 2009," in
each case, of the Company. The Exchange Debentures and the Debenture Trustee's
certificate of authentication shall be in substantially the forms set forth in
Exhibit A hereto and in this Article, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Exchange Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers of the Company executing
such Exchange Debentures, as evidenced by their execution of the Exchange
Debentures. Any portion of the text of any Exchange Debenture may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the
Exchange Debenture. Each Exchange Debenture shall be dated the date of its
authentication.
The definitive Exchange Debentures shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Exchange Debentures,
as evidenced by their execution of such Exchange Debentures.
Initial Exchange Debentures offered and sold in reliance on Rule 144A
under the Securities Act (or exchanged for Senior Exchangeable Preferred Stock
so offered and sold) shall be issued initially in the form of a single permanent
global Exchange Debentures in substantially the form set forth in Exhibit A and
contain each of the legends set forth in Section 203 (the "U.S. Global Exchange
Debenture"), registered in the name of the nominee of the Depositary, deposited
with the Debenture Trustee, as custodian for the Depositary or its nominee, duly
executed by the
33
Company and authenticated by the Debenture Trustee as hereinafter provided. The
aggregate principal amount of the U.S. Global Exchange Debenture may from time
to time be increased or decreased by adjustments made on the records of the
Debenture Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Exchange Debentures offered and sold in offshore transactions
in reliance on Regulation S under the Securities Act (or exchanged for Senior
Exchangeable Preferred Stock so offered and sold) shall be initially issued in
the form of a single temporary global Exchange Debenture in substantially the
form set forth in Exhibit A (the "Temporary Offshore Global Exchange
Debenture"), registered in the name of the nominee of the Depositary, deposited
with the Debenture Trustee, as custodian for the Depositary or its nominee, duly
executed by the Company and authenticated by the Debenture Trustee as
hereinafter provided. At any time following 41 days after the date hereof (the
"Offshore Exchange Debenture Exchange Date"), upon receipt by the Debenture
Trustee and the Company of a certificate substantially in the form set forth in
Section 204, a single permanent global Exchange Debenture substantially in the
form of Exhibit A hereto (the "Permanent Offshore Global Exchange Debenture";
and together with the Temporary Offshore Global Exchange Debenture, the
"Offshore Global Exchange Debenture") duly executed by the Company and
authenticated by the Debenture Trustee as hereinafter provided shall be
deposited with the Debenture Trustee, as custodian for the Depositary, and the
Exchange Debenture Registrar shall reflect on its books and records the date and
a decrease in the principal amount of the Temporary Offshore Global Exchange
Debenture in an amount equal to the principal amount of the beneficial interest
in the Temporary Offshore Global Exchange Debenture transferred. The aggregate
principal amount of the Offshore Global Exchange Debenture may from time to time
be increased or decreased by adjustments made in the records of the Debenture
Trustee, as custodian for the Depositary or its nominee, as herein provided.
Initial Exchange Debentures issued pursuant to Section 305 (or exchanged for
Senior Exchangeable Preferred Stock so offered and sold) in exchange for or upon
transfer of beneficial interests in the U.S. Global Exchange Debenture or the
Offshore Global Exchange Debenture shall be in the form of U.S. Physical
Exchange Debentures or in the form of permanent certificated Exchange Debentures
substantially in the form set forth in Exhibit A (the "Offshore Physical
Exchange Debentures"), respectively, as hereinafter provided.
Initial Exchange Debentures which are offered and sold to
Institutional Accredited Investors which are not QIBs (excluding Non-U.S.
Persons) (or exchanged for Senior Exchangeable Preferred Stock so offered and
sold) shall be issued in the form of permanent certificated Exchange Debentures
in substantially the form set forth in Exhibit A and contain the Private
Placement Legend as set forth in Section 203 (the "U.S. Physical Exchange
Debentures").
The Offshore Physical Exchange Debentures and U.S. Physical Exchange
Debentures are sometimes collectively referred to herein as the "Physical
Exchange Debentures." The U.S. Global Exchange Debenture and the Offshore Global
Exchange Debenture are sometimes collectively referred to as the "Global
Exchange Debentures."
34
New Exchange Debentures shall be issued substantially in the form set
forth in Exhibit A.
SECTION 202. Form of Debenture Trustee's Certificate of
------------------------------------------
Authentication.
--------------
Subject to Section 611, the Debenture Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Exchange Debentures referred to in the within-
mentioned Exchange Indenture.
United States Trust Company of New York,
as Debenture Trustee
Dated: __________ By: _________________
Authorized Signatory
SECTION 203. Restrictive Legends.
-------------------
Unless and until (i) an Initial Exchange Debenture is sold pursuant to
an effective Shelf Registration Statement or (ii) an Initial Exchange Debenture
or Senior Exchangeable Preferred Stock is exchanged for a New Exchange Debenture
or Senior Exchangeable Preferred Stock in an Exchange Offer pursuant to an
effective Exchange Offer Registration Statement, in each case pursuant to the
Registration Rights Agreement, (A) each U.S. Global Exchange Debenture and U.S.
Physical Exchange Debenture shall bear the following legend set forth below (the
"Private Placement Legend") on the face thereof and (B) the Offshore Physical
Exchange Debentures and the Temporary Offshore Global Exchange Debenture shall
bear the Private Placement Legend on the face thereof until the Offshore
Exchange Debenture Exchange Date and receipt by the Company and the Debenture
Trustee of a certificate substantially in the form provided in Section 204:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS
35
SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS
TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER
THE SECURITIES ACT AND ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR AND THIS SECURITY)
AND THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y)
SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇, ▇▇ (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE DEBENTURE TRUSTEE,
THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
DEBENTURE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRADED, EXCHANGED
OR OTHERWISE TRANSFERRED SEPARATELY FROM THE COMMON STOCK OF THE COMPANY
UNTIL (I) JUNE 15, 1998; (II) THE OCCURRENCE OF A CHANGE
36
IN CONTROL; (III) THE DATE ON WHICH A PREFERRED STOCK REGISTRATION
STATEMENT IS DECLARED EFFECTIVE; (IV) IMMEDIATELY PRIOR TO ANY REDEMPTION
OF SENIOR EXCHANGEABLE PREFERRED STOCK BY THE COMPANY WITH THE PROCEEDS OF
A PUBLIC EQUITY OFFERING; OR (V) SUCH EARLIER DATE AS DETERMINED BY ▇▇▇▇▇▇▇
▇▇▇▇▇ IN ITS SOLE DISCRETION (THE DATE OF THE OCCURRENCE OF AN EVENT
SPECIFIED IN CLAUSES (I)-(V) BEING THE "SEPARATION DATE").
Each Global Exchange Debenture, whether or not an Initial Exchange
Debenture, shall also bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 311 AND 312 OF THE EXCHANGE INDENTURE.
37
SECTION 204. Form of Certificate to Be Delivered After the Offshore
------------------------------------------------------
Exchange Debenture Exchange Date.
--------------------------------
On or after February 8, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: TUESDAY MORNING CORPORATION (the "Company")
13 1/4% Subordinated Exchange Debentures due 2009 (the
"Exchange Debentures")
-----------------------------------------------------
_____
Ladies and Gentlemen:
This letter relates to $__________ principal amount of Exchange
Debentures represented by the temporary offshore global note certificate (the
"Temporary Offshore Global Exchange Debenture"). Pursuant to Section [201] [203]
of the Exchange Indenture dated as of December 29, 1997 (the "Exchange
Indenture") relating to the Exchange Debentures, we hereby certify that (1) we
are the beneficial owner of such principal amount of Exchange Debentures
represented by the Temporary Offshore Global Exchange Debenture and (2) we are a
Non-U.S. Person to whom the Exchange Debentures could be transferred in
accordance with Rule 904 of Regulation S promulgated under the Securities Act of
1933 (the "Securities Act"). [Accordingly, you are hereby requested to exchange
the Temporary Offshore Global Exchange Debenture for an unlegended Permanent
Offshore Global Exchange Debenture representing the undersigned's interest in
the principal amount of Exchange Debentures represented by the Temporary
Offshore Global Exchange Debenture, all in the manner provided for in the
Exchange Indenture.] [Accordingly, you are hereby requested to issue an Offshore
Physical Exchange Debenture representing the undersigned's interest in the
principal amount of Exchange Debentures represented by the Offshore Global
Exchange Debenture, all in the manner provided by the Exchange Indenture.]
38
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:__________________________________________________________________
Authorized Signature
ARTICLE THREE
THE EXCHANGE DEBENTURES
SECTION 301. Amount.
------
The aggregate principal amount of Exchange Debentures which may be
authenticated and delivered under this Exchange Indenture is limited to
$50,000,000, except for Exchange Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Exchange
Debentures pursuant to Section 303, 304, 305, 306, 311, 312, 906, 1013, 1014 or
1108 or pursuant to an Exchange Offer. Exchange Debentures may be issued in
exchange for Senior Exchangeable Preferred Stock as provided in the Certificate
of Designation with respect thereto or in connection with the payment of
interest on Exchange Debentures as provided herein.
The Initial Exchange Debentures shall be known and designated as the
"13 1/4% Subordinated Exchange Debentures due 2009" and the New Exchange
Debentures shall be known and designated as the "13 1/4% Series B Subordinated
Exchange Debentures due 2009," in each case, of the Company. The Stated Maturity
of the Exchange Debentures shall be December 15, 2009, and they shall bear
interest at the rate of 13 1/4% per annum from the Exchange Date, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, payable quarterly on March 15, June 15, September 15 and December
15 in each year, commencing on the first such date after the Exchange Date until
the principal thereof is paid in full and to the Person in whose name the
Exchange Debenture (or any predecessor Exchange Debenture) is registered at the
close of business on the March 1, June 1, September 1 or December
39
1 immediately preceding such Interest Payment Date (each, a "Regular Record
Date"). Interest will be computed on the Exchange Debentures as specified in
Section 310 hereof. On or prior to December 15, 2002, interest is payable in
additional Exchange Debentures having an aggregate principal amount equal to the
amount of such interest, or at the option of the Company, in cash. Thereafter,
all interest will be payable only in cash. Interest on the Exchange Debentures
will accrue from the date of issuance thereof.
The principal of (and premium, if any) and interest on the Exchange
Debentures shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency of
the Company as may be maintained for such purpose; provided, however, that, at
the option of the Company, interest may be paid (a) by check (or, if Exchange
Debentures have been issued as payment of interest in lieu of money, by such
Exchange Debentures) mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Exchange Debenture Register or (b) by wire
transfer to an account located in the United States maintained by the payee.
Holders shall have the right to require the Company to purchase their
Exchange Debentures, in whole or in part, in the event of a Change in Control
pursuant to Section 1013. The Exchange Debentures shall be subject to repurchase
pursuant to an Excess Proceeds Offer as provided in Section 1014.
The Exchange Debentures shall be redeemable as provided in Article
Eleven and in the Exchange Debentures. The Indebtedness evidenced by the
Exchange Debentures shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve. The due and punctual payment of
principal of, and premium, if any, and interest on the Exchange Debentures
payable by the Company is irrevocably and unconditionally guaranteed, to the
extent set forth herein, by each of the Subsidiary Debenture Guarantors. The
Debenture Guarantee issued by any Subsidiary Debenture Guarantor will be
subordinated to all existing and future Guarantor Senior Indebtedness of such
Subsidiary Debenture Guarantor as provided in Article Twelve.
SECTION 302. Denominations.
-------------
The Exchange Debentures shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Exchange Debentures shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, its Chief
Operating Officer, its Chief Financial Officer or a Vice President. The
signature of any of these officers on the
40
Exchange Debentures may be the manual or facsimile signatures of the present or
any future such authorized officer and may be imprinted or otherwise reproduced
on the Exchange Debentures.
Exchange Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Exchange
Debentures or did not hold such offices at the date of such Exchange Debentures.
At any time and from time to time after the execution and delivery of
this Exchange Indenture, the Company may deliver (i) Exchange Debentures and
(ii) any additional Exchange Debentures issued in lieu of interest payments in
money as provided in this Exchange Indenture and in the Exchange Debentures, in
each case executed by the Company to the Debenture Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Exchange Debentures, directing the Debenture Trustee to authenticate the
Exchange Debentures and certifying that all conditions precedent to the issuance
of Exchange Debentures contained herein have been fully complied with, and the
Debentures Trustee in accordance with such Company Order shall authenticate and
deliver such Initial Exchange Debentures and Exchange Debentures issued in lieu
of interest payments in money, as the case may be. On Company Order, the
Debenture Trustee shall authenticate for original issue New Exchange Debentures
in an aggregate principal amount not to exceed $50,000,000; provided that such
New Exchange Debentures shall be issuable only upon the valid surrender for
cancellation of Initial Exchange Debentures of a like aggregate principal amount
in accordance with an Exchange Offer pursuant to the Registration Rights
Agreement. In each case, the Debenture Trustee shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel of the Company that it may
reasonably request in connection with such authentication of Exchange
Debentures. Such order shall specify the amount of Exchange Debentures to be
authenticated and the date on which the original issue of Exchange Debentures is
to be authenticated.
Each Exchange Debenture shall be dated the date of its authentication.
No Exchange Debenture shall be entitled to any benefit under this
Exchange Indenture or be valid or obligatory for any purpose unless there
appears on such Exchange Debenture a certificate of authentication substantially
in the form provided for herein duly executed by the Debenture Trustee by manual
signature of an authorized signatory, and such certificate upon any Exchange
Debenture shall be conclusive evidence, and the only evidence, that such
Exchange Debenture has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Exchange Indenture.
In case the Company or any Subsidiary Debenture Guarantor, pursuant to
Article Eight, shall be consolidated or merged with or into any other Person or
shall convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person,
41
and the successor Person resulting from such consolidation, or surviving such
merger, or into which the Company or such Subsidiary Debenture Guarantor shall
have been merged, or the Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Debenture Trustee pursuant to Article
Eight, any of the Exchange Debentures authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Exchange Debentures executed in the name of the successor Person with such
changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Exchange Debentures surrendered for such exchange
and of like principal amount; and the Debenture Trustee, upon Company Request of
the successor Person, shall authenticate and deliver Exchange Debentures as
specified in such request for the purpose of such exchange. If Exchange
Debentures shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section 303 in exchange or substitution for or
upon registration of transfer of any Exchange Debentures, such successor Person,
at the option of the Holders but without expense to them, shall provide for the
exchange of all Exchange Debentures at the time Outstanding for Exchange
Debentures authenticated and delivered in such new name.
SECTION 304. Temporary Exchange Debentures.
-----------------------------
Pending the preparation of definitive Exchange Debentures, the Company
may execute, and upon Company Order the Debenture Trustee shall authenticate and
deliver, temporary Exchange Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Exchange Debentures in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Exchange
Debentures may determine, as conclusively evidenced by their execution of such
Exchange Debentures.
If temporary Exchange Debentures are issued, the Company will cause
definitive Exchange Debentures to be prepared without unreasonable delay. After
the preparation of definitive Exchange Debentures, the temporary Exchange
Debentures shall be exchangeable for definitive Exchange Debentures, upon
surrender of the temporary Exchange Debentures at the office or agency of the
Company in a Place of Payment, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Exchange Debentures, the Company shall
execute and, upon Company Order, the Debenture Trustee shall authenticate and
make available for delivery in exchange therefor a like principal amount of
definitive Exchange Debentures of authorized denominations. Until so exchanged
the temporary Exchange Debentures shall in all respects be entitled to the same
benefits under this Exchange Indenture as definitive Exchange Debentures.
42
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Debenture Trustee a register for the Exchange Debentures (the register
maintained in the Corporate Trust Office of the Debenture Trustee and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Exchange Debenture Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Exchange Debentures and of transfers of
Exchange Debentures. The Exchange Debenture Register shall be in written form or
any other form capable of being converted into written form within a reasonable
time. At all reasonable times, the Exchange Debenture Register shall be open to
inspection by the Debenture Trustee. The Debenture Trustee is hereby initially
appointed as note registrar (the Debenture Trustee in such capacity, together
with any successor of the Debenture Trustee in such capacity, the "Exchange
Debenture Registrar") for the purpose of registering Exchange Debentures and
transfers of Exchange Debentures as herein provided.
Upon surrender for registration of transfer of any Exchange Debenture
at the office or agency in a Place of Payment, the Company shall execute, and
the Debenture Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Exchange Debentures, of
any authorized denomination or denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Exchange Debentures may be exchanged for
other Exchange Debentures, of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Exchange Debentures to be
exchanged at such office or agency. Whenever any Exchange Debentures are so
surrendered for exchange (including an exchange of Initial Exchange Debentures
for New Exchange Debentures), the Company shall execute, and the Debenture
Trustee shall authenticate and deliver, the Exchange Debentures which the Holder
making the exchange is entitled to receive; provided that no exchange of Initial
Exchange Debentures for New Exchange Debentures shall occur until an Exchange
Offer Registration Statement shall have been declared effective by the
Commission, the Debenture Trustee shall have received an Officers' Certificate
confirming that the Exchange Offer Registration Statement has been declared
effective by the Commission and the Initial Exchange Debentures to be exchanged
for the New Exchange Debentures shall be cancelled by the Debenture Trustee.
All Exchange Debentures issued upon any registration of transfer or
exchange of Exchange Debentures shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Exchange
Indenture, as the Exchange Debentures surrendered upon such registration of
transfer or exchange.
Every Exchange Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Exchange
Debenture Registrar) be duly
43
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Exchange Debenture Registrar, duly executed
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Exchange Debentures, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Exchange Debentures, other than exchanges pursuant to Section 303, 304, 906,
1013, 1014 or 1108 not involving any transfer.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Exchange
----------------------------------------------
Debentures.
----------
If any mutilated Exchange Debenture is surrendered to the Debenture
Trustee, the Company shall execute and the Debenture Trustee shall authenticate
and deliver in exchange therefor a new Exchange Debenture of like tenor and
principal amount and bearing a number not contemporaneously outstanding, or, in
case any such mutilated Exchange Debenture has become or is about to become due
and payable, the Company in its discretion may, instead of issuing a new
Exchange Debenture, pay such Exchange Debenture.
If there shall be delivered to the Company, any Subsidiary Debenture
Guarantor and to the Debenture Trustee (i) evidence to their satisfaction of the
destruction, loss or theft of any Exchange Debenture and (ii) such security or
indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company, any
Subsidiary Debenture Guarantor or the Debenture Trustee that such Exchange
Debenture has been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Debenture Trustee shall authenticate and deliver, in
lieu of any such destroyed, lost or stolen Exchange Debenture, a new Exchange
Debenture of like tenor and principal amount and bearing a number not
contemporaneously outstanding, or, in case any such destroyed, lost or stolen
Exchange Debenture has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Exchange Debenture, pay such
Exchange Debenture.
Upon the issuance of any new Exchange Debenture under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Debenture Trustee) in
connection therewith.
Every new Exchange Debenture issued pursuant to this Section in lieu
of any destroyed, lost or stolen Exchange Debenture, shall constitute an
original additional contractual obligation of the Company, any Subsidiary
Debenture Guarantor and any other obligor upon the Exchange Debentures, whether
or not the mutilated, destroyed, lost or stolen Exchange Debenture shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this
44
Exchange Indenture equally and proportionately with any and all other Exchange
Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Exchange Debentures.
SECTION 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Exchange Debenture which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name such Exchange Debenture (or one or more Predecessor
Exchange Debentures) is registered at the close of business on the Regular
Record Date for such interest at the Place of Payment; provided, however, that
each installment of interest on any Exchange Debenture may at the Company's
option be paid (i) by mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 308, to the
address of such Person as it appears on the Exchange Debenture Register or (ii)
by wire transfer to an account located in the United States maintained by the
payee.
Any interest on any Exchange Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of its having been such Holder, and such defaulted interest and, if
applicable, interest on such defaulted interest (to the extent lawful) at the
rate specified in the Exchange Debentures (such defaulted interest and, if
applicable, interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Exchange Debentures (or their respective
Predecessor Exchange Debentures) are registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Debenture Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Exchange Debenture and the date of the proposed payment
(the "Special Record Date"), and at the same time the Company shall deposit
with the Debenture Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Debenture Trustee for such deposit on or
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Debenture Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after the receipt by the
Debenture Trustee of the notice of the proposed
45
payment. The Debenture Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given in the manner provided in
Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so given, such Defaulted Interest shall be
paid to the Persons in whose name the Registered Exchange Debentures (or
their respective Predecessor Exchange Debentures) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Exchange Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Exchange Debentures
may be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Debenture Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Debenture Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Exchange Debenture delivered under this Exchange Indenture upon
registration of transfer of or in exchange for or in lieu of any other Exchange
Debenture shall carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Exchange Debenture.
SECTION 308. Persons Deemed Owners.
---------------------
Prior to due presentment of an Exchange Debenture for registration of
transfer, the Company, any Subsidiary Debenture Guarantor, the Debenture Trustee
and any agent of the Company, any Subsidiary Debenture Guarantor or the
Debenture Trustee may treat the Person in whose name such Exchange Debenture is
registered as the owner of such Exchange Debenture for the purpose of receiving
payment of principal of (and premium, if any, on) and (subject to Sections 305
and 307) interest on such Exchange Debenture and for all other purposes
whatsoever, whether or not such Exchange Debenture be overdue, and none of the
Company, any Subsidiary Debenture Guarantor, the Debenture Trustee or any agent
of the Company, any Subsidiary Debenture Guarantor or the Debenture Trustee
shall be affected by notice to the contrary.
SECTION 309. Cancellation.
------------
All Exchange Debentures surrendered for payment, redemption, repayment
at the option of the Holder, registration of transfer or exchange shall, if
surrendered to any Person other than the Debenture Trustee, be delivered to the
Debenture Trustee. All Exchange Debentures so delivered to the Debenture Trustee
shall be promptly cancelled by it. The Company may at any time deliver to the
Debenture Trustee for cancellation any Exchange Debentures previously
authenticated and delivered hereunder which the Company may have acquired in any
manner
46
whatsoever, and may deliver to the Debenture Trustee (or to any other Person for
delivery to the Debenture Trustee) for cancellation any Exchange Debentures
previously authenticated hereunder which the Company has not issued and sold,
and all Exchange Debentures so delivered shall be promptly cancelled by the
Debenture Trustee. If the Company shall so acquire any of the Exchange
Debentures, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Exchange Debentures unless
and until the same are surrendered to the Debenture Trustee for cancellation. No
Exchange Debentures shall be authenticated in lieu of or in exchange for any
Exchange Debentures cancelled as provided in this Section, except as expressly
permitted by this Exchange Indenture. All cancelled Exchange Debentures held by
the Debenture Trustee shall be disposed of by the Debenture Trustee in
accordance with its customary procedures unless by Company Order the Company
shall direct that cancelled Exchange Debentures be returned to it.
SECTION 310. Computation of Interest.
-----------------------
Interest on the Exchange Debentures shall be computed on the basis of
a 360-day year of twelve 30-day months.
SECTION 311. Book-Entry Provisions for Global Exchange Debentures.
----------------------------------------------------
(a) Each Global Exchange Debenture initially shall (i) be registered
in the name of the Depositary for such Global Exchange Debentures or the nominee
of such Depositary, (ii) be delivered to the Debenture Trustee as custodian for
such Depositary and (iii) bear legends as set forth in Section 203.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Exchange Indenture with respect to any Global Exchange
Debenture, and the Depositary may be treated by the Company, the Subsidiary
Debenture Guarantors, the Debenture Trustee and any agent of the Company, the
Subsidiary Debenture Guarantors or the Debenture Trustee as the absolute owner
of such Global Exchange Debenture for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Subsidiary
Debenture Guarantors, the Debenture Trustee or any agent of the Company, the
Subsidiary Debenture Guarantors or the Debenture Trustee from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
beneficial owner of any Exchange Debenture. The registered holder of a Global
Exchange Debenture may grant proxies and otherwise authorize any person,
including Agent Members and persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Exchange Indenture or the Exchange Debentures.
(b) Interests of beneficial owners in a Global Exchange Debenture may
be transferred in accordance with the applicable rules and procedures of the
Depositary and the
47
provisions of Section 312. Transfers of a Global Exchange Debenture shall be
limited to transfers of such Global Exchange Debenture in whole, but not in
part, to the Depositary, its successors or their respective nominees, except (i)
as otherwise set forth in Section 312 and (ii) U.S. Physical Exchange Debentures
or Offshore Physical Exchange Debentures shall be transferred to all beneficial
owners in exchange for their beneficial interests in the U.S. Global Exchange
Debenture or the Offshore Global Exchange Debenture, respectively, in the event
that the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the applicable Global Exchange Debenture or the
Depositary ceases to be a "Clearing Agency" registered under the Exchange Act
and a successor depositary is not appointed by the Company within 90 days or an
Event of Default has occurred and is continuing and the Exchange Debenture
Registrar has received a request from the Depositary. In connection with a
transfer of an entire Global Exchange Debenture to beneficial owners pursuant to
clause (ii) of this paragraph (b), the applicable Global Exchange Debenture
shall be deemed to be surrendered to the Debenture Trustee for cancellation, and
the Company shall execute, and the Debenture Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the applicable Global Exchange Debenture, an equal
aggregate principal amount at maturity of U.S. Physical Exchange Debentures (in
the case of the U.S. Global Exchange Debenture) or Offshore Physical Exchange
Debentures (in the case of the Offshore Global Exchange Debenture), as the case
may be, of authorized denominations.
(c) Any beneficial interest in one of the Global Exchange Debentures
that is transferred to a person who takes delivery in the form of an interest in
the other Global Exchange Debenture will, upon transfer, cease to be an interest
in such Global Exchange Debenture and become an interest in the other Global
Exchange Debenture and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests in
such other Global Exchange Debenture for as long as it remains such an interest.
(d) Any U.S. Physical Exchange Debenture delivered in exchange for an
interest in the U.S. Global Exchange Debenture pursuant to paragraph (b) of this
Section shall, unless such exchange is made on or after the Resale Restriction
Termination Date and except as otherwise provided in Section 312, bear the
Private Placement Legend.
SECTION 312. Transfer Provisions.
-------------------
Unless and until (i) an Initial Exchange Debenture is sold pursuant to
an effective Registration Statement, or (ii) an Initial Exchange Debenture is
exchanged for a New Exchange Debenture in the Exchange Offer pursuant to an
effective Registration Statement, in each case, pursuant to the Registration
Rights Agreement, the following provisions shall apply:
(a) General. The provisions of this Section 312 shall apply to all
-------
transfers involving any Physical Exchange Debenture and any beneficial
interest in any Global Exchange Debenture.
48
(b) Certain Definitions. As used in this Section 312 only, "delivery"
-------------------
of a certificate by a transferee or transferor means the delivery to the
Exchange Debenture Registrar by such transferee or transferor of the
applicable certificate duly completed; "holding" includes both possession
of a Physical Exchange Debenture and ownership of a beneficial interest in
a Global Exchange Debenture, as the context requires; "transferring" a
Global Exchange Debenture means transferring that portion of the principal
amount of the transferor's beneficial interest therein that the transferor
has notified the Exchange Debenture Registrar that it has agreed to
transfer; and "transferring" a Physical Exchange Debenture means
transferring that portion of the principal amount thereof that the
transferor has notified the Exchange Debenture Registrar that it has agreed
to transfer.
As used in this Exchange Indenture, "Accredited Investor Certificate"
means a certificate substantially in the form set forth in Section 313;
"Regulation S Certificate" means a certificate substantially in the form
set forth in Section 314; "Rule 144A Certificate" means a certificate
substantially in the form set forth in Section 315; and "Non-Registration
Opinion and Supporting Evidence" means a written opinion of counsel
reasonably acceptable to the Company to the effect that, and such other
certification or information as the Company may reasonably require to
confirm that, the proposed transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of
the Securities Act.
(c) [Intentionally Omitted]
(d) Deemed Delivery of a Rule 144A Certificate in Certain
-----------------------------------------------------
Circumstances. A Rule 144A Certificate, if not actually delivered, will be
-------------
deemed delivered if (A) (i) the transferor advises the Company and the
Debenture Trustee in writing that the relevant offer and sale were made in
accordance with the provisions of Rule 144A (or, in the case of a transfer
of a Physical Exchange Debenture, the transferor checks the box provided on
the Physical Exchange Debenture to that effect) and (ii) the transferee
advises the Company and the Debenture Trustee in writing that (x) it and,
if applicable, each account for which it is acting in connection with the
relevant transfer, is a qualified institutional buyer within the meaning of
Rule 144A, (y) it is aware that the transfer of Exchange Debentures to it
is being made in reliance on the exemption from the provisions of Section 5
of the Securities Act provided by Rule 144A, and (z) prior to the proposed
date of transfer it has been given the opportunity to obtain from the
Company the information referred to in Rule 144A(d)(4), and has either
declined such opportunity or has received such information (or, in the case
of a transfer of a Physical Exchange Debenture, the transferee signs the
certification provided on the Physical Exchange Debenture to that effect);
or (B) the transferor holds the U.S. Global Exchange Debenture and is
transferring to a transferee that will take delivery in the form of the
U.S. Global Exchange Debenture.
49
(e) Procedures and Requirements.
---------------------------
1. If the proposed transfer occurs prior to the Offshore
Exchange Debenture Exchange Date, and the proposed transferor holds:
(A) a U.S. Physical Exchange Debenture which is surrendered
to the Exchange Debenture Registrar, and the proposed transferee
or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and,
if required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical Exchange Debenture, then the
Exchange Debenture Registrar shall (x) register such
transfer in the name of such transferee and record the date
thereof in its books and records, (y) cancel such
surrendered U.S. Physical Exchange Debenture and (z) deliver
a new U.S. Physical Exchange Debenture to such transferee
duly registered in the name of such transferee in principal
amount equal to the principal amount being transferred of
such surrendered U.S. Physical Exchange Debenture;
(ii) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the U.S. Global Exchange Debenture,
then the Exchange Debenture Registrar shall (x) cancel such
surrendered U.S. Physical Exchange Debenture, (y) record an
increase in the principal amount of the U.S. Global Exchange
Debenture equal to the principal amount being transferred of
such surrendered U.S. Physical Exchange Debenture and (z)
notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer; or
(iii) delivers a Regulation S Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global
Exchange Debenture, then the Exchange Debenture Registrar
shall (x) cancel such surrendered U.S. Physical Exchange
Debenture, (y) record an increase in the principal amount of
the Temporary Offshore Global Exchange
50
Debenture equal to the principal amount being transferred of
such surrendered U.S. Physical Exchange Debenture and (z)
notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer.
In any of the cases described in this Section 312(e)(1)(A), the
Exchange Debenture Registrar shall deliver to the transferor a
new U.S. Physical Exchange Debenture in principal amount equal to
the principal amount not being transferred of such surrendered
U.S. Physical Exchange Debenture, as applicable.
(B) the U.S. Global Exchange Debenture, and the proposed
transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and,
if required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical Exchange Debenture, then the
Exchange Debenture Registrar shall (w) register such
transfer in the name of such transferee and record the date
thereof in its books and records, (x) record a decrease in
the principal amount of the U.S. Global Exchange Debenture
in an amount equal to the beneficial interest therein being
transferred, (y) deliver a new U.S. Physical Exchange
Debenture to such transferee duly registered in the name of
such transferee in principal amount equal to the amount of
such decrease and (z) notify the Depositary in accordance
with the procedures of the Depositary that it approves of
such transfer;
(ii) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the U.S. Global Exchange Debenture,
then the transfer shall be effected in accordance with the
procedures of the Depositary therefor; or
(iii) delivers a Regulation S Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global
Exchange Debenture, then the Exchange Debenture Registrar
shall (w) register such transfer in the
51
name of such transferee and record the date thereof in its
books and records, (x) record a decrease in the principal
amount of the U.S. Global Exchange Debenture in an amount
equal to the beneficial interest therein being transferred,
(y) record an increase in the principal amount of the
Offshore Global Exchange Debenture equal to the amount of
such decrease and (z) notify the Depositary in accordance
with the procedures of the Depositary that it approves of
such transfer.
(C) the Temporary Offshore Global Exchange Debenture, and
the proposed transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and,
if required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical Exchange Debenture, then the
Exchange Debenture Registrar shall (w) register such
transfer in the name of such transferee and record the date
thereof in its books and records, (x) record a decrease in
the principal amount of the Offshore Global Exchange
Debenture in an amount equal to the beneficial interest
therein being transferred, (y) deliver a new U.S. Physical
Exchange Debenture to such transferee duly registered in the
name of such transferee in principal amount equal to the
amount of such decrease and (z) notify the Depositary in
accordance with the procedures of the Depositary that it
approves of such transfer;
(ii) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the U.S. Global Exchange Debenture,
then the Exchange Debenture Registrar shall (x) record a
decrease in the principal amount of the Offshore Global
Exchange Debenture in an amount equal to the beneficial
interest therein being transferred, (y) record an increase
in the principal amount of the U.S. Global Exchange
Debenture equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer; or
52
(iii) delivers a Regulation S Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the Temporary Offshore Global
Exchange Debenture, then the transfer shall be effected in
accordance with the procedures of the Depositary therefor;
provided, however, that until the Offshore Exchange
Debenture Exchange Date occurs, beneficial interests in the
Offshore Global Exchange Debenture may be held only in or
through accounts maintained at the Depositary by Euroclear
or Cedel (or by Agent Members acting for the account
thereof), and no person shall be entitled to effect any
transfer or exchange that would result in any such interest
being held otherwise than in or through such an account.
2. If the proposed transfer occurs on or after the Offshore
Exchange Debentures Exchange Date and the proposed transferor holds:
(A) a U.S. Physical Exchange Debenture which is surrendered
to the Exchange Debenture Registrar, and the proposed transferee
or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and,
if required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical Exchange Debenture, then the
procedures set forth in Section 312(e)(1)(A)(i) shall apply;
(ii) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the Offshore Global Exchange
Debenture, then the procedures set forth in Section
312(e)(1)(A)(ii) shall apply; or
(iii) delivers a Regulation S Certificate, then the
Exchange Debenture Registrar shall cancel such surrendered
U.S. Physical Exchange Debenture and at the direction of the
transferee, either:
53
(x) register such transfer in the name of such
transferee, record the date thereof in its books and records
and deliver a new Offshore Physical Exchange Debenture to
such transferee in principal amount equal to the principal
amount being transferred of such surrendered U.S. Physical
Exchange Debenture, or
(y) if the proposed transferee is or is acting
through an Agent Member, record an increase in the principal
amount of the Offshore Global Exchange Debenture equal to
the principal amount being transferred of such surrendered
U.S. Physical Exchange Debenture and notify the Depositary
in accordance with the procedures of the Depositary that it
approves of such transfer.
In any of the cases described in this Section
312(e)(2)(A)(i), (ii) or (iii)(x), the Exchange Debenture
Registrar shall deliver to the transferor a new U.S.
Physical Exchange Debenture in principal amount equal to the
principal amount not being transferred of such surrendered
U.S. Physical Exchange Debenture, as applicable.
(B) the U.S. Global Exchange Debenture, and the proposed
transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and,
if required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical Exchange Debenture, then the
procedures set forth in Section 312(e)(1)(B)(i) shall apply;
or
(ii) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests that the proposed transferee receive a
beneficial interest in the U.S. Global Exchange Debenture,
then the procedures set forth in Section 312(e)(1)(B)(ii)
shall apply; or
(iii) delivers a Regulation S Certificate, then the
Exchange Debenture Registrar shall (x) record a decrease in
the principal amount of the U.S. Global Exchange Debenture
in an amount equal to the beneficial interest therein being
transferred, (y) notify the Depositary in accordance with
the procedures of the
54
Depositary that it approves of such transfer and (z) at the
direction of the transferee, either:
(x) register such transfer in the name of such
transferee, record the date thereof in its books and
records and deliver a new Offshore Physical Exchange
Debenture to such transferee in principal amount equal
to the amount of such decrease, or
(y) if the proposed transferee is or is acting
through an Agent Member, record an increase in the
principal amount of the Offshore Global Exchange
Debenture equal to the amount of such decrease.
(C) an Offshore Physical Exchange Debenture which is
surrendered to the Exchange Debenture Registrar, and the proposed
transferee or transferor, as applicable:
(i) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests delivery in the form of the U.S. Global
Exchange Debenture, then the Exchange Debenture Registrar
shall (x) cancel such surrendered Offshore Physical Exchange
Debenture, (y) record an increase in the principal amount of
the U.S. Global Exchange Debenture equal to the principal
amount being transferred of such surrendered Offshore
Physical Exchange Debenture and (z) notify the Depositary in
accordance with the procedures of the Depositary that it
approves of such transfer;
(ii) where the proposed transferee is or is acting
through an Agent Member, requests that the proposed
transferee receive a beneficial interest in the Offshore
Global Exchange Debenture, then the Exchange Debenture
Registrar shall (x) cancel such surrendered Offshore
Physical Exchange Debenture, (y) record an increase in the
principal amount of the Offshore Global Exchange Debenture
equal to the principal amount being transferred of such
surrendered Offshore Physical Exchange Debenture and (z)
notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer; or
55
(iii) does not make a request covered by Section
312(e)(2)(C)(i) or Section 312(e)(2)(C)(ii), then the
Exchange Debenture Registrar shall (x) register such
transfer in the name of such transferee and record the date
thereof in its books and records, (y) cancel such
surrendered Offshore Physical Exchange Debenture and (z)
deliver a new Offshore Physical Exchange Debenture to such
transferee duly registered in the name of such transferee in
principal amount equal to the principal amount being
transferred of such surrendered Offshore Physical Exchange
Debenture.
In any of the cases described in this Section 312(e)(2)(C), the
Exchange Debenture Registrar shall deliver to the transferor a
new U.S. Physical Exchange Debenture in principal amount equal to
the principal amount not being transferred of such surrendered
U.S. Physical Exchange Debenture, as applicable.
(D) the Offshore Global Exchange Debenture, and the
proposed transferee or transferor, as applicable:
(i) delivers (or is deemed to have delivered pursuant
to clause (d) above) a Rule 144A Certificate and the
proposed transferee is or is acting through an Agent Member
and requests delivery in the form of the U.S. Global
Exchange Debenture, then the Exchange Debenture Registrar
shall (x) record a decrease in the principal amount of the
Offshore Global Exchange Debenture in an amount equal to the
beneficial interest therein being transferred, (y) record an
increase in the principal amount of the U.S. Global Exchange
Debenture equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer;
(ii) where the proposed transferee is or is acting
through an Agent Member, requests that the proposed
transferee receive a beneficial interest in the Offshore
Global Exchange Debenture, then the transfer shall be
effected in accordance with the procedures of the Depositary
therefor; or
(iii) does not make a request covered by Section
312(e)(2)(D)(i) or Section 312(e)(2)(D)(ii), then the
Exchange Debenture Registrar shall (w) register such
transfer in the name of such transferee and record the date
thereof in its books and records, (x) record a decrease in
the principal amount of the Offshore Global
56
Exchange Debenture in an amount equal to the beneficial
interest therein being transferred, (y) deliver a new
Offshore Physical Exchange Debenture to such transferee duly
registered in the name of such transferee in principal
amount equal to the amount of such decrease and (z) notify
the Depositary in accordance with the procedures of the
Depositary that it approves of such transfer.
(f) Execution, Authentication and Delivery of Physical Exchange
-----------------------------------------------------------
Debentures. In any case in which the Exchange Debenture Registrar is
----------
required to deliver a Physical Exchange Debenture to a transferee or
transferor, the Company shall execute, and the Debenture Trustee shall
authenticate and make available for delivery, such Physical Exchange
Debenture.
(g) Certain Additional Terms Applicable to Physical Exchange
--------------------------------------------------------
Debentures. Any transferee entitled to receive a Physical Exchange
----------
Debenture may request that the principal amount thereof be evidenced by one
or more Physical Exchange Debentures in any authorized denomination or
denominations and the Exchange Debenture Registrar shall comply with such
request if all other transfer restrictions are satisfied.
(h) Transfers Not Covered by Section 312(e). The Exchange Debenture
---------------------------------------
Registrar shall effect and record, upon receipt of a written request from
the Company so to do, a transfer not otherwise permitted by Section 312(e),
such recording to be done in accordance with the otherwise applicable
provisions of Section 312(e), upon the furnishing by the proposed
transferor or transferee of a Non-Registration Opinion and Supporting
Evidence.
(i) General. By its acceptance of any Exchange Debenture bearing the
-------
Private Placement Legend, each Holder of such Exchange Debenture
acknowledges the restrictions on transfer of such Exchange Debenture set
forth in this Exchange Indenture and in the Private Placement Legend and
agrees that it will transfer such Exchange Debenture only as provided in
this Exchange Indenture. The Exchange Debenture Registrar shall not
register a transfer of any Exchange Debenture unless such transfer complies
with the restrictions with respect thereto set forth in this Exchange
Indenture. The Exchange Debenture Registrar shall not be required to
determine (but may rely upon a determination made by the Company) the
sufficiency or accuracy of any such certifications, legal opinions, other
information or document.
(j) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Exchange Debentures not bearing the Private Placement
Legend, the Exchange Debenture Registrar shall deliver Exchange Debentures
that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Exchange Debentures bearing the Private Placement Legend,
the Exchange Debenture Registrar shall deliver only Exchange
57
Debentures that bear the Private Placement Legend unless (i) the
circumstances exist contemplated by the fourth paragraph of Section 201
(with respect to an Offshore Physical Exchange Debenture) or the requested
transfer is at least two years after the original issue date of the Initial
Exchange Debenture (with respect to any Physical Exchange Debenture), (ii)
there is delivered to the Exchange Debenture Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Debenture Trustee to
the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions
of the Securities Act or (iii) such Exchange Debentures are exchanged for
New Exchange Debentures pursuant to an Exchange Offer.
SECTION 313. Form of Accredited Investor Certificate.
---------------------------------------
Transferee Letter of Representation
-----------------------------------
United States Trust Company of New York,
as Debenture Trustee
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the 13 1/4% Subordinated Exchange Debentures due 2009 (the
"Exchange Debentures") of Tuesday Morning Corporation (the "Company"), we
confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended (the "Securities Act")) purchasing for our own account or
for the account of such an institutional "accredited investor," and we are
acquiring the Exchange Debentures for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act or other applicable securities law and we
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Exchange Debentures, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.
2. We understand and acknowledge that the Exchange Debentures have
not been registered under the Securities Act, or any other applicable
securities law and may not be offered, sold or otherwise transferred except
in compliance with the registration requirements of the Securities Act or
any other applicable securities law, or pursuant to an exemption therefrom,
and in each case in compliance with the conditions for transfer set
58
forth below. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Exchange Debentures to offer, sell or
otherwise transfer such Exchange Debentures prior to the date which is two
years after the later of the date of original issue and the last date on
which the Company or any affiliate of the Company was the owner of such
Exchange Debentures (or any predecessor thereto) (the "Resale Restriction
Termination Date") only (a) to the Company or any subsidiary thereof, (b)
pursuant to a registration statement which has been declared effective
under the Securities Act, (c) for so long as the Exchange Debentures are
eligible for resale pursuant to Rule 144A under the Securities Act ("Rule
144A"), to a person we reasonably believe is a "Qualified Institutional
Buyer" within the meaning of Rule 144A (a "QIB") that purchases for its own
account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales to non-U.S. persons that occur outside the United States within the
meaning of Regulation S under the Securities Act or (e) pursuant to any
other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Exchange
Debentures is proposed to be made pursuant to clause (d) or (e) above prior
to the Resale Restriction Termination Date, the transferor shall deliver to
the trustee (the "Debenture Trustee") under the Exchange Indenture pursuant
to which the Exchange Debentures are issued a letter from the transferee
substantially in the form of this letter, which shall provide, among other
things, that the transferee is a person or entity as defined in paragraph 1
of this letter and that it is acquiring such Exchange Debentures for
investment purposes and not for distribution in violation of the Securities
Act. We acknowledge that the Company and the Debenture Trustee reserve the
right prior to any offer, sale or other transfer of the Exchange Debentures
pursuant to clauses (d) and (e) above prior to the Resale Restriction
Termination Date to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Debenture Trustee.
3. We are acquiring the Exchange Debentures purchased by us for our
own account or for one or more accounts as to each of which we exercise
sole investment discretion.
4. You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
59
(Name of Purchaser)
By:____________________________
Date:__________________________
Upon transfer, the Exchange Debentures would be registered in the name
of the new beneficial owner as follows:
Name Address Taxpayer ID Number
---- ------- ------------------
Date of this Certificate _______________ __, 199__
SECTION 314. Form of Regulation S Certificate.
--------------------------------
Regulation S Certificate
------------------------
To: United States Trust Company of New York,
as Debenture Trustee (the "Debenture Trustee")
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Tuesday Morning Corporation (the "Company")
13 1/4% Subordinated Exchange Debentures due 2009
(the "Exchange Debentures")
-------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____ aggregate principal
amount of Exchange Debentures, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S ("Regulation S") under the
Securities Act of 1933, as amended (the "Securities Act"), and accordingly, we
hereby certify as follows:
1. The offer of the Exchange Debentures was not made to a person in
the United States (unless such person or the account held by it for which
it is acting is excluded from the definition of "U.S. person" pursuant to
Rule 902(o) of Regulation S under the circumstances described in Rule
902(i)(3) of Regulation S) or specifically targeted at an identifiable
group of U.S. citizens abroad.
60
2. Either (a) at the time the buy order was originated, the buyer
was outside the United States or we and any person acting on our behalf
reasonably believed that the buyer was outside the United States or (b) the
transaction was executed in, on or through the facilities of a designated
offshore securities market, and neither we nor any person acting on our
behalf knows that the transaction was pre-arranged with a buyer in the
United States.
3. Neither we, any of our affiliates, nor any person acting on our
or their behalf has made any directed selling efforts in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable.
4. The proposed transfer of Exchange Debentures is not part of a
plan or scheme to evade the registration requirements of the Securities
Act.
5. If we are a dealer or a person receiving a selling concession or
other fee or remuneration in respect of the Exchange Debentures, and the
proposed transfer takes place before the Offshore Exchange Debenture
Exchange Date referred to in the Exchange Indenture dated as of December
29, 1997, among the Company, the guarantors thereunder and the Debenture
Trustee, or we are an officer or director of the Company or a distributor,
we certify that the proposed transfer is being made in accordance with the
provisions of Rules 903 and 904(c) of Regulation S.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding 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 SELLER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
61
SECTION 315. Form of Rule 144A Certificate.
-----------------------------
Rule 144A Certificate
---------------------
To: United States Trust Company of New York,
as Debenture Trustee (the "Debenture Trustee")
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Tuesday Morning Corporation (the "Company")
13 1/4% Subordinated Exchange Debentures due 2009
(the "Exchange Debentures")
-------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____ aggregate principal
amount of Exchange Debentures, we confirm that such sale has been effected
pursuant to and in accordance with Rule 144A ("Rule 144A") under the Securities
Act of 1933, as amended (the "Securities Act"). We are aware that the transfer
of Exchange Debentures to us is being made in reliance on the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to
the date of this Certificate we have been given the opportunity to obtain from
the Company the information referred to in Rule 144A(d)(4), and have either
declined such opportunity or have received such information.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
62
SECTION 316. CUSIP Numbers.
-------------
The Company in issuing the Exchange Debentures may use "CUSIP" numbers
(if then generally in use) in addition to serial numbers, and, if so, the
Debenture Trustee shall use such "CUSIP" numbers in addition to serial numbers
in notices of redemption, repurchase or other notices to Holders as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such CUSIP numbers either as
printed on the Exchange Debentures or as contained in any notice of a redemption
or repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Exchange Debentures, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Debenture Trustee of any
change in the CUSIP numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Exchange Indenture.
------------------------------------------------
This Exchange Indenture shall, upon Company Request, cease to be of
further effect with respect to Exchange Debentures (except as to any surviving
rights of registration of transfer or exchange of the Exchange Debentures as
expressly provided for) and the Debenture Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Exchange Indenture when
(1) either
(A) all the Exchange Debentures theretofore authenticated and
delivered (other than (i) Exchange Debentures which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306, and (ii) Exchange Debentures for whose
payment money has theretofore been deposited in trust with the
Debenture Trustee or any Paying Agent or segregated and held in trust
by the Company and thereafter repaid to the Company or discharged from
such trust as provided in Section 1003) have been delivered to the
Debenture Trustee for cancellation; or
(B) all Exchange Debentures and, in the case of (i) or (ii)
below, not theretofore delivered to the Debenture Trustee for
cancellation
(i) have become due and payable,
63
(ii) will become due and payable at their Stated Maturity
within one year or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Debenture Trustee for the giving of notice of
redemption by the Debenture Trustee in the name, and at the
expense, of the Company,
and the Company or any Subsidiary Debenture Guarantor, in the case of (i),
(ii) or (iii) above, has irrevocably deposited or caused to be deposited
with the Debenture Trustee as trust funds in trust for such purpose an
amount sufficient to pay and discharge the entire indebtedness on such
Exchange Debentures not theretofore delivered to the Debenture Trustee for
cancellation, for principal (and premium, if any) and interest on the
Exchange Debentures to the date of such deposit (in the case of Exchange
Debentures which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) no Default or Event of Default with respect to this Exchange
Indenture or the Exchange Debenture shall have occurred and be continuing
on the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument or agreement to which the Company or
any Subsidiary Debenture Guarantor is a party or by which it is bound;
(3) the Company or any Subsidiary Debenture Guarantor has paid or
caused to be paid all other sums payable hereunder by the Company or any
Subsidiary Debenture Guarantor;
(4) the Company has delivered irrevocable instructions to the
Debenture Trustee to apply the deposited money toward the payment of such
Exchange Debentures at maturity or the Redemption Date, as the case may be;
and
(5) the Company has delivered to the Debenture Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Exchange Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Exchange
Indenture, the obligations of the Company to the Debenture Trustee under Section
606, the obligations of the Company to any Authenticating Agent under Section
612 and, if money shall have been deposited with the Debenture Trustee pursuant
to subclause (B) of clause (1) of this Section, the obligations of the Debenture
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
64
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Debenture Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Exchange
Debentures and this Exchange Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Debenture Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with the Debenture Trustee; but such money need not be segregated
from other funds except to the extent required by law.
If the Debenture Trustee or Paying Agent is unable to apply any money
in accordance with Section 401 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 and any
Subsidiary Debenture Guarantor's obligations under this Exchange Indenture and
the Exchange Debentures shall be revived and reinstated as though no deposit had
occurred pursuant to Section 401; provided that if the Company has made any
payment of principal of, premium, if any, or interest on any Exchange Debentures
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Exchange Debentures to receive such payment
from the money held by the Debenture Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article 12 or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Exchange Debenture
when it becomes due and payable and continuance of such default for a
period of 30 days;
(2) default in the payment of the principal of, or premium, if any,
on any Exchange Debenture at its Maturity (upon acceleration, optional
redemption, required purchase or otherwise);
65
(3) default in the performance, or breach, of the provisions
described in Article Eight, the failure to make or consummate a Change in
Control Offer in accordance with Section 1013 or the failure to make or
consummate an Excess Proceeds Offer in accordance with Section 1014;
(4) default in the performance, or breach, of any covenant or
warranty of the Company or any Subsidiary Debenture Guarantor contained in
this Exchange Indenture or any Debenture Guarantee (other than a default in
the performance, or breach, of a covenant or warranty which is specifically
dealt with in clause (1), (2) or (3) of this Section) and continuance of
such default or breach for a period of 30 days after there has been given
to the Company by the Debenture Trustee or to the Company and the Debenture
Trustee by the Holders of at least 25% in aggregate principal amount of all
Outstanding Exchange Debentures;
(5) (a) one or more defaults in the payment of principal of or
premium, if any, on Indebtedness of the Company or any Restricted
Subsidiary aggregating $10,000,000 or more, when the same becomes due and
payable at the stated maturity thereof, and such default or defaults shall
have continued after any applicable grace period and shall not have been
cured or waived or (b) Indebtedness of the Company or any Restricted
Subsidiary aggregating $10,000,000 or more shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or
repurchased (other than by regularly scheduled required prepayment) prior
to the stated maturity thereof;
(6) one or more final judgments or orders shall be rendered against
the Company or any Restricted Subsidiary which require the payment of
money, either individually or in an aggregate amount, in excess of
$10,000,000 and shall not be discharged and either (a) an enforcement
proceeding shall have been commenced by any creditor upon such judgment or
order or (b) there shall have been a period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, was not in effect;
(7) any Debenture Guarantee ceases to be in full force and effect or
is declared null and void or any Subsidiary Debenture Guarantor denies that
it has any further liability under any Debenture Guarantee, or gives notice
to such effect (other than by reason of the termination of this Exchange
Indenture or the release of any such Debenture Guarantee in accordance with
this Exchange Indenture); or
(8) the Company or any of its Significant Subsidiaries pursuant to or
within the meaning of 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; (D) makes a general assignment for the
benefit of its creditors, or (E) admits in writing that it is generally not
66
paying its debts (other than debts which are the subject of a bona fide
dispute) as they become due; or
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that remains unstayed and in effect for 60 days and:
(A) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case; (B) appoints a Custodian of the
Company or any of its Significant Subsidiaries or for all or substantially
all of the property of the Company or any of its Significant Subsidiaries;
or (C) orders the liquidation of the Company or any of its Significant
Subsidiaries; provided that clauses (A), (B) and (C) shall not apply to an
Unrestricted Subsidiary, unless such action or proceeding has a material
adverse effect on the interests of the Company or any Restricted
Subsidiary.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
clause (8) or (9) of Section 501) occurs and is continuing, then in every such
case the Debenture Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Exchange Debentures, by written notice to
the Company (and to the Debenture Trustee if such notice is given by the
Holders), may, and the Debenture Trustee, upon the written request of such
Holders, shall declare the principal of, premium, if any, and accrued interest
on all of the Outstanding Exchange Debentures to be due and payable immediately;
provided that so long as the Senior Credit Agreement shall be in full force and
effect, if an Event of Default shall have occurred and be continuing (other than
as specified in clause (8) or (9) of Section 501 with respect to the Company),
any such acceleration shall not be effective until the earlier to occur of (x)
five Business Days following delivery of a written notice of such acceleration
of the Exchange Debentures to the agent under the Senior Credit Agreement and
(y) the acceleration of any Indebtedness under the Senior Credit Agreement. Upon
any such declaration all such amounts payable in respect of the Exchange
Debentures shall become immediately due and payable. If an Event of Default
specified in clause (8) or (9) of Section 501 occurs and is continuing, then the
principal of, premium, if any, and accrued interest on all of the Outstanding
Exchange Debentures shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Debenture Trustee or any
Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Debenture Trustee as hereinafter provided in this Article, the Holders of a
majority in aggregate principal amount of the Outstanding Exchange Debentures,
by written notice to the Company and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Debenture Trustee a sum
sufficient to pay
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(A) all overdue interest on all Outstanding Exchange Debentures,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Exchange Debentures that has become due otherwise than by
such declaration of acceleration together with interest on such unpaid
principal at the rate borne by such Exchange Debentures,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest and overdue principal at the rate borne
by such Exchange Debentures, and
(D) all sums paid or advanced by the Debenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Debenture Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of amounts of
principal (or premium, if any, on) or interest on Exchange Debentures which
have become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Debenture Trustee.
-----------------
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Exchange Debenture when such interest becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Exchange Debenture at the Maturity thereof,
then the Company will, upon demand of the Debenture Trustee, pay to the
Debenture Trustee for the benefit of the Holders of such Exchange Debentures,
the whole amount then due and payable on such Exchange Debentures for principal
(and premium, if any) and interest, and interest on any overdue principal (and
premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, upon any overdue installment of interest, at the rate
borne by such Exchange Debentures, and, in addition thereto, such further amount
as shall be sufficient to cover the costs
68
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Debenture Trustee, in its own name as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any Subsidiary Debenture Guarantor (in
accordance with the applicable Debenture Guarantee) or any other obligor upon
such Exchange Debentures and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company, any
Subsidiary Debenture Guarantor or any other obligor upon such Exchange
Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Debenture Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders under this Exchange Indenture of the Debenture Guarantees by such
appropriate judicial proceedings as the Debenture Trustee shall deem most
effectual to protect and enforce any such rights, including seeking recourse
against any Subsidiary Debenture Guarantor, whether for the specific enforcement
of any covenant or agreement in this Exchange Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy,
including, without limitation, seeking recourse against any Subsidiary Debenture
Guarantor.
SECTION 504. Debenture Trustee May File Proofs of Claim.
------------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, including any
Subsidiary Debenture Guarantor, upon the Exchange Debentures or the property of
the Company or of such other obligor or their creditors, the Debenture Trustee
(irrespective of whether the principal of the Exchange Debentures shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Debenture Trustee shall have made any demand on the
Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Exchange
Debentures to take such other actions (including participating as a member,
voting or otherwise, of any official committee of creditors appointed in
such matter) and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Debenture Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
69
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Debenture Trustee and, in the event
that the Debenture Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Debenture Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee, its agents and counsel, and any other amounts due the Debenture Trustee
under Section 607.
Nothing herein contained shall be deemed to authorize the Debenture
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
Exchange Debentures or the rights of any Holder thereof or to authorize the
Debenture Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 505. Debenture Trustee May Enforce Claims Without Possession
-------------------------------------------------------
of Exchange Debentures.
----------------------
All rights of action and claims under this Exchange Indenture, the
Exchange Debentures or the Debenture Guarantees may be prosecuted and enforced
by the Debenture Trustee without the possession of any of the Exchange
Debentures or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Debenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Exchange Debentures in respect of
which such judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Subject to Article Twelve, any money collected by the Debenture
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Debenture Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest, upon
presentation of the Exchange Debentures and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Debenture Trustee under
-----
Section 607;
Second: To the payment of the amounts then due and unpaid for
------
principal of (and premium, if any, on) and interest on the Exchange
Debentures in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority
70
of any kind, according to the amounts due and payable on such Exchange
Debentures for principal (and premium, if any) and interest, respectively;
and
Third: The balance, if any, to the Person or Persons entitled
-----
thereto, including the Company or any other obligor on the Exchange
Debentures, as their interests may appear or as a court of competent
jurisdiction may direct; provided that all sums due and owing to the
Holders and the Debenture Trustee have been paid in full as required by
this Exchange Indenture.
SECTION 507. Limitation on Suits.
-------------------
No Holder of any Exchange Debenture shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Exchange Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the Debenture
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Exchange Debentures shall have made a written request to
the Debenture Trustee to institute proceedings in respect of such Event of
Default in its own name as Debenture Trustee hereunder;
(3) such Holder or Holders have offered to the Debenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Debenture Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Debenture Trustee during such 30-day period by the Holders of
a majority in principal amount of the Outstanding Exchange Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Exchange Indenture, any Exchange Debenture or any Debenture Guarantee to
affect, disturb or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Exchange Indenture, any Exchange Debenture or any
Debenture Guarantee, except in the manner herein provided and for the equal and
ratable benefit of all Holders.
71
SECTION 508. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
--------------------
Notwithstanding any other provision in this Exchange Indenture, the
Holder of any Exchange Debenture shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable,
Article Eleven) and in such Exchange Debenture of the principal of (and premium,
if any, on) and (subject to Section 307) interest on, such Exchange Debenture on
the respective Stated Maturities expressed in such Exchange Debenture (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Debenture Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Exchange Indenture or any Debenture
Guarantee and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Debenture Trustee or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, any Subsidiary Debenture Guarantor, any other obligor on the
Exchange Debentures, the Debenture Trustee and the Holders of Exchange
Debentures shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Debenture
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Exchange Debentures in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Debenture Trustee or to the Holders of Exchange Debentures is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Debenture Trustee or of any Holder of any
Exchange Debenture to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Debenture Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Debenture Trustee or by the Holders, as the case may be.
72
SECTION 512. Control by Holders.
------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Exchange Debentures shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Exchange Indenture,
(2) subject to Section 315 of the Trust Indenture Act, the Debenture
Trustee may take any other action deemed proper by the Debenture Trustee
which is not inconsistent with such direction, and
(3) the Debenture Trustee need not take any action which might
involve it in personal liability or be unjustly prejudicial to the Holders
of Exchange Debentures not consenting.
SECTION 513. Waiver of Past Defaults.
-----------------------
Subject to Sections 508, 902 and the last paragraph of Section 502,
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Exchange Debentures (including consents obtained in connection with
a tender offer or exchange offer for the Exchange Debentures) may on behalf of
the Holders of all the Exchange Debentures waive any past default hereunder and
its consequences under this Exchange Indenture or any Debenture Guarantee,
except a default
(1) in respect of the payment of the principal of (or premium, if
any, on) or interest on any Exchange Debenture, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Exchange Debenture affected.
Upon any such waiver, any 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 Exchange Indenture and the Debenture Guarantees; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
73
SECTION 514. Waiver of Stay or Extension Laws.
--------------------------------
Each of the Company, the Subsidiary Debenture Guarantors and any other
obligor on the Exchange Debentures covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company, any Subsidiary Debenture Guarantor or any such obligor from
paying all or any portion of the principal of, premium, if any, or interest on
the Exchange Debentures contemplated herein or in the Exchange Debentures or
which may affect the covenants or the performance of this Exchange Indenture;
and each of the Company, the Subsidiary Debenture Guarantors and any other
obligor on the Exchange Debentures (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Debenture Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE DEBENTURE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of a Default or an Event of
Default,
(1) the Debenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Exchange Indenture, and
no implied covenants or obligations shall be read into this Exchange
Indenture against the Debenture Trustee; and
(2) in the absence of bad faith or willful misconduct on its part,
the Debenture 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 Debenture Trustee and conforming
to the requirements of this Indenture; but in the case of any such
certificates or opinions, the Debenture Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Exchange Indenture, but not to verify the contents
thereof.
(b) In case a Default or an Event of Default has occurred and is
continuing of which a Responsible Officer of the Debenture Trustee has actual
knowledge or of which written notice of such Default or Event of Default shall
have been given to the Debenture Trustee by the Company, any other obligor of
the Exchange Debentures or by any Holder, the Debenture Trustee
74
shall exercise such of the rights and powers vested in it by this Exchange
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Exchange Indenture shall be construed to
relieve the Debenture Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that
------
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Debenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Debenture Trustee was negligent in ascertaining the
pertinent facts;
(3) the Debenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in aggregate principal amount of
the Outstanding Notes relating to the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred upon the Debenture Trustee, under
this Exchange Indenture; and
(4) no provision of this Exchange Indenture shall require the
Debenture Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Exchange Indenture relating to the conduct or affecting the liability of or
affording protection to the Debenture Trustee shall be subject to the provisions
of this Section.
SECTION 602. Notice of Defaults.
------------------
Within ten days after the earlier of receipt from the Company of
notice of the occurrence of any Default or Event of Default hereunder or the
date when such Default or Event of Default becomes known to the Debenture
Trustee, the Debenture Trustee shall transmit, in the manner and to the extent
provided in TIA Section 313(c), notice of such Default or Event of Default
hereunder known to the Debenture Trustee, unless such Default or Event of
Default shall have been cured or waived; provided, however, that, except in the
case of a Default or Event of Default in the payment of the principal of (or
premium, if any, on) or interest on any Exchange Debenture, the Debenture
Trustee shall be protected in withholding such notice if and so long as
75
the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Debenture Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
SECTION 603. Certain Rights of Debenture Trustee.
-----------------------------------
Subject to the provisions of TIA Sections 315(a) through 315(d)
(determined as if the TIA were applicable to this Exchange Indenture at all
times):
(1) the Debenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Exchange Indenture the
Debenture Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Debenture Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, request and rely
upon an Officers' Certificate;
(4) the Debenture Trustee may consult with counsel of its selection
and the written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Debenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Exchange Indenture at the
request or direction of any of the Holders of Exchange Debentures pursuant
to this Exchange Indenture, unless such Holders shall have offered to the
Debenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Debenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Debenture Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and,
76
if the Debenture Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Debenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Debenture Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(8) the Debenture Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Exchange Indenture.
The Debenture Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
SECTION 604. Debenture Trustee Not Responsible for Recitals or
-------------------------------------------------
Issuance of Exchange Debentures.
-------------------------------
The recitals contained herein and in the Exchange Debentures, except
for the Debenture Trustee's certificates of authentication, shall be taken as
the statements of the Company, and neither the Debenture Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The
Debenture Trustee makes no representations as to the validity or sufficiency of
this Exchange Indenture or of the Exchange Debentures, except that the Debenture
Trustee represents that it is duly authorized to execute and deliver this
Exchange Indenture, authenticate the Exchange Debentures and perform its
obligations hereunder and that the statements made by it in its Statement of
Eligibility on Form T-1 supplied to the Company are true and accurate, subject
to the qualifications set forth therein. Neither the Debenture Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Exchange Debentures or the proceeds thereof.
SECTION 605. May Hold Exchange Debentures.
----------------------------
The Debenture Trustee, any Authenticating Agent, any Paying Agent, any
Exchange Debenture Registrar or any other agent of the Company or of the
Debenture Trustee, in its individual or any other capacity, may become the owner
or pledgee of Exchange Debentures and, subject to TIA Sections 310(b) and 311,
may otherwise deal with the Company with the same rights it would have if it
were not Debenture Trustee, Authenticating Agent, Paying Agent, Exchange
Debenture Registrar or such other agent.
77
SECTION 606. Money Held in Trust.
-------------------
All money received by the Debenture Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the purposes for
which they were received. Money held by the Debenture Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Debenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees:
(1) to pay to the Debenture Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Debenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Debenture Trustee in
accordance with any provision of this Exchange Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel and costs and expenses of collection), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Debenture Trustee or any predecessor
Debenture Trustee and its agents for, and to hold it harmless against, any
and all loss, liability, damage, claim or expense, including taxes (other
than taxes based on the income of the Debenture Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Debenture Trustee, to pay or reimburse the Debenture Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Debenture
Trustee shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Exchange Indenture. As security for the
performance of such obligations of the Company, the Debenture Trustee shall have
a claim prior to the Exchange Debentures upon all property and funds held or
collected by the Debenture Trustee as such, except funds held in trust for the
payment of principal of (and premium, if any, on) or interest on particular
Exchange Debentures.
When the Debenture Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(8) or Section
501(9), the expenses (including the
78
reasonable charges and expenses of its counsel) of and the compensation of the
Debenture Trustee for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Exchange Indenture.
SECTION 608. Corporate Debenture Trustee Required; Eligibility.
-------------------------------------------------
There shall at all times be an Debenture Trustee hereunder which shall
be eligible to act as Debenture Trustee under TIA Section 310(a)(1) and which
shall have an office in The City of New York, and shall have a combined capital
and surplus of at least $50,000,000. If the Debenture Trustee does not have an
office in The City of New York, the Debenture Trustee may appoint an agent in
The City of New York reasonably acceptable to the Company to conduct any
activities which the Debenture Trustee may be required under this Exchange
Indenture to conduct in The City of New York. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Debenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Debenture Trustee and no
appointment of a successor Debenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Debenture
Trustee in accordance with the applicable requirements of Section 610.
(b) The Debenture Trustee may resign at any time with respect to the
Exchange Debentures by giving written notice thereof to the Company. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of
Directors, a copy of which shall be delivered to the resigning Debenture Trustee
and a copy to the successor trustee. If the instrument of acceptance by a
successor Debenture Trustee required by Section 610 shall not have been
delivered to the Debenture Trustee within 30 days after the giving of such
notice of resignation, the resigning Debenture Trustee may petition any court of
competent jurisdiction for the appointment of a successor Debenture Trustee with
respect to the Exchange Debentures.
(c) The Debenture Trustee may be removed at any time with respect to
the Exchange Debentures by Act of the Holders of not less than a majority in
principal amount of the
79
Outstanding Exchange Debentures, delivered to the Debenture Trustee and to the
Company. If the instrument of acceptance by a successor Debenture Trustee
required by Section 609 shall not have been delivered to the Debenture Trustee
within 30 days after the giving of such notice of removal, the Debenture Trustee
being removed may petition any court of competent jurisdiction for the
appointment of a successor Debenture Trustee with respect to the Exchange
Debentures.
(d) If at any time:
(1) the Debenture Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of an Exchange Debenture for at
least six months, or
(2) the Debenture Trustee shall cease to be eligible under Section
608 and shall fail to resign after written request therefor by the Company
or by any Holder who has been a bona fide Holder of an Exchange Debenture
for at least six months, or
(3) the Debenture Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a Custodian of the Debenture Trustee
or of its property shall be appointed or any public officer shall take
charge or control of the Debenture Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Debenture Trustee with respect to all Exchange Debentures, or (ii) subject to
TIA Section 315(e), any Holder who has been a bona fide Holder of an Exchange
Debenture for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Debenture Trustee with respect to all Exchange Debentures and the
appointment of a successor Debenture Trustee or Debenture Trustees.
(e) If the Debenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Debenture
Trustee for any cause, with respect to the Exchange Debentures, the Company, by
a Board Resolution, shall promptly appoint a successor Debenture Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Debenture Trustee with respect to the
Exchange Debentures shall be appointed by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Exchange Debentures delivered to
the Company and the retiring Debenture Trustee, the successor Debenture Trustee
so appointed shall, forthwith upon its acceptance of such appointment, become
the successor Debenture Trustee with respect to the Exchange Debentures and to
that extent supersede the successor Debenture Trustee appointed by the Company.
If no successor Debenture Trustee with respect to the Exchange Debentures shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who has been a bona fide Holder of
an Exchange Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
80
jurisdiction for the appointment of a successor Debenture Trustee with respect
to the Exchange Debentures.
(f) The Company shall give notice of each resignation and each
removal of the Debenture Trustee with respect to the Exchange Debentures and
each appointment of a successor Debenture Trustee with respect to the Exchange
Debentures to the Holders of Exchange Debentures in the manner provided for in
Section 106. Each notice shall include the name of the successor Debenture
Trustee with respect to the Exchange Debentures and the address of its Corporate
Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
--------------------------------------
(a) Each successor Debenture Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring Debenture
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Debenture Trustee shall become effective and such
successor Debenture Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Debenture Trustee; but, on the request of the Company or the successor Debenture
Trustee, such retiring Debenture Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Debenture
Trustee all the rights, powers and trusts of the retiring Debenture Trustee and
shall duly assign, transfer and deliver to such successor Debenture Trustee all
property and money held by such retiring Debenture Trustee hereunder.
(b) Upon request of any such successor Debenture Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Debenture Trustee all rights, powers and trusts
referred to in paragraph (a) of this Section.
(c) No successor Debenture Trustee shall accept its appointment
unless at the time of such acceptance, such successor Debenture Trustee shall be
qualified and eligible under this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
--------
Any corporation into which the Debenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Debenture Trustee
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of the Debenture Trustee, shall be the successor of the
Debenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Exchange Debentures shall have been authenticated, but not delivered, by the
Debenture Trustee then in office, any successor by merger, conversion
81
or consolidation to such authenticating Debenture Trustee may adopt such
authentication and deliver the Exchange Debentures so authenticated with the
same effect as if such successor Debenture Trustee had itself authenticated such
Exchange Debentures. In case at that time any of the Exchange Debentures shall
not have been authenticated, any successor Debenture Trustee may authenticate
such Exchange Debentures either in the name of any predecessor hereunder or in
the name of the successor Debenture Trustee. In all such cases such certificates
shall have the full force and effect which this Exchange Indenture provides for,
the certificate of authentication of the Debenture Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Debenture Trustee or to authenticate Exchange Debentures in the name
of any predecessor Debenture Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
SECTION 612. Appointment of Authenticating Agent.
-----------------------------------
At any time when any of the Exchange Debentures remain Outstanding,
the Debenture Trustee may appoint an Authenticating Agent or Agents with respect
to the Exchange Debentures which shall be authorized to act on behalf of the
Debenture Trustee to authenticate Exchange Debentures and the Debenture Trustee
shall give written notice of such appointment to all Holders of Exchange
Debentures with respect to which such Authenticating Agent will serve, in the
manner provided for in Section 106. Exchange Debentures so authenticated shall
be entitled to the benefits of this Exchange Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Debenture Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Debenture Trustee, and a copy of such
instrument shall be promptly furnished to the Company. Wherever reference is
made in this Exchange Indenture to the authentication and delivery of Exchange
Debentures by the Debenture Trustee or the Debenture Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Debenture Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Debenture Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any state thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion
82
or consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Debenture
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Debenture Trustee and to the Company. The Debenture
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Debenture Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the
Company and shall give written notice of such appointment to all Holders of
Exchange Debentures, in the manner provided for in Section 106. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Company agrees to pay to each Authenticating Agent from time to
time such compensation for its services under this Section as shall be agreed in
writing between the Company and such Authenticating Agent.
If an appointment is made pursuant to this Section, the Exchange
Debentures may have endorsed thereon, in addition to the Debenture Trustee's
certificate of authentication, an alternate certificate of authentication in the
following form:
This is one of the Exchange Debentures designated therein referred to
in the within-mentioned Exchange Indenture.
United States Trust Company of New York,
as Debenture Trustee
By: ____________________________________
as Authenticating Agent
By: ____________________________________
Authorized Officer
83
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY DEBENTURE TRUSTEE
AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses.
----------------------------------------------
The Company will furnish or cause to be furnished to the Debenture
Trustee
(a) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Debenture Trustee may reasonably require,
of the names and addresses of the Holders as of such Regular Record Date;
and
(b) at such other times as the Debenture Trustee may reasonably
request in writing, within 30 days after receipt by the Company of any such
request, a list of similar form and content to that in Subsection (a)
hereof as of a date not more than 15 days prior to the time such list is
furnished;
provided, however, that if and so long as the Debenture Trustee shall be the
Exchange Debenture Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Exchange Debentures, by receiving and holding the
same, agrees with the Company and the Debenture Trustee that none of the Company
or the Debenture Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with TIA Section 312, regardless of
the source from which such information was derived, and that the Debenture
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under TIA Section 312(b).
SECTION 703. Reports by Debenture Trustee.
----------------------------
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Exchange Debentures pursuant to this Exchange
Indenture, the Debenture Trustee shall transmit to the Holders of Exchange
Debentures (with a copy to the Company at the Place of Payment), in the manner
and to the extent provided in TIA Section 313(c), a brief report dated as of
such May 15 if required by TIA Section 313(a).
84
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company will not, in a single transaction or through a series of
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any other Person or Persons or permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in the sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Restricted Subsidiaries on a consolidated basis to any other
Person or Persons, unless at the time and immediately after giving effect
thereto:
(a) either (1) the Company shall be the continuing corporation or (2)
the Person (if other than the Company) formed by such consolidation or into
which the Company or such Restricted Subsidiary is merged or the Person
which acquires by sale, assignment, conveyance, transfer, lease or
disposition all or substantially all of the properties and assets of the
Company and its Restricted Subsidiaries on a consolidated basis (the
"Surviving Entity") (i) will be a corporation duly organized and validly
existing under the laws of the United States of America, any state thereof
or the District of Columbia and (ii) will expressly assume, by an indenture
supplemental hereto, executed and delivered to the Debenture Trustees, in
form reasonably satisfactory to the Debenture Trustee, the Company's
obligation for the due and punctual payment of the principal of (and
premium, if any) and interest on all the Exchange Debentures and the
performance and observance of every covenant of this Exchange Indenture on
the part of the Company to be performed or observed;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating
any obligation of the Company or any Restricted Subsidiary incurred in
connection with or as a result of such transaction or series of
transactions as having been incurred at the time of such transaction), no
Default or Event of Default shall have occurred and be continuing;
(c) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (on the
assumption that the transaction or series of transactions occurred on the
first day of the four-quarter period immediately prior to the consummation
of such transaction or series of transactions with the appropriate
adjustments with respect to the transaction or series of transactions being
included in such pro forma calculations), the Company (or the Surviving
Entity if the Company is not the
85
continuing obligor under the Exchange Indenture), could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 1008;
(d) each Subsidiary Debenture Guarantor, if any, unless it is the
other party to the transactions described above, shall have by supplemental
indenture confirmed that its Debenture Guarantee will apply to such
Person's obligations hereunder and the Exchange Debentures;
(e) if any of the property or assets of the Company or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of Section 1012 are complied with; and
(f) the Company or the Surviving Entity shall have delivered to the
Debenture Trustee, in form and substance reasonably satisfactory to the
Debenture Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Section 801 and that all conditions precedent herein
provided for relating to such transaction have been satisfied.
SECTION 802. Subsidiary Debenture Guarantors May Consolidate, Etc.,
------------------------------------------------------
Only on Certain Terms.
---------------------
Each Subsidiary Debenture Guarantor, if any (other than any Subsidiary
whose Debenture Guarantee is being released pursuant to the provisions of
Section 1309 as a result of such transaction), will not, and the Company will
not permit a Subsidiary Debenture Guarantor to, in a single transaction or
through a series of related transactions, merge or consolidate with or into any
other corporation or other entity (other than the Company or any Subsidiary
Debenture Guarantor), or sell, assign, convey, transfer, lease or otherwise
dispose of its properties and assets on a consolidated basis substantially as an
entirety to any entity (other than the Company or any Subsidiary Debenture
Guarantor) unless:
(a) either (1) such Subsidiary Debenture Guarantor shall be the
continuing corporation or (2) the Person (if other than such Subsidiary
Debenture Guarantor) formed by such consolidation or into which such
Subsidiary Debenture Guarantor is merged or the entity which acquires by
sale, assignment, conveyance, transfer, lease or other disposition of all
or substantially all of the properties and assets of such Subsidiary
Debenture Guarantor, as the case may be, (i) shall be a corporation duly
organized and validly existing under the laws of the United States, any
state thereof or the District of Columbia, and (ii) shall expressly assume
by an indenture supplemental hereto, executed and delivered to the
Debenture Trustee, in form satisfactory to the Debenture Trustee, all
86
obligations of such Subsidiary Debenture Guarantor under the Exchange
Debentures and the Exchange Indenture;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating
any obligation of the Company or such Subsidiary Debenture Guarantor
incurred in connection with or as a result of such transaction or series of
transactions as having been incurred at the time of such transaction), no
Default or Event of Default shall have occurred and be continuing; and
(c) such Subsidiary Debenture Guarantor or such Person shall have
delivered to the Debenture Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or disposition and, if a supplemental indenture
is required in connection with such transaction, such supplemental
indenture comply with this Section 802 and that all conditions precedent
herein provided for relating to such transaction have been satisfied.
SECTION 803. Successor Substituted.
---------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company or any Subsidiary Debenture Guarantor in accordance with
Sections 801 and 802, the successor Person formed by such consolidation or into
which the Company or such Subsidiary Debenture Guarantor, as the case may be, is
merged or the successor Person to which such sale, assignment, conveyance,
transfer, lease or disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company or such Subsidiary
Debenture Guarantor, as the case may be, under this Exchange Indenture and/or
the Debenture Guarantees, as the case may be, with the same effect as if such
successor had been named as the Company or such Subsidiary Debenture Guarantor,
as the case may be, herein and/or the Debenture Guarantees, as the case may be.
When a Successor assumes all the obligations of its predecessor hereunder, the
Exchange Debentures or a Debenture Guarantee, as the case may be, the
predecessor shall be released from all obligations; provided that in the case of
a transfer by lease, the predecessor shall not be released from the payment of
principal and interest or other obligations on the Exchange Debentures or a
Debenture Guarantee, as the case may be.
ARTICLE NINE
SUPPLEMENTAL EXCHANGE INDENTURES
SECTION 901. Supplemental Exchange Indentures Without Consent of
---------------------------------------------------
Holders.
-------
87
Without the consent of any Holders, the Company or any Subsidiary
Debenture Guarantor, when authorized by or pursuant to a Board Resolution, and
the Debenture Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto, in form satisfactory to the Debenture
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, a
Subsidiary Debenture Guarantor or any other obligor on the Exchange
Debentures, and the assumption by any such successor of the covenants of
the Company or such obligor or Subsidiary Debenture Guarantor contained
herein and in the Exchange Debentures and in any Debenture Guarantee in
accordance with Article Eight;
(2) to add to the covenants of the Company, any Subsidiary Debenture
Guarantor or any other obligor upon the Exchange Debentures for the benefit
of the Holders or to surrender any right or power conferred upon the
Company, or any Subsidiary Debenture Guarantor or any other obligor on the
Exchange Debentures, as applicable, in this Exchange Indenture and in the
Exchange Debentures or in any Debenture Guarantee;
(3) to cure any ambiguity, or to correct or supplement any provision
herein, in the Exchange Debentures or in any Debenture Guarantee which may
be defective or inconsistent with any other provision herein, in the
Exchange Debentures or in any Debenture Guarantee or to make any other
provisions with respect to matters or questions arising under this Exchange
Indenture, the Exchange Debentures or any Debenture Guarantee; provided
that, in each case, such provisions shall not adversely affect the
interests of the Holders;
(4) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Exchange Indenture under the
Trust Indenture Act;
(5) to add a Subsidiary Debenture Guarantor of the Exchange
Debentures under this Exchange Indenture;
(6) to evidence and provide for the acceptance of the appointment of
a successor Debenture Trustee under this Exchange Indenture; or
(7) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Debenture Trustee for the benefit of the Holders as additional
security for the payment and performance of the Company's and any
Subsidiary Debenture Guarantor's obligations under this Exchange Indenture,
in any property, or assets, including any of which are required to be
mortgaged, pledged or hypothecated, or in which a security interest is
required to be granted to the Debenture Trustee pursuant to this Exchange
Indenture or otherwise.
88
SECTION 902. Supplemental Exchange Indentures with Consent of
------------------------------------------------
Holders.
-------
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Exchange Debentures that are affected
thereby, by Act of said Holders delivered to the Company, the Subsidiary
Debenture Guarantors and the Debenture Trustee, the Company and the Subsidiary
Debenture Guarantors, when authorized by or pursuant to their respective Board
Resolutions, and the Debenture Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Exchange Indenture or of
modifying in any manner the rights of the Holders of Exchange Debentures under
this Exchange Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Exchange Debenture
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Exchange Debenture, or reduce the principal
amount thereof, or premium, if any, or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency
in which the principal of any Exchange Debenture or any premium or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date);
(2) amend, change or modify any of the provisions of Section 1013 or
Section 1014 including any definitions relating thereto in any manner
materially adverse to the Holders;
(3) reduce the percentage in principal amount of Outstanding Exchange
Debentures, the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Exchange Indenture or
certain defaults hereunder and their consequences provided for in this
Exchange Indenture;
(4) modify any provisions of this Section, Section 1021 or Section
513, except to increase the percentage in principal amount of the
Outstanding Exchange Debentures required to take any of the actions
described therein or to provide that certain additional provisions of this
Exchange Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Exchange Debenture affected thereby;
(5) except as otherwise permitted under Article Eight, consent to the
assignment or transfer by the Company or any Subsidiary Debenture Guarantor
of any of their rights or obligations under this Exchange Indenture;
89
(6) amend or modify any of the provisions of Article Thirteen in any
manner adverse to the Holders; or
(7) modify any of the provisions of this Exchange Indenture relating
to the subordination of the Exchange Debentures in a manner adverse to the
Holders.
SECTION 903. Execution of Supplemental Exchange Indentures.
---------------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Exchange Indenture, the Debenture Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Exchange Indenture. The Debenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects
the Debenture Trustee's own rights, duties or immunities under this Exchange
Indenture or otherwise.
SECTION 904. Effect of Supplemental Exchange Indentures.
------------------------------------------
Upon the execution of any supplemental indenture under this Article,
this Exchange Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Exchange Indenture for all
purposes; and every Holder of Exchange Debentures theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Exchange Debentures to Supplemental
------------------------------------------------
Exchange Indentures.
-------------------
Exchange Debentures authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Debenture Trustee, bear a notation in form approved by the Debenture
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Exchange Debentures so modified as to conform,
in the opinion of the Debenture Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Debenture Trustee in exchange for Outstanding
Exchange Debentures.
90
SECTION 907. Notice of Supplemental Exchange Indentures.
------------------------------------------
Promptly after the execution by the Company, any Subsidiary Debenture
Guarantor and the Debenture Trustee of any supplemental indenture pursuant to
the provisions of Section 902, the Company shall give notice thereof to the
Holders of each Outstanding Exchange Debenture affected, in the manner provided
for in Section 106, setting forth in general terms the substance of such
supplemental indenture.
SECTION 908. Effect on Senior Indebtedness and Senior Subordinated
-----------------------------------------------------
Indebtedness.
------------
No supplemental indenture shall adversely affect the rights of the
holders of Senior Indebtedness and Senior Subordinated Indebtedness under
Article Twelve of this Exchange Indenture without the consent of such holders
affected thereby.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
---------------------------------------------------
The Company covenants and agrees for the benefit of the Holders of
Exchange Debentures that it will duly and punctually pay the principal of (and
premium, if any, on) and interest on the Exchange Debentures in accordance with
the terms of the Exchange Debentures and this Exchange Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York an office or agency
where Exchange Debentures may be presented or surrendered for payment (the
"Place of Payment"), where Exchange Debentures may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Exchange Debentures and this Exchange Indenture
may be served. The Company hereby designates the Corporate Trust Office as the
Place of Payment.
The Company will give prompt written notice to the Debenture Trustee
of the location, and any change in the location, of the Place of Payment. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Debenture Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Debenture Trustee, and the Company hereby
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appoints the Debenture Trustee as its agent to receive such respective
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Exchange Debentures may be presented or
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Exchange
Debentures for such purposes. The Company will give prompt written notice to
the Debenture Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 1003. Money for Exchange Debentures Payments to Be Held in
----------------------------------------------------
Trust.
-----
If the Company shall at any time act as its own Paying Agent with
respect to the Exchange Debentures, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Exchange
Debentures, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Debenture Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Exchange Debentures, it will, prior to or on each due date of the principal of
(and premium, if any, on) or interest on any Exchange Debentures, deposit with a
Paying Agent a sum in same day funds sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Debenture Trustee) the Company will promptly
notify the Debenture Trustee of its action or failure so to act.
The Company will cause each Paying Agent (other than the Debenture
Trustee) to execute and deliver to the Debenture Trustee an instrument in which
such Paying Agent shall agree with the Debenture Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) and interest on the Exchange Debentures in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Debenture Trustee notice of any default by the Company
(or any other obligor upon the Exchange Debentures) in the making of any
payment of principal of (and premium, if any) or interest on the Exchange
Debentures; and
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(3) at any time during the continuance of any such default, upon the
written request of the Debenture Trustee, forthwith pay to the Debenture
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Exchange Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Debenture
Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Debenture Trustee upon the same trusts as those upon which sums
were held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Debenture Trustee, such Paying Agent shall be released from
all further liability with respect to such sums.
Any money deposited with the Debenture Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Exchange Debenture and remaining unclaimed
for two years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Exchange Debenture shall thereafter, as an unsecured general creditor, look only
to the Company for payment thereof, and all liability of the Debenture Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Debenture Trustee or such Paying Agent, before being required to make any such
repayment to the Company, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory), licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that, subject to the other provisions
of this Exchange Indenture, the Company shall not be required to preserve any
such existence (except the Company), right, license or franchise 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 Subsidiaries as a whole
and that the loss thereof is not, and will not be, disadvantageous in any
material respect to the Holders.
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SECTION 1005. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (b)
all lawful claims for labor, materials and supplies, which, if unpaid, would by
law become a material liability or lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company) are being maintained in
accordance with GAAP.
SECTION 1006. Maintenance of Properties.
-------------------------
The Company will cause all material properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Restricted Subsidiary and not adverse in
any material respect to the Holders.
SECTION 1007. Statement by Officers as to Default.
-----------------------------------
(a) The Company and each Subsidiary Debenture Guarantor will deliver
to the Debenture Trustee, within 45 days after the end of each fiscal quarter
and within 120 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company or the Subsidiary
Debenture Guarantor, as the case may be, during the preceding quarter or the
preceding fiscal year, as the case may be, has been made under the supervision
of the signing officers with a view to determining whether it has kept,
observed, performed and fulfilled, and has caused each of its Subsidiaries to
keep, observe, perform and fulfill 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 during such preceding quarter or the
preceding fiscal year, as the case may be, has kept, observed, performed and
fulfilled, and has caused each of its Subsidiaries to keep, observe, perform and
fulfill each and every such covenant contained in this Indenture and no Default
or Event of Default occurred during such quarter or year, as the case may be,
and at the date of such certificate there is no Default or Event of Default
which has
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occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe its status, with particularity and
that, to the best of his or her knowledge, no event has occurred and remains by
reason of which payments on the account of the principal of or interest, if any,
on the Exchange Debentures is prohibited or if such event has occurred, a
description of the event and what action each is taking or proposes to take with
respect thereto. The Officers' Certificate shall also notify the Debenture
Trustee should the Company elect to change the manner in which it fixes its
fiscal year-end. For purposes of this Section 1007(a), such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Exchange Indenture.
(b) When any Default or Event of Default has occurred and is
continuing under this Exchange Indenture, or if the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default (other than
with respect to Indebtedness in the principal amount of less than $10,000,000),
the Company shall deliver to the Debenture Trustee by registered or certified
mail or by telegram, telex or facsimile transmission an Officers' Certificate
specifying such event, notice or other action within five Business Days of its
occurrence.
SECTION 1008. Limitation on Indebtedness.
--------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, create, issue, assume, guarantee or in any manner become directly or
indirectly liable for the payment of, or otherwise incur (collectively,
"incur"), any Indebtedness (including any Acquired Indebtedness), other than
Permitted Indebtedness; provided, however, that the Company and any Subsidiary
Debenture Guarantor may incur Indebtedness (including Acquired Indebtedness) if
at the time of such incurrence the Consolidated Fixed Charge Coverage Ratio for
the four full fiscal quarters immediately preceding the incurrence of such
Indebtedness for which internal financial statements are available, taken as one
period (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness was incurred,
and the application of such proceeds occurred, on the first day of such four-
quarter period, (ii) the incurrence, repayment or retirement of any other
Indebtedness by the Company and its Restricted Subsidiaries since the first day
of such four-quarter period as if such Indebtedness was incurred, repaid or
retired on the first day of such four-quarter period (except that, in making
such computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such four-quarter period) and (iii) the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business acquired or disposed of by the Company or its
Restricted Subsidiaries, as the case may be, since the first day of such four-
quarter period, as if such acquisition or disposition occurred on the first day
of such four-quarter period), would have been at least equal to 2.0 to 1.0.
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SECTION 1009. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Capital Stock of the Company (other than
dividends or distributions payable solely in shares of Qualified Capital
Stock of the Company or in options, warrants or other rights to acquire
such shares of Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock of the Company or any
Affiliate of the Company or any options, warrants or other rights to
acquire such shares of Capital Stock (other than such options, warrants or
rights owned by the Company or a wholly owned Restricted Subsidiary);
(iii) declare or pay any dividend on, or make any distribution to
holders of, any shares of Capital Stock of any Restricted Subsidiary to any
Person (other than to the Company or any of its wholly owned Restricted
Subsidiaries or to all holders of Capital Stock of such Restricted
Subsidiary on a pro rata basis);
(iv) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Junior Subordinated
Indebtedness of the Company or any Subsidiary Debenture Guarantor; or
(v) make any Investment (other than any Permitted Investment) in any
Person (such payments or other actions described in (but not excluded from)
clauses (i) through (v) are collectively referred to as "Restricted
Payments"), unless at the time of, and immediately after giving effect to,
the proposed Restricted Payment (the amount of any such Restricted Payment,
if other than cash, as determined by the Board of Directors of the Company,
whose determination shall be conclusive and evidenced by a Board
Resolution), (1) no Default or Event of Default shall have occurred and be
continuing, (2) the Company could incur at least $ 1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 1008
and (3) the aggregate amount of all Restricted Payments declared or made
after the Issuance Date shall not exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income of the Company
accrued on a cumulative basis during the period beginning on the first
day of the Company's first fiscal quarter after the Issuance Date and
ending on the last day of the Company's last fiscal quarter ending
prior to the date of such proposed
96
Restricted Payment (or, if such aggregate cumulative Consolidated
Adjusted Net Income shall be a loss, minus 100% of such loss), plus
(B) the aggregate net cash proceeds received after the Issuance
Date by the Company from the issuance or sale (other than to any
Restricted Subsidiary) of shares of Qualified Capital Stock of the
Company (including upon the exercise of options, warrants or fights)
or warrants, options or rights to purchase shares of Qualified Capital
Stock of the Company, plus
(C) the aggregate net cash proceeds received after the Issuance
Date by the Company from the issuance or sale (other than to any
Restricted Subsidiary) of debt securities or Redeemable Capital Stock
that have been converted into or exchanged for Qualified Capital Stock
of the Company, to the extent such securities were originally sold for
cash, together with the aggregate net cash proceeds received by the
Company at the time of such conversion or exchange, plus
(D) to the extent that any Investment constituting a Restricted
Payment that was made after the Issuance Date is sold or is otherwise
liquidated or repaid, an amount (to the extent not included in
Consolidated Adjusted Net Income) equal to the sum of (I) the lesser
of (x) the cash proceeds with respect to such Investment (less the
cost of the disposition of such Investment and net of taxes) and (y)
the initial amount of such Investment, and (II) with respect solely to
any Restricted Payment to be made pursuant to clause (v) of this
paragraph (a), the cash proceeds with respect to such Investment (less
the cost of the disposition of such Investment and net of taxes) in
excess of the amount in (I), plus
(E) $5,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as (with respect
to clauses (ii), (iii), (iv), (v), (vi), (vii) and (viii) below) at the time of
and after giving effect thereto no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration the payment of such
dividend would have complied with the provisions of paragraph (a) above;
(ii) the purchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary) of, shares of Qualified Capital
Stock of the Company;
97
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Junior Subordinated Indebtedness in exchange
for, or out of the net cash proceeds of a substantially concurrent issuance
and sale (other than to a Restricted Subsidiary) of, shares of Qualified
Capital Stock of the Company;
(iv) the purchase of any Indebtedness that is expressly subordinated
in right of payment to the Exchange Debentures at a purchase price not
greater than 101% of the principal amount thereof in the event of a Change
in Control in accordance with provisions similar to those of Section 1013;
provided that prior to such purchase the Company has made the Change in
Control Offer as provided in Section 1013 and has purchased all Exchange
Debentures validly tendered for payment in connection with such Change in
Control Offer;
(v) the repurchase, redemption or other acquisition or retirement
for value of shares of Management Stock; provided that (1) the Company is
required, by the terms of written agreements between the Company and each
of ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ as in effect on the Issuance Date, to
effect such purchase, redemption or other acquisition or retirement for
value of such shares and (2) the aggregate consideration paid by the
Company for such shares so purchased, redeemed or otherwise acquired or
retired for value does not exceed $25,000,000 in the aggregate;
(vi) the repurchase, redemption or other acquisition or retirement
for value of shares of Capital Stock of the Company from employees who have
died (or their estates or beneficiaries) or whose employment has been
terminated; provided that such payment shall not exceed $1,500,000 in any
twelve month period, excluding any amounts used to repurchase, redeem,
acquire or retire for value shares of Capital Stock of the Company pursuant
to clause (v) above;
(vii) repurchases of Capital Stock of the Company (or warrants or
options convertible into or exchangeable for such Capital Stock) deemed to
occur upon exercise of stock options to the extent that shares of such
Capital Stock (or warrants or options convertible into or exchangeable for
such Capital Stock) represent a portion of the exercise price of such
options;
(viii) the issuance by the Company of shares of Preferred Stock as
dividends paid in kind on the Preferred Stock of the Company outstanding on
the Issuance Date or on shares of Preferred Stock so issued as payment in
kind dividends, such dividends made pursuant to the terms of the
Certificate of Designation for such Preferred Stock as in effect on the
Issuance Date; and
(ix) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Junior Subordinated Indebtedness (other than
Redeemable Capital Stock) in
98
exchange for, or out of the net cash proceeds of a substantially concurrent
incurrence (other than to a Restricted Subsidiary) of, new Junior
Subordinated Indebtedness so long as (A) the principal amount of such new
Junior Subordinated Indebtedness does not exceed the principal amount (or,
if such Junior Subordinated Indebtedness being refinanced provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date of
determination) of the Indebtedness being so purchased, redeemed, defeased,
acquired or retired, plus either the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of such
Indebtedness being refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing,
plus, in either case, the amount of reasonable expenses of the Company
incurred in connection with such refinancing, (B) such new Junior
Subordinated Indebtedness is pari passu or subordinated, as applicable, to
the Exchange Debentures to the same extent as such Indebtedness so
purchased, redeemed, defeased, acquired or retired and (C) such new
Indebtedness has an Average Life longer than the Average Life of the
Exchange Debentures and a final Stated Maturity of principal later than the
final Stated Maturity of principal of the Exchange Debentures.
The actions described in clauses (i), (ii), (iii), (iv), (v), (vi) and
(vii) of this paragraph (b) shall be Restricted Payments that shall be permitted
to be taken in accordance with this paragraph (b) but shall reduce the amount
that would otherwise be available for Restricted Payments under clause (3) of
paragraph (a) above and the actions described in clauses (viii) and (ix) of this
paragraph (b) shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph (b) and shall not reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of paragraph
(a).
(c) Notwithstanding the foregoing, the Company will not, and will not
permit any Restricted Subsidiary to, pay any cash dividends on any shares of
Capital Stock of the Company which shall rank junior to the Senior Exchangeable
Preferred Stock until such time as the Notes have received a rating from ▇▇▇▇▇'▇
of at least "B1" or higher.
SECTION 1010. Limitation on Issuances and Sales of Capital Stock of
-----------------------------------------------------
Restricted Subsidiaries.
-----------------------
The Company (i) shall not permit any Restricted Subsidiary to issue
any Capital Stock (other than to the Company or a wholly owned Restricted
Subsidiary) and (ii) shall not permit any Person (other than the Company or a
wholly owned Restricted Subsidiary) to own any Capital Stock of any Restricted
Subsidiary; provided, however, that this Section 1010 shall not prohibit (a) the
issuance and sale of all, but not less than all, of the issued and outstanding
Capital Stock of any Restricted Subsidiary owned by the Company or any of its
Restricted Subsidiaries in compliance with the other provisions of this Exchange
Indenture, (b) the ownership by other Persons of Qualified Capital Stock (other
than Preferred Stock) issued prior to the time such
99
Restricted Subsidiary became a Subsidiary of the Company that was neither issued
in contemplation of such Subsidiary becoming a Subsidiary nor acquired at that
time or (C) the ownership by directors of director's qualifying shares or the
ownership by foreign nationals of Capital Stock of any Restricted Subsidiary, to
the extent mandated by applicable law.
SECTION 1011. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with, or for the
benefit of, any Affiliate of the Company or any Restricted Subsidiary (other
than the Company or a Restricted Subsidiary) (collectively, "Interested
Persons"), unless (i) such transaction or series of transactions are on terms
that are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could have been able to be obtained in an arm's-
length transaction with third parties that are not Interested Persons, (ii) with
respect to any transaction or series of related transactions involving aggregate
consideration equal to or greater than $1,000,000, the Company has delivered an
Officers' Certificate to the Debenture Trustee certifying that such transaction
or series of transactions complies with clause (i) above and (iii) with respect
to any transaction or series of related transactions involving aggregate
consideration equal to or greater than $5,000,000, such transaction or series of
related transactions (x) has been approved by the Board of Directors of the
Company (including a majority of the Disinterested Directors of the Company) or
(y) the Company has obtained a written opinion from a nationally recognized
investment banking or valuation firm certifying that such transaction or series
of related transactions is fair to the Company or its Restricted Subsidiary, as
the case may be, from a financial point of view; provided, however, that this
Section 1011 shall not restrict (1) the Company from paying reasonable and
customary regular compensation and fees to directors of the Company or any
Restricted Subsidiary who are not employees of the Company or any Restricted
Subsidiary, (2) the payment of management fees to Permitted Holders in an
aggregate amount not to exceed $500,000 per year, (3) loans and advances to
officers, directors and employees of the Company or any Restricted Subsidiary in
the ordinary course of business in accordance with the past practices of the
Company or any Restricted Subsidiary not to exceed $3,000,000 in the aggregate
outstanding at any time, (4) any transactions made in compliance with Section
1009, (5) the issuance and sale of Qualified Capital Stock of the Company to
Persons who are stockholders of the Company at the time of such issuance and
sale and (6) the performance of any written agreement as in effect on the
Issuance Date and as amended from time to time, provided that any such amendment
is not less favorable in any material respect to the Company or any Restricted
Subsidiary than the terms of such agreement as in effect on the Issuance Date.
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SECTION 1012. Limitation on Liens.
-------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien of any kind securing Pari Passu Indebtedness or Junior Subordinated
Indebtedness of the Company on or with respect to any of its property or assets,
including any shares of stock or indebtedness of any Restricted Subsidiary,
whether owned at the Issuance Date or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereon, unless (x) in the case of any Lien securing Pari Passu
Indebtedness of the Company, the Exchange Debentures are secured by a Lien on
such property, assets or proceeds that is senior in priority to or pari passu
with such Lien and (y) in the case of any Lien securing Junior Subordinated
Indebtedness of the Company, the Exchange Debentures are secured by a Lien on
such property, assets or proceeds that is senior in priority to such Lien.
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien securing Pari Passu Indebtedness or Junior Subordinated Indebtedness of
such Restricted Subsidiary on or with respect to any such Restricted
Subsidiary's properties or assets, including any shares of stock or Indebtedness
of any Subsidiary of such Restricted Subsidiary, whether owned at the Issuance
Date or thereafter acquired, or any income, profits or proceeds therefrom, or
assign or otherwise convey any right to receive income thereon, unless (x) in
the case of any Lien securing Pari Passu Indebtedness of the Restricted
Subsidiary, such Debenture Guarantee is secured by a Lien on such property,
assets or proceeds that is senior in priority to or pari passu with such Lien
and (y) in the case of any Lien securing Subordinated Indebtedness of the
Restricted Subsidiary, such Debenture Guarantee is secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien.
SECTION 1013. Purchase of Exchange Debentures upon Change in Control.
------------------------------------------------------
(a) If a Change in Control shall occur at any time, then each Holder
of Exchange Debentures will have the right to require that the Company purchase
such Holder's Exchange Debentures, in whole or in part in integral multiples of
$1,000, at a purchase price (the "Change in Control Purchase Price") in cash in
an amount equal to 101% of the principal amount thereof, plus accrued interest,
if any, to the date of purchase (the "Change in Control Purchase Date"),
pursuant to the offer described below (the "Change in Control Offer") and the
other procedures set forth in this Exchange Indenture.
(b) Within 30 days following any Change in Control, the Company shall
notify the Debenture Trustee thereof and give written notice of such Change in
Control Offer to each Holder by first-class mail, postage prepaid, at the
address of such Holder appearing in the Exchange Debenture Register, stating,
among other things, (i) the Change in Control Purchase Price and the Change in
Control Purchase Date, which shall be a Business Day no earlier than 30
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days nor later than 75 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act or any
applicable securities laws or regulations; (ii) that any Exchange Debenture not
tendered will continue to accrue interest; (iii) that, unless the Company
defaults in the payment of the Change in Control Purchase Price, any Exchange
Debentures accepted for payment pursuant to the Change in Control Offer shall
cease to accrue interest after the Change in Control Purchase Date; and (iv)that
Holders electing to have any Notes purchased pursuant to a Change in Control
Offer shall be required to surrender the Notes, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Notes completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change in Control Purchase
Date; (v) that Holders shall be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change in Control 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 its election to have such Notes purchased; (vi) that
Holders whose Exchange Debentures are being purchased only in part shall be
issued new Exchange Debentures equal in principal amount to the unpurchased
portion of the Exchange Debentures surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple thereof; (vii)
the instructions that the Holders of Exchange Debentures must follow in order to
tender their Exchange Debentures; and (viii) the circumstances and relevant
facts regarding such Change in Control.
(c) The Company shall comply to the extent applicable with the
requirements of the tender offer rules, including Rule 14e-1 under the Exchange
Act, and any other applicable securities laws and regulations in connection with
a Change in Control Offer.
(d) The Company shall not, and shall not permit any Restricted
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under the Senior Credit Agreement or under
Indebtedness as in effect on the Issuance Date) that would materially impair the
ability of the Company to make a Change in Control Offer to purchase the
Exchange Debentures or, if such Change in Control Offer is made, to pay for the
Exchange Debentures tendered for purchase.
(e) Prior to complying with the provisions of this Section 1013, but
in any event within 30 days following a Change in Control, the Company shall
either terminate all commitments and repay in full all Indebtedness under the
Senior Credit Agreement and the Notes, respectively, and or obtain the requisite
consents, if any, under the Senior Credit Agreement and the Notes Indenture to
permit the purchase of the Exchange Debentures as provided for under this
Section 1013.
(f) The Company shall not, and shall not permit any Restricted
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under the Senior Credit Agreement, the Notes
Indenture or under Indebtedness as in effect on the
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Issuance Date) that would materially impair the ability of the Company to make a
Change in Control Offer to purchase the Exchange Debentures or, if such Change
in Control Offer is made, to pay for the Exchange Debentures tendered for
purchase.
SECTION 1014. Limitation on Sale of Assets.
----------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly, or indirectly, consummate any Asset Sale unless (i) the
consideration received by the Company or such Restricted Subsidiary for such
Asset Sale is not less than the fair market value of the assets sold (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a Board Resolution) and (ii) at least 75% of such
consideration consists of cash or Cash Equivalents. The amount of any (I)
Indebtedness of a Restricted Subsidiary that is not a Subsidiary Debenture
Guarantor or any Senior Indebtedness of the Company or any Subsidiary Debenture
Guarantor that is actually assumed by the transferee in such Asset Sale and from
which the Company and the Restricted Subsidiaries are fully released shall be
deemed to be cash for purposes of determining the percentage of cash
consideration received by the Company or the Restricted Subsidiaries (excluding
any liabilities that are incurred in connection with or in anticipation of such
Asset Sale) and (II) notes or other similar obligations received by the Company
or any Restricted Subsidiary from such transferee that are converted, sold or
exchanged within 30 days of the related Asset Sale by the Company or the
Restricted Subsidiaries into cash shall be deemed to be cash, in an amount equal
to the net cash proceeds realized upon such conversion, sale or exchange for
purposes of determining the percentage of cash consideration received by the
Company or the Restricted Subsidiaries.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may use the Net Cash Proceeds thereof, within 12 months after
such Asset Sale, to (i) permanently repay or prepay any then outstanding Senior
Indebtedness or Senior Subordinated Indebtedness of the Company or any
Restricted Subsidiary (and to correspondingly reduce commitments with respect
thereto) or (ii) invest (or enter into a legally binding agreement to invest) in
other properties or assets to replace the properties or assets that were the
subject of the Asset Sale or in properties and assets that will be used in
businesses of the Company or its Restricted Subsidiaries, as the case may be,
existing at the time such assets are sold. If any such legally binding
agreement to invest such Net Cash Proceeds is terminated, then the Company may,
within 90 days of such termination or within 12 months of such Asset Sale,
whichever is later, invest such Net Cash Proceeds as provided in clause (i) or
(ii) (without regard to the parenthetical contained in such clause (ii)) above.
The amount of such Net Cash Proceeds not so used as set forth above in this
paragraph (b) shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10,000,000,
the Company shall, within 30 Business Days, make an offer to purchase (an
"Excess Proceeds Offer") from all holders of Exchange Debentures, on a pro rata
basis, in accordance with the procedures set forth below, the maximum principal
amount (expressed as an integral multiple of $1,000) of
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Exchange Debentures that may be purchased with the Excess Proceeds. The offer
price as to each Exchange Debenture shall be payable in cash in an amount equal
to 100% of the principal amount of such Exchange Debenture plus accrued
interest, if any (the "Offered Price"), to the date such Excess Proceeds Offer
is consummated (the "Offer Date"). To the extent that the aggregate principal
amount of Exchange Debentures tendered pursuant to an Excess Proceeds Offer is
less than the Excess Proceeds, the Company may use such deficiency for any
lawful purposes. If the aggregate principal amount of Exchange Debentures
validly tendered and not withdrawn by holders thereof exceeds the Excess
Proceeds, Exchange Debentures to be purchased will be selected on a pro rata
basis. Upon completion of such Exceeds Proceeds Offer, the amount of Excess
Proceeds shall be reset to zero.
(d) Whenever the Excess Proceeds received by the Company exceed
$10,000,000, such Excess Proceeds shall be set aside by the Company in a
separate account pending (i) deposit with the Debenture Trustee or a paying
agent of the amount required to purchase the Exchange Debentures tendered in an
Excess Proceeds Offer, (ii) delivery by the Company of the Offered Price to the
holders of the Exchange Debentures tendered in an Excess Proceeds Offer and
(iii) application, as set forth above, of Excess Proceeds for any lawful
purposes. Such Excess Proceeds may be invested in Cash Equivalents, provided
that the maturity date of any investment shall not be later than the Offer Date.
The Company shall be entitled to any interest or dividends accrued, earned or
paid on such Cash Equivalents.
(e) If the Company becomes obligated to make an Excess Proceeds Offer
pursuant to clause (c) above, the Exchange Debentures shall be purchased by the
Company, at the option of the Holders thereof, in whole or in part in integral
multiples of $1,000, on a date that is not earlier than 30 days and not later
than 60 days from the date the notice is given to holders, or such later date as
may be necessary for the Company to comply with the requirements under the
Exchange Act, subject to proration in the event the amount of Excess Proceeds is
less than the aggregate Offered Price of all Exchange Debentures tendered.
(f) Within 15 days after the obligation of the Company to make an
Excess Proceeds Offer arises, the Company shall notify the Debenture Trustee
thereof and give written notice of such Excess Proceeds Offer to each Holder of
Exchange Debentures by first-class mail, postage prepaid, at the address of such
Holder appearing in the Exchange Debenture Register, stating, (i) the Offered
Price and the Offer Date, which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the Exchange Act or any
applicable securities laws or regulations; (ii) that any Exchange Debenture not
tendered will continue to accrue interest; (iii) that, unless the Company
defaults in the payment of the Offered Price, any Exchange Debentures accepted
for payment pursuant to the Excess Proceeds Offer shall cease to accrue interest
after the date of purchase; (iv) that Holders electing to have any Exchange
Debentures purchased pursuant to an Excess Proceeds Offer shall be required to
surrender the Exchange Debentures, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Exchange Debentures
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completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Offer Date; (v)
that Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Offer Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Exchange
Debentures delivered for purchase, and a statement that such Holder is
withdrawing its election to have such Exchange Debentures purchased; (vi) that
Holders whose Exchange Debentures are being purchased only in part shall be
issued new Exchange Debentures equal in principal amount to the unpurchased
portion of the Exchange Debentures surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple thereof; (vii)
the instructions that the Holders of Exchange Debentures must follow in order to
tender their Exchange Debentures; and (viii) the circumstances and relevant
facts regarding such Excess Proceeds Offer.
(g) The Company shall comply to the extent applicable with the
requirements of the tender offer rules, including Rule 14e-1 under the Exchange
Act, and any other applicable securities laws and regulations in connection with
an Excess Proceeds Offer.
SECTION 1015. Limitations on Guarantees of Indebtedness by Restricted
-------------------------------------------------------
Subsidiaries.
------------
(a) The Company will not permit any Restricted Subsidiary, directly
or indirectly, to guarantee, assume or in any other manner become liable with
respect to any Indebtedness of the Company unless (i) (A) if such Restricted
Subsidiary is not a Subsidiary Debenture Guarantor, such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture, in form
satisfactory to the Debenture Trustee, providing for a guarantee of the Exchange
Debentures by such Restricted Subsidiary and delivers to such Debenture Trustee
an Opinion of Counsel reasonably satisfactory to such Debenture Trustee to the
effect that such supplemental indenture has been duly executed and delivered by
such Restricted Subsidiary and is in compliance with the terms of this Exchange
Indenture and (B) with respect to any guarantee by a Restricted Subsidiary of
Junior Subordinated Indebtedness of the Company, any such guarantee shall be
subordinated to such Restricted Subsidiary's Debenture Guarantee at least to the
same extent as such guaranteed Indebtedness is subordinated to the Exchange
Debentures and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Debenture Guarantee.
(b) Notwithstanding the foregoing, any guarantee of the Exchange
Debentures created pursuant to the provisions described in the foregoing
paragraph (a) will provide by its terms that it will be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer
to any Person not an Affiliate of the Company of all of the Company's Capital
Stock in, or all or substantially all the assets of, the applicable Subsidiary
Debenture
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Guarantor (which sale, exchange or transfer is otherwise in compliance with this
Exchange Indenture) or (ii) the designation of such Restricted Subsidiary as an
Unrestricted Subsidiary in accordance with the terms of this Exchange Indenture.
SECTION 1016. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries.
---------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital Stock to the
Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the
Company or any other Restricted Subsidiary, (c) make loans or advances to the
Company or any other Restricted Subsidiary, (d) transfer any of its properties
or assets to the Company or any other Restricted Subsidiary (other than
customary restrictions on transfers of property subject to a Lien permitted
under this Exchange Indenture that would not materially adversely affect the
Company's ability to satisfy its obligations under the Exchange Debentures and
this Exchange Indenture) or (e) guarantee any Indebtedness of the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law, (ii) customary provisions
restricting subletting or assignment of any lease or assignment of any other
contract to which the Company or any Restricted Subsidiary is a party or to
which any of their respective properties or assets are subject, (iii) any
agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), 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, (iv)
encumbrances and restrictions in effect on the Issuance Date pursuant to the
Senior Credit Facility and its related documentation, (v) any encumbrance or
restriction contained in contracts for sales of assets permitted by Section 1014
with respect to the assets to be sold pursuant to such contract and (vi) any
encumbrance or restriction existing under any agreement that extends, renews,
refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (iii) and (iv); provided that the terms
and conditions of any such encumbrances or restrictions are not materially less
favorable to the Holders than those under or pursuant to the agreement so
extended, renewed, refinanced or replaced.
SECTION 1017. Limitation on Sale and Leaseback Transactions.
---------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into any Sale and Leaseback Transaction with
respect to any property or assets (whether now owned or hereafter acquired),
unless (i) the sale or transfer of such property or assets to be leased is
treated as an Asset Sale and the Company complies with Section 1014 and (ii) the
Company or such Restricted Subsidiary would be permitted to incur Indebtedness
under
106
Section 1008 in the amount of the Capitalized Lease Obligations incurred in
respect of such Sale and Leaseback Transaction; provided, however, that the
Company and its Restricted Subsidiaries will not be required to comply with
Section 1017 with respect to the sale and leaseback of the Headquarters
Facility.
SECTION 1018. Limitation on Other Subordinated Indebtedness.
---------------------------------------------
Neither the Company nor any Restricted Subsidiary shall incur, create,
assume, guarantee or in any other manner become directly or indirectly liable
with respect to or responsible for, or permit to remain outstanding, any
Indebtedness, other than the Exchange Debentures, that is subordinate or junior
in right of payment to any Senior Subordinated Indebtedness unless such
Indebtedness is also pari passu with, or subordinate in right of payment to, the
Exchange Debentures pursuant to subordination provisions substantially similar
to those contained in this Exchange Indenture.
SECTION 1019. Limitation on Unrestricted Subsidiaries.
---------------------------------------
The Company shall not make, and shall not permit any of its Restricted
Subsidiaries to make, any Investments in Unrestricted Subsidiaries if, at the
time thereof, the aggregate amount of such Investments would exceed the amount
of Restricted Payments then permitted to be made pursuant to Section 1008. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
Section 1019 (i) shall be treated as the making of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company or a
Restricted Subsidiary and (ii) may be made in cash or property.
SECTION 1020. Reports.
-------
The Company shall file on a timely basis with the Commission, to the
extent such filings are accepted by the Commission and whether or not the
Company has a class of securities registered under the Exchange Act, the annual
reports, quarterly reports and other documents that the Company would be
required to file if it were subject to Section 13 or 15 of the Exchange Act.
The Company shall also (a) file with the Debenture Trustee, and provide to each
Holder of Exchange Debentures (at their respective addresses set forth in the
Exchange Debenture Register), without cost to such Holder, copies of such
reports and documents within 15 days after the date on which the Company files
such reports and documents with the Commission or the date on which the Company
would be required to file such reports and documents if the Company were so
required, and (b) if filing such reports and documents with the Commission is
not accepted by the Commission or is prohibited under the Exchange Act, supply
at the Company's cost copies of such reports and documents to any prospective
Holder promptly upon written request.
Delivery of such reports, information and documents to the Debenture
Trustee is for informational purposes only and the Debenture Trustee's receipt
of such shall not constitute
107
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Debenture Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 1021. Waiver of Certain Covenants.
---------------------------
The Company and the Restricted Subsidiaries may omit in any particular
instance to comply with any term, provision or condition set forth in Sections
1007 to 1012, inclusive, and 1015 to 1019, inclusive, if before or after the
time for such compliance the Holders of at least a majority in aggregate
principal amount of all Outstanding Exchange Debentures affected by such term,
provision or covenant, by Act of such Holders, waive such compliance in such
instance with such term, provision or condition, but no such waiver shall extend
to or affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company, the Restricted Subsidiaries and the duties of the Debenture Trustee, as
applicable, in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
REDEMPTION OF EXCHANGE DEBENTURES
SECTION 1101. Redemption.
----------
The Exchange Debentures may or shall be, as the case may be, redeemed,
as a whole or from time to time in part, subject to the conditions and the
Redemption Prices specified in the form of Exchange Debenture, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive interest due on
Interest Payment Date), on the Redemption Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Exchange Debentures at the election of the Company or
otherwise, as permitted or required by any provision of this Exchange Indenture,
shall be made in accordance with the terms of such Exchange Debentures and in
accordance with this Article Eleven.
SECTION 1103. Election to Redeem; Notice to Debenture Trustee.
-----------------------------------------------
The election of the Company to redeem any Exchange Debentures pursuant
to Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Debenture Trustee), notify the
108
Debenture Trustee of such Redemption Date and of the principal amount of
Exchange Debentures to be redeemed and shall deliver to the Debenture Trustee
such documentation and records as shall enable the Debenture Trustee to select
the Exchange Debentures to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Debenture Trustee of Exchange Debentures
-----------------------------------------------------
to Be Redeemed.
--------------
If less than all the Exchange Debentures are to be redeemed, the
particular Exchange Debentures to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Debenture Trustee, from the Outstanding
Exchange Debentures not previously called for redemption, in compliance with the
requirements of the principal national securities exchange, if any, on which
such Exchange Debentures are listed, or, if such Exchange Debentures are not so
listed, on a pro rata basis, by lot or by such other method as the Debenture
Trustee shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements) and which may provide for the selection for
redemption of portions of the principal of Exchange Debentures; provided,
however, that no such partial redemption shall reduce the portion of the
principal amount of an Exchange Debenture not redeemed to less than $1,000.
The Debenture Trustee shall promptly notify the Company in writing of
the Exchange Debentures selected for redemption and, in the case of any Exchange
Debentures selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Exchange Indenture, unless the context
otherwise requires, all provisions relating to redemption of Exchange Debentures
shall relate, in the case of any Exchange Debenture redeemed or to be redeemed
only in part, to the portion of the principal amount of such Exchange Debenture
which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Exchange Debentures to be redeemed. The Debenture Trustee
shall give notice of redemption in the Company's name and at the Company's
expense; provided, however, that the Company shall deliver to the Debenture
Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate
requesting that the Debenture Trustee give such notice and setting forth the
information to be stated in such notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
109
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Exchange Debentures are to be
redeemed, the identification of the particular Exchange Debentures to be
redeemed, as well as the aggregate principal amount of Exchange Debentures
to be redeemed and the aggregate principal amount of Exchange Debentures to
be outstanding after such partial redemption,
(4) in case any Exchange Debenture is to be redeemed in part only,
the notice which relates to such Exchange Debenture shall state that on and
after the Redemption Date, upon surrender of such Exchange Debenture, the
holder will receive, without charge, a new Exchange Debenture or Exchange
Debentures of authorized denominations for the principal amount thereof
remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Exchange Debenture, or the
portion thereof, to be redeemed, and, unless the Company defaults in making
the redemption payment, that interest on Exchange Debentures called for
redemption (or the portion thereof) will cease to accrue on and after said
date,
(6) the place or places where such Exchange Debentures are to be
surrendered for payment of the Redemption Price and accrued interest, if
any,
(7) the name and address of the Paying Agent,
(8) that Exchange Debentures called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Exchange Debentures, and
(10) the paragraph of the Exchange Debentures pursuant to which the
Exchange Debentures are to be redeemed.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to 10:00 A.M. on any Redemption Date, the Company shall deposit
with the Debenture Trustee or with a Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in Section
1003) an amount of money sufficient to pay the
110
Redemption Price of, and accrued interest on, all the Exchange Debentures which
are to be redeemed on that date.
SECTION 1107. Exchange Debentures Payable on Redemption Date.
----------------------------------------------
Notice of redemption having been given as aforesaid, the Exchange
Debentures so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
interest) such Exchange Debentures shall cease to bear interest. Upon surrender
of any such Exchange Debenture for redemption in accordance with said notice,
such Exchange Debenture shall be paid by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Exchange Debentures,
or one or more Predecessor Exchange Debentures, registered as such at the close
of business on the relevant Regular Record Date or Special Record Date, as the
case may be, according to their terms and the provisions of Section 307.
If any Exchange Debenture called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate of
interest set forth in the Exchange Debenture.
SECTION 1108. Exchange Debentures Redeemed in Part.
------------------------------------
Any Exchange Debenture which is to be redeemed only in part (pursuant
to the provisions of this Article) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Debenture Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Debenture Trustee duly executed by, the Holder thereof or such
Holders attorney duly authorized in writing), and the Company shall execute, and
the Debenture Trustee shall authenticate and deliver to the Holder of such
Exchange Debenture without service charge, a new Exchange Debenture or Exchange
Debentures, of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Exchange Debenture so surrendered, provided, that each
such new Exchange Debenture will be in a principal amount of $1,000 or integral
multiple thereof.
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ARTICLE TWELVE
SUBORDINATION OF EXCHANGE DEBENTURES
SECTION 1201. Exchange Debentures Subordinate to Senior Indebtedness
------------------------------------------------------
and Senior Subordinated Indebtedness.
------------------------------------
The Company covenants and agrees, and each Holder of a Exchange
Debenture, by its acceptance thereof, likewise covenants and agrees, for the
benefit of the holders, from time to time, of Senior Indebtedness and Senior
Subordinated Indebtedness that, to the extent and in the manner hereinafter set
forth in this Article, the Indebtedness represented by the Exchange Debentures
and the payment of the principal of (and premium, if any) and interest on each
and all of the Exchange Debentures are hereby expressly made subordinate and
subject in right of payment as provided in this Article to the prior payment in
full in cash or cash equivalents of all Senior Indebtedness and Senior
Subordinated Indebtedness; provided, however, that the Exchange Debentures, the
Indebtedness represented thereby and the payment of the principal of (and
premium, if any) and interest on the Exchange Debentures in all respects shall
rank equally with, or prior to, all existing and future senior subordinated
indebtedness (including, without limitation, Indebtedness) of the Company that
is subordinated to Senior Indebtedness or Senior Subordinated Indebtedness.
SECTION 1202. Payment Over of Proceeds upon Dissolution, Etc.
----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relating to the Company or to its assets, or
(b) any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or other marshalling of
assets or liabilities of the Company (except in connection with the
consolidation or merger of the Company or its liquidation or dissolution
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety upon the terms and conditions described under
Article Eight), then and in any event:
(1) the holders of Senior Indebtedness and Senior Subordinated
Indebtedness shall first be entitled to receive payment in full in cash or
cash equivalents of all Senior Indebtedness and Senior Subordinated
Indebtedness, or provision shall be made for such payment in full, before
the Holders will be entitled to receive any payment or distribution of any
kind or character (other than any payment or distribution in the form of
equity securities or subordinated securities of the Company or any
successor obligor that, in the case of any such subordinated securities,
are subordinated in right of payment to all Senior Indebtedness and Senior
Subordinated Indebtedness that may at the time be outstanding to at least
the same extent as the Exchange Debentures are so subordinated as provided
in this
112
Indenture (such equity securities or subordinated securities hereinafter
being "Permitted Junior Securities") and any payment made pursuant to
Article Fourteen from monies or U.S. Government Obligations previously
deposited with the Debenture Trustee) on account of principal of (or
premium, if any) or interest on the Exchange Debentures or on account of
the purchase or redemption or other acquisition of Exchange Debentures; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than a payment
or distribution in the form of Permitted Junior Securities and any payment
made pursuant to Article Fourteen from monies or U.S. Government
Obligations previously deposited with the Debenture Trustee), by set-off or
otherwise, to which the Holders or the Debenture Trustee would be entitled
but for the provisions of this Indenture shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness and Senior
Subordinated Indebtedness or their representative ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness
and Senior Subordinated Indebtedness to the extent necessary to make
payment in full of all Senior Indebtedness and Senior Subordinated
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness and
Senior Subordinated Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance, transfer or lease of its properties and assets substantially as
an entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of the Company for the purposes of this Section if the Person
formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance, transfer or lease such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the conditions
set forth in Article Eight.
SECTION 1203. Suspension of Payment When Designated Senior
--------------------------------------------
Indebtedness in Default.
-----------------------
(a) Unless Section 1202 shall be applicable, upon the occurrence of a
Payment Default, no payment or distribution of any assets of the Company of any
kind or character, whether in cash, property or securities (other than Permitted
Junior Securities and payments made pursuant to Article Fourteen from monies or
U.S. Government Obligations previously deposited with the Debenture Trustee),
shall be made by or on behalf of the Company on account of principal of (or
premium, if any) or interest on the Exchange Debentures or on account of the
purchase or redemption or other acquisition of Exchange Debentures unless and
until such
113
Payment Default shall have been cured or waived in writing from the Agent Bank
or any other representative of a holder of Designated Senior Indebtedness or
shall have ceased to exist or such Designated Senior Indebtedness shall have
been discharged or paid in full in cash or cash equivalents, after which the
Company shall resume making any and all required payments in respect of the
Exchange Debentures, including any missed payments.
(b) Unless Section 1202 shall be applicable, upon (1) the occurrence
of a Non-Payment Default and (2) receipt by the Debenture Trustee of written
notice thereof from the Agent Bank or any other representative of a holder of
Designated Senior Indebtedness, then no payment or distribution of any assets of
the Company of any kind or character, whether in cash, property or securities
(other than Permitted Junior Securities and payments made pursuant to Article
Fourteen from monies or U.S. Government Obligations previously deposited with
the Debenture Trustee), shall be made by or on behalf of the Company on account
of any principal of (or premium, if any) or interest on the Exchange Debentures
or on account of the purchase, redemption or other acquisition of Exchange
Debentures for a period ("Payment Blockage Period") commencing on the date of
receipt by the Debenture Trustee of written notice from the Agent Bank or such
other representative and ending on the earliest of (i) 179 days thereafter
(provided that any Designated Senior Indebtedness as to which notice was given
shall not theretofore have been accelerated, in which case the provisions of
paragraph (a) shall apply), (ii) the date on which such Non-Payment Default is
cured, waived or ceases to exist or such Designated Senior Indebtedness is
discharged or paid in full in cash or cash equivalents or (iii) the date on
which such Payment Blockage Period shall have been terminated by written notice
to the Debenture Trustee or the Company from the Agent Bank or such other
representative initiating such Payment Blockage Period, after which the Company
will resume making any and all required payments in respect of the Exchange
Debentures, including any missed payments. In any event, not more than one
Payment Blockage Period may be commenced during any period of 360 consecutive
days. No event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the basis
for the commencement of a subsequent Payment Blockage Period, unless such
default has been cured or waived for a period of not less than 90 consecutive
days subsequent to the commencement of such initial Payment Blockage Period. In
no event will a Payment Blockage Period extend beyond 179 days.
In the event that, notwithstanding the foregoing and the provisions of
Section 1202, any payments or distribution shall be made to the Debenture
Trustee (and not paid over to the Holders of the Exchange Debentures) which is
prohibited by the foregoing provisions of this Section and the provisions of
Section 1202, then and in such event such payment shall be paid over and
delivered forthwith by the Debenture Trustee to the Agent Bank and any other
representative of holders of Designated Senior Indebtedness, as their interests
may appear, to the extent necessary to pay in full, in cash or cash equivalents
all Designated Senior Indebtedness.
114
SECTION 1204. Payment Permitted if No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this Exchange
Indenture or in any of the Exchange Debentures shall prevent the Company, at any
time except during the pendency of any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshalling of assets and liabilities of the Company referred to in
Section 1202 or under the conditions described in Section 1203, from making
payments at any time of principal of, and premium, if any, or interest on the
Exchange Debentures.
SECTION 1205. Subrogation to Rights of Holders of Senior Indebtedness
-------------------------------------------------------
and Senior Subordinated Indebtedness.
------------------------------------
Subject to the payment in full of all Senior Indebtedness and Senior
Subordinated Indebtedness, the Holders of the Exchange Debentures shall be
subrogated (equally and ratably with the holders of all Pari Passu Indebtedness
of the Company) to the rights of the holders of such Senior Indebtedness and
Senior Subordinated Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness and Senior
Subordinated Indebtedness. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness and Senior Subordinated
Indebtedness of any cash, property or securities to which the Holders of the
Exchange Debentures or the Debenture Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness and Senior Subordinated
Indebtedness by Holders of the Exchange Debentures or on their behalf or by the
Debenture Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness and Senior Subordinated Indebtedness, and the Holders of
the Exchange Debentures, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness and Senior Subordinated
Indebtedness; it being understood that the provisions of this Article are
intended solely for the purpose of determining the relative rights of the
Holders of the Exchange Debentures, on the one hand, and the holders of Senior
Indebtedness and Senior Subordinated Indebtedness, on the other hand.
SECTION 1206. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness and Senior Subordinated Indebtedness on the other
hand. Nothing contained in this Article or elsewhere in this Exchange Indenture
or in the Exchange Debentures is intended to or shall (a) impair, as between the
Company and the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of (and premium, if any) and
interest on the Exchange Debentures as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders and creditors of the Company other than their
rights in relation to holders of Senior Indebtedness
115
and Senior Subordinated Indebtedness; or (c) prevent the Debenture Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Exchange Indenture, subject to the rights, if any, under
this Article of the holders of Senior Indebtedness and Senior Subordinated
Indebtedness.
SECTION 1207. Debenture Trustee to Effectuate Subordination.
---------------------------------------------
Each Holder of an Exchange Debenture by its acceptance thereof
authorizes and directs the Debenture Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article and appoints the Debenture Trustee his attorney-in-fact for any and
all such purposes. If the Debenture Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 504 hereof at least 30 days before the expiration of the time to file
such claim, the Agent Bank (if the Senior Credit Agreement is still outstanding)
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of the Exchange Debentures.
SECTION 1208. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness or Senior Subordinated Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Exchange Indenture, regardless
of any knowledge thereof any such holder may have or be otherwise charged with.
(b) Without in any way limiting the generality of paragraph (a) of
this Section, the holders of Senior Indebtedness and Senior Subordinated
Indebtedness may, at any time and from time to time, without the consent of or
notice to the Debenture Trustee or the Holders, without incurring responsibility
to the Holders and without impairing or releasing the subordination provided in
this Article or the obligations hereunder of the Holders to the holders of
Senior Indebtedness or Senior Subordinated Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or Senior
Subordinated Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness or Senior Subordinated Indebtedness is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness or Senior
Subordinated Indebtedness; (3) release any Person liable in any manner for the
collection of Senior Indebtedness or Senior Subordinated Indebtedness; and (4)
exercise or refrain from exercising any rights against the Company and any other
Person.
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SECTION 1209. Distribution or Notice to Representative.
----------------------------------------
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness and Senior Subordinated 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 Twelve, the Debenture 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 Debenture 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 Senior
Subordinated Indebtedness and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other acts pertinent thereto or to this Article Twelve.
SECTION 1210. Notice to Debenture Trustee.
---------------------------
(a) The Company shall give prompt written notice to the Debenture
Trustee of any fact known to the Company which would prohibit the making of any
payment to or by the Debenture Trustee in respect of the Exchange Debentures.
Notwithstanding the provisions of this Article or any other provision of this
Exchange Indenture, the Debenture Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Debenture Trustee in respect of the Exchange Debentures, unless and until
the Debenture Trustee shall have received written notice thereof from the
Company, the Agent Bank or a holder of Senior Indebtedness or Senior
Subordinated Indebtedness or from any trustee, fiduciary or agent therefor; and,
prior to the receipt of any such written notice, the Debenture Trustee, subject
to TIA Sections 315(a) through 315(d), shall be entitled in all respects to
assume that no such facts exist; provided, however, that, if the Debenture
Trustee shall not have received the notice provided for in this Section at least
three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of, and premium, if any, or interest on any Exchange
Debenture), then, anything herein contained to the contrary notwithstanding, the
Debenture Trustee shall have full power and authority to receive such money and
to apply the same to the purpose for which such money was received and shall not
be affected by any notice to the contrary which may be received by it within
three Business Days prior to such date.
(b) Subject to TIA Sections 315(a) through 315(d), the Debenture
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing itself to be a holder of Senior Indebtedness and Senior
Subordinated Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior Indebtedness and
Senior Subordinated Indebtedness (or a trustee, fiduciary or agent therefor).
In the event that the Debenture Trustee determines in good faith that further
evidence is required with respect to the
117
right of any Person as a holder of Senior Indebtedness and Senior Subordinated
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Debenture Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Debenture Trustee as to the amount of Senior
Indebtedness and Senior Subordinated Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article and, if such evidence is not furnished, the Debenture Trustee may
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment.
SECTION 1211. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of the Company referred to
in this Article, the Debenture Trustee, subject to TIA Sections 315(a) through
315(d), and the Holders of the Exchange Debentures shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Debenture Trustee or to the
Holders of Exchange Debentures, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of 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; provided that such court, trustee,
receiver, custodian, assignee, agent or other Person has been apprised of, or
the order, decree or certificate makes reference to, the provisions of this
Article.
SECTION 1212. Rights of Debenture Trustee as a Holder of Senior
-------------------------------------------------
Indebtedness and Senior Subordinated Indebtedness; Preservation of Debenture
----------------------------------------------------------------------------
Trustee's Rights.
----------------
The Debenture Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Indebtedness
and Senior Subordinated Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness and Senior Subordinated
Indebtedness, and nothing in this Exchange Indenture shall deprive the Debenture
Trustee of any of its rights as such holder. Nothing in this Article shall
apply to claims of, or payments to, the Debenture Trustee under or pursuant to
Section 607.
SECTION 1213. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Debenture Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Debenture Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
118
Debenture Trustee; provided, however, that Section 1212 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as Paying
Agent.
SECTION 1214. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the
Debenture Trustee or the Holders of Exchange Debentures to take any action to
accelerate the maturity of the Exchange Debentures pursuant to Article Five or
to pursue any rights or remedies hereunder or under applicable law, except as
provided in Article Five.
SECTION 1215. Trust Moneys Not Subordinated.
-----------------------------
Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of U.S. Government Obligations held in trust under
Article Fourteen hereof by the Debenture Trustee (or other qualifying trustee)
and which were deposited in accordance with the terms of Article Fourteen hereof
and not in violation of Section 1203 hereof for the payment of principal of (and
premium, if any) and interest on the Exchange Debentures shall not be
subordinated to the prior payment of any Senior Indebtedness or Senior
Subordinated Indebtedness or subject to the restrictions set forth in this
Article Twelve, and none of the Holders shall be obligated to pay over any such
amount to the Company or any holder of Senior Indebtedness or Senior
Subordinated Indebtedness or any other creditor of the Company.
SECTION 1216. Debenture Trustee Not Fiduciary for Holders of Senior
-----------------------------------------------------
Indebtedness or Senior Subordinated Indebtedness.
------------------------------------------------
The Debenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness or Senior Subordinated Indebtedness and shall
not be liable to any such holders if the Debenture Trustee shall mistakenly, in
the absence of gross negligence or willful misconduct, pay over or distribute to
Holders of Exchange Debentures or to the Company or to any other person cash,
property or securities to which any holders of Senior Indebtedness or Senior
Subordinated Indebtedness shall be entitled by virtue of this Article or
otherwise. With respect to the holders of Senior Indebtedness and Senior
Subordinated Indebtedness, the Debenture Trustee undertakes to perform or to
observe only such of its covenants or obligations as are specifically set forth
in this Article and no implied covenants or obligations with respect to holders
of Senior Indebtedness shall be read into this Indenture against the Debenture
Trustee.
119
ARTICLE THIRTEEN
GUARANTEES
SECTION 1301. Debenture Guarantees.
--------------------
Each Subsidiary Debenture Guarantor hereby jointly and severally,
absolutely, unconditionally and irrevocably guarantees the Exchange Debentures
and obligations of the Company hereunder and thereunder, and guarantees to each
Holder of an Exchange Debenture authenticated and delivered by the Debenture
Trustee, and to the Debenture Trustee on behalf of such Holder, that: (a) the
principal of (and premium, if any) and interest on the Exchange Debentures will
be paid in full when due, whether at Stated Maturity, by acceleration or
otherwise (including, without limitation, the amount that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Law), together with interest on the overdue principal, if any, and interest on
any overdue interest, to the extent lawful, and all other obligations of the
Company to the Holders or the Debenture Trustee hereunder or thereunder will be
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Exchange
Debentures or of any such other obligations, the same will be 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, subject, however, in
the case of clauses (a) and (b) above, to the limitations set forth in Section
1305 hereof.
Each Subsidiary Debenture Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Exchange Debentures or this Exchange Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Exchange Debentures with respect to any provisions hereof or thereof, any
release of any other Subsidiary Debenture Guarantor, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
Each Subsidiary Debenture Guarantor hereby waives (to the extent
permitted by law) the benefits of diligence, presentment, demand for payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company or any
other Person, protest, notice and all demands whatsoever and covenants that the
Debenture Guarantee of such Subsidiary Debenture Guarantor shall not be
discharged as to any Exchange Debenture except by complete performance of the
obligations contained in such Exchange Debenture and such Debenture Guarantee.
Each Subsidiary Debenture Guarantors acknowledges that the Debenture Guarantee
is a guarantee of payment and not of collection. Each of the Subsidiary
Debenture Guarantors hereby agrees that, in the event of a default in payment of
principal (or premium, if any) or interest on such Exchange Debenture, whether
at its Stated Maturity, by acceleration, purchase or otherwise, legal
proceedings may be
120
instituted by the Debenture Trustee on behalf of, or by, the Holder of such
Exchange Debenture, subject to the terms and conditions set forth in this
Exchange Indenture, directly against each of the Subsidiary Debenture Guarantors
to enforce such Subsidiary Debenture Guarantor's Debenture Guarantee without
first proceeding against the Company or any other Subsidiary Debenture
Guarantor. Each Subsidiary Debenture Guarantor agrees that if, after the
occurrence and during the continuance of an Event of Default, the Debenture
Trustee or any of the Holders are prevented by applicable law from exercising
their respective rights to accelerate the maturity of the Exchange Debentures,
to collect interest on the Exchange Debentures, or to enforce or exercise any
other right or remedy with respect to the Exchange Debentures, such Subsidiary
Debenture Guarantor will pay to the Debenture Trustee for the account of the
Holders, upon demand therefor, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised by the
Debenture Trustee or any of the Holders.
If any Holder or the Debenture Trustee is required by any court or
otherwise to return to the Company or any Subsidiary Debenture Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
either the Company or any Subsidiary Debenture Guarantor, any amount paid by any
of them to the Debenture Trustee or such Holder, the Debenture Guarantee of each
of the Subsidiary Debenture Guarantors, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Subsidiary Debenture
Guarantor further agrees that, as between each Subsidiary Debenture Guarantor,
on the one hand, and the Holders and the Debenture Trustee, on the other hand,
(x) subject to this Article Thirteen, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Five hereof for the purposes of
the Debenture Guarantee of such Subsidiary Debenture Guarantor, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article Five hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Debenture Guarantor for the purpose of the Debenture
Guarantee of such Subsidiary Debenture Guarantor.
Each Debenture Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Exchange
Debentures are, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee on the Exchange
Debentures, whether as a "voidable preference", "fraudulent transfer" or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Exchange Debentures shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
121
SECTION 1302. Severability.
------------
In case any provision of any Debenture Guarantee 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 1303. Restricted Subsidiaries.
-----------------------
If the Company or any of its Restricted Subsidiaries acquires or forms
a Restricted Subsidiary organized in the United States, the Company will cause
any such Restricted Subsidiary (and any other Restricted Subsidiary as required
pursuant to Section 1015) to (i) execute and deliver to the Debenture Trustee a
supplemental indenture in accordance with the provisions of Article Nine of this
Exchange Indenture pursuant to which such Restricted Subsidiary shall guarantee
all of the obligations on the Exchange Debentures, whether for principal,
premium, if any, interest (including interest accruing after the filing of, or
which would have accrued but for the filing of, a petition by or against the
Company under Bankruptcy Law, whether or not such interest is allowed as a claim
after such filing in any proceeding under such law) and other amounts due in
connection therewith (including any fees, expenses and indemnities), on a senior
unsecured subordinated basis, and (ii) deliver to such Debenture Trustee an
Opinion of Counsel reasonably satisfactory to such Debenture Trustee to the
effect that such supplemental indenture has been duly executed and delivered by
such Restricted Subsidiary and is in compliance with the terms of this Exchange
Indenture. Upon the execution of any such supplemental indenture, the
obligations of the Subsidiary Debenture Guarantors and any such Restricted
Subsidiary under their respective Debenture Guarantees shall become joint and
several and each reference to the "Subsidiary Debenture Guarantor" in this
Indenture shall, subject to Section 1308, be deemed to refer to all Subsidiary
Debenture Guarantors, including such Restricted Subsidiary.
SECTION 1304. Subordination of Debenture Guarantees.
-------------------------------------
The Debenture Guarantee issued by any Subsidiary Debenture Guarantor
will be unsecured subordinated obligations of such Subsidiary Debenture
Guarantor, ranking pari passu with all other existing and future subordinated
indebtedness of such Subsidiary Debenture Guarantor, if any. The Indebtedness
evidenced by such Debenture Guarantee will be subordinated on the same basis to
Debenture Guarantor Senior Indebtedness and Debenture Guarantor Senior
Subordinated Indebtedness of such Subsidiary Debenture Guarantor as the Exchange
Debentures are subordinated to Senior Indebtedness and Senior Subordinated
Indebtedness under Article Twelve.
SECTION 1305. Limitation of Subsidiary Debenture Guarantors'
----------------------------------------------
Liability.
---------
Each Subsidiary Debenture Guarantor and by its acceptance hereof each
Holder confirms that it is the intention of all such parties that the guarantee
by each such Subsidiary
122
Debenture Guarantor pursuant to its Debenture Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law or the provisions of its local law relating to
fraudulent transfer or conveyance. To effectuate the foregoing intention, the
Holders and each such Subsidiary Debenture Guarantor hereby irrevocably agree
that the obligations of such Subsidiary Debenture Guarantor under its Debenture
Guarantee shall be limited to the maximum amount that will not, after giving
effect to all other contingent and fixed liabilities of such Subsidiary
Debenture Guarantor and after giving effect to any collections from or payments
made by or on behalf of any other Subsidiary Debenture Guarantor in respect of
the obligations of such other Subsidiary Debenture Guarantor under its Debenture
Guarantee or pursuant to Section 1305 hereof, result in the obligations of such
Subsidiary Debenture Guarantor under its Debenture Guarantee constituting such
fraudulent transfer or conveyance.
SECTION 1306. Contribution.
------------
In order to provide for just and equitable contribution among the
Subsidiary Debenture Guarantors, the Subsidiary Debenture Guarantors agree,
inter se, that in the event any payment or distribution is made by any
Subsidiary Debenture Guarantor (a "Funding Guarantor") under a Debenture
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Subsidiary Debenture Guarantors in a pro rata amount based on the Adjusted
Net Assets (as defined below) of each Subsidiary Debenture Guarantor (including
the Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Exchange Debentures or any other Subsidiary Debenture Guarantor's obligations
with respect to the Debenture Guarantee of such Subsidiary Debenture Guarantor.
"Adjusted Net Assets" of such Subsidiary Debenture Guarantor at any date shall
mean the lesser of (x) the amount by which the fair value of the property of
such Subsidiary Debenture Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date),
but excluding liabilities under the Debenture Guarantee of such Subsidiary
Debenture Guarantor at such date and (y) the amount by which the present fair
salable value of the assets of such Subsidiary Debenture Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Subsidiary Debenture Guarantor on its debts (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), excluding
debt in respect of the Debenture Guarantee of such Subsidiary Debenture
Guarantor, as they become absolute and matured.
SECTION 1307. Subrogation.
-----------
Each Subsidiary Debenture Guarantor shall be subrogated to all rights
of Holders against the Company in respect of any amounts paid by any Subsidiary
Debenture Guarantor pursuant to the provisions of Section 1301; provided,
however, that, if an Event of Default has occurred and is continuing, no
Subsidiary Debenture Guarantor shall be entitled to enforce or
123
receive any payments arising out of, or based upon, such right of subrogation
until all amounts then due and payable by the Company under this Exchange
Indenture or the Exchange Debentures shall have been paid in full.
SECTION 1308. Reinstatement.
-------------
Each Subsidiary Debenture Guarantor hereby agrees (and each Person who
becomes a Subsidiary Debenture Guarantor shall agree) that the Debenture
Guarantee provided for in Section 1301 shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part thereof, of
any obligations or interest thereon is rescinded or must otherwise be restored
by a Holder to the Company upon the bankruptcy or insolvency of the Company or
any Subsidiary Debenture Guarantor.
SECTION 1309. Release of a Subsidiary Debenture Guarantor.
-------------------------------------------
(a) If no Default exists or would exist under this Exchange Indenture,
the Debenture Guarantee issued by any Subsidiary Debenture Guarantor under this
Exchange Indenture shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer to any Person not an Affiliate of
the Company or a Restricted Subsidiary of all of the Company's Capital Stock in,
or all or substantially all the assets of, such Subsidiary Debenture Guarantor
(which sale, exchange or transfer is not prohibited by this Exchange Indenture).
(b) Concurrently with the discharge of the Exchange Debentures under
Section 401, the defeasance of the Exchange Debentures under Section 1402
hereof, or the covenant defeasance of the Exchange Debentures under Section 1403
hereof, the Subsidiary Debenture Guarantors shall be released from all their
obligations under their Debenture Guarantees under this Article Thirteen.
SECTION 1309. Benefits Acknowledged.
---------------------
Each Subsidiary Debenture Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Exchange Indenture and that its guarantee and waivers pursuant to its
Debenture Guarantee are knowingly made in contemplation of such benefits.
124
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
-------------------------------------------------
Defeasance.
----------
The Company may, at its option and at any time, effect defeasance of
the Exchange Debentures under Section 1402, or covenant defeasance of the
Exchange Debentures under Section 1403, in accordance with the terms of the
Exchange Debentures and in accordance with this Article.
SECTION 1402. Defeasance and Discharge.
------------------------
Upon the Company's exercise under Section 1401 of the option
applicable to this Section 1402, the Company and the Subsidiary Debenture
Guarantors shall be deemed to have been discharged from their obligations with
respect to the Outstanding Exchange Debentures and the Debenture Guarantees,
respectively, on the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company and the Subsidiary Debenture Guarantors shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Exchange
Debentures, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 1405 and the other Sections of this Exchange Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under the Exchange Debentures and this Exchange Indenture insofar as
the Exchange Debentures are concerned (and the Debenture Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Outstanding Exchange Debentures to
receive, solely from the trust fund described in Section 1404 and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any) and interest on such Exchange Debentures when such payments are due, (B)
the Company's obligations with respect to such Exchange Debentures under
Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Debenture Trustee hereunder, and the Company's obligations
in connection therewith and (D) this Article Fourteen. Subject to compliance
with this Article Fourteen, the Company may exercise its option under this
Section 1402 notwithstanding the prior exercise of its option under Section 1403
with respect to such Exchange Debentures.
SECTION 1403. Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 1401 of the option
applicable to this Section 1403, the Company and the Subsidiary Debenture
Guarantors shall be released from their obligations under Section 801, 802 and
Sections 1008 through 1019 with respect to the Outstanding Exchange Debentures
on and after the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "covenant defeasance"), and such Exchange Debentures shall
thereafter
125
be deemed not to be "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Exchange Debentures, the
Company and any Subsidiary Debenture Guarantor, as applicable, may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 501(3) or 501(4) or otherwise, as the case may be, but,
except as specified above, the remainder of this Exchange Indenture and such
Exchange Debentures shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section
1402 or Section 1403 to the Outstanding Exchange Debentures:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Debenture Trustee (or another trustee satisfying the
requirements of Section 608 who shall agree to comply with the provisions
of this Article Fourteen applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Exchange
Debentures, (A) an amount in cash, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment of principal (including any premium) and
interest, if any, on such Exchange Debentures, money in an amount, or (C) a
combination thereof, in each case in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Debenture Trustee, to pay and discharge, and which shall be applied by the
Debenture Trustee (or other qualifying trustee) to pay and discharge, the
principal of (and premium, if any, on) and interest on such Outstanding
Exchange Debentures on the Stated Maturity of such principal (and premium,
if any) or installment of interest; provided that the Debenture Trustee (or
such qualifying trustee) shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to said
payments with respect to such Exchange Debentures.
(2) No Default or Event of Default with respect to such Exchange
Debentures shall have occurred and be continuing on the date of such
deposit or, insofar as paragraphs (8) and (9) of Section 501 are concerned,
at any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
126
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any material agreement to which the Company or any Subsidiary Debenture
Guarantor is a party or by which it is bound.
(4) In the case of an election under Section 1402, the Company shall
have delivered to the Debenture Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the Issuance Date, there
has been a change in the applicable federal income tax law or
interpretation of such federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the Outstanding Exchange Debentures will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred.
(5) In the case of an election under Section 1403, the Company shall
have delivered to the Debenture Trustee an Opinion of Counsel to the effect
that the Holders of such Exchange Debentures will not recognize income,
gain or loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(6) In the case of defeasance under Section 1402 or covenant
defeasance under Section 1403, the Company shall have delivered to the
Debenture Trustee an Opinion of Counsel to the effect that (A) the trust
funds will not be subject to any rights of holders of Senior Indebtedness
or Senior Subordinated Indebtedness under Article Twelve hereof, and (B)
after the 91st day following the deposit or after the date such opinion is
delivered, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
(7) The Company shall have delivered to the Debenture Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the holders of the Exchange Debentures or any
Debenture Guarantee over the other creditors of either the Company or any
Subsidiary Debenture Guarantor with the intent of hindering, delaying or
defrauding creditors of either the Company or any Subsidiary Debenture
Guarantor.
(8) The Company shall have delivered to the Debenture Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 1402 or the covenant defeasance under Section 1403, as the case may
be, have been complied with.
127
SECTION 1405. Deposited Money and Government Obligations to Be Held
-----------------------------------------------------
in Trust; Other Miscellaneous Provisions.
----------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Debenture Trustee (or other qualifying trustee, collectively for
purposes of this Section 1405, the "Debenture Trustee") pursuant to Sections
1404 and 1406 in respect of such Outstanding Exchange Debentures shall be held
in trust and applied by the Debenture Trustee, in accordance with the provisions
of such Exchange Debentures and this Exchange Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Debenture Trustee may determine, to the Holders of such
Exchange Debentures of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law. Money and U.S.
Government Obligations so held in trust are not subject to Article Twelve.
The Company shall pay and indemnify the Debenture Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of such Outstanding Exchange
Debentures.
Anything in this Article Fourteen to the contrary notwithstanding, the
Debenture Trustee shall deliver or pay to the Company from time to time upon
Company Request any money or U.S. Government Obligations (or other property and
any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Debenture Trustee,
are in excess of the amount thereof which would then be required to be deposited
to effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement.
-------------
If the Debenture Trustee or any Paying Agent is unable to apply any
money in accordance with Section 1405 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Exchange Indenture
and such Exchange Debentures shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be, until
such time as the Debenture Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 1405; provided, however, that if the
Company makes any payment of principal of (or premium, if any) or interest on
any such Exchange Debenture following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Exchange
Debentures to receive such payment from the money held by the Debenture Trustee
or Paying Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Indenture to be duly executed as of the day and year first above written.
TUESDAY MORNING CORPORATION
By:_________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer and Secretary
TMI HOLDINGS, INC.
By:_________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Secretary
and Treasurer
TUESDAY MORNING, INC.
By:_________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer and Secretary
FRIDAY MORNING, INC.
By:________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Operating
Officer
TMIL CORPORATION
By:_________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Secretary
and Treasurer
United States Trust Company of New York,
as Debenture Trustee
By:_________________________________________
Name:
Title:
Exhibit A
---------
[FACE OF EXCHANGE DEBENTURE]
TUESDAY MORNING CORPORATION
13 1/4% [Series B]/1/ Subordinated Exchange Debentures due 2009
No.__________
CUSIP No.__________________________________________________________________
$ __________
TUESDAY MORNING CORPORATION, a Delaware corporation (the "Company",
-------
which term includes any successor Person under the Exchange Indenture
hereinafter referred to), for value received, promises to pay to ___________, or
its registered assigns, the principal sum of ___________________________________
Dollars ($___________), on December 15, 2009.
[Interest Rate: 13 1/4% per annum.]/1/
Interest Payment Dates: March 15, June 15, September 15 and December
15 of each year commencing on the first such
date after the Exchange Date.
Regular Record Dates: March 1, June 1, September 1 and December 1
of each year.
Reference is hereby made to the further provisions of this Exchange
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
___________________
/1/ Include only for New Exchange Debentures.
A-2
IN WITNESS WHEREOF, the Company has caused this Exchange Debenture to
be signed manually or by facsimile by its duly authorized officers.
Date:________________ TUESDAY MORNING CORPORATION
By: _______________________
Name:
Title:
A-3
(Form of Debenture Trustee's Certificate of Authentication)
This is one of the 13 1/4% [Series B]/2/ Subordinated Exchange Debentures due
2009 referred to in the within-mentioned Exchange Indenture.
United States Trust Company of New York,
as Debenture Trustee
Dated: __________ By: _________________________
Authorized Signatory
___________________
/2/ Include only for New Exchange Debenture.
A-4
[REVERSE SIDE OF EXCHANGE DEBENTURE]
TUESDAY MORNING CORPORATION
13 1/4% [Series B]/1/ Subordinated Exchange Debentures due 2009
1. Principal and Interest; Subordination.
-------------------------------------
The Company will pay the principal of this Exchange Debenture on
December 15, 2009.
The Company promises to pay interest on the principal amount of this
Exchange Debenture on each Interest Payment Date, as set forth below, at the
rate of 13 1/4% per annum [(subject to adjustment as provided below)]/2/ [except
that interest accrued on this Exchange Debenture pursuant to the fourth
paragraph of this Section 1 for periods prior to the applicable Exchange Date
(as such term is defined in the Registration Rights Agreement referred to below)
will accrue at the rate or rates borne by the Exchange Debentures from time to
time during such periods]./1/
Interest will be payable quarterly (to the Holders of record of the
Exchange Debentures (or any Predecessor Exchange Debentures) at the close of
business on the March 1, June 1, September 1 or December 1 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing on the
first such date after the Exchange Date.
[The Holder of this Exchange Debenture is entitled to the benefits of
the Registration Rights Agreement, dated December 29, 1997, among the Company,
the Subsidiary Debenture Guarantors and the Initial Purchaser named therein (the
"Registration Rights Agreement"). In the event that either (a) the Exchange
Offer Registration Statement (as such term is defined in the Registration Rights
Agreement) is not filed with the Securities and Exchange Commission on or prior
to the 45th calendar day following the date of original issue of the Exchange
Debentures, (b) the Exchange Offer Registration Statement (as such term is
defined in the Registration Rights Agreement) has not been declared effective on
or prior to the 120th calendar day following the date of original issue of the
Exchange Debentures or (c) the Exchange Offer is not consummated or a Shelf
Registration Statement (as such terms are defined in the Registration Rights
Agreement) is not declared effective on or prior to the 150th calendar day
following the Issuance Date, the interest rate borne by this Exchange Debenture
shall be increased by one-quarter of one percent per annum following such 45-day
period in the case of (a) above, following such 120-day period in the case of
(b) above or following such 150-day period in the case of (c) above, which rate
will be increased by an additional one-quarter of one
_____________________
/1/ Include only for New Exchange Debenture.
/2/ Include only for Initial Exchange Debenture.
A-5
percent per annum for each 90-day period that any additional interest continues
to accrue; provided that the aggregate increase in such annual interest rate
shall in no event exceed one percent. Upon (x) the filing of the Exchange Offer
Registration Statement after the 45-day period described in clause (a) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
120-day period described in clause (b) above or (z) the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 150-day period described in clause (c) above, the
interest rate borne by this Exchange Debenture from the date of such filing,
effectiveness or the consummation, as the case may be, will be reduced to the
interest rate set forth above; provided, however, that, if after any such
reduction in interest rate, a different event specified in clause (a), (b) or
(c) above occurs, the interest rate may again be increased pursuant to the
foregoing provisions.]/1/
Interest on this Exchange Debenture will accrue from the most recent
date to which interest has been paid [on this Exchange Debenture or the Exchange
Debenture surrendered in exchange herefor]/2/ or, if no interest has been paid,
from the Exchange Date; provided that, if there is no existing default in the
payment of interest and if this Exchange Debenture is authenticated between a
Regular Record Date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such Interest Payment Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum equal to the rate of interest applicable to the Exchange
Debentures.
The indebtedness evidenced by the Exchange Debentures is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness and
Senior Subordinated Indebtedness, and this Exchange Debenture is issued subject
to such provisions. Each Holder of this Exchange Debenture, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Debenture Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Debenture Trustee its attorney-in-fact for such
purpose.
2. Method of Payment.
-----------------
The Company will pay interest (except defaulted interest) on the
principal amount of the Exchange Debentures on each March 15, June 15, September
15 and December 15 to the Persons who are Holders (as reflected in the Exchange
Debenture Register at the close of business on the March 1, June 1, September 1
and December 1 immediately preceding the Interest Payment Date), in each case,
even if the Exchange Debenture is cancelled on
___________________
/1/ Include only for Initial Exchange Debenture.
/2/ Include only for New Exchange Debenture
A-6
registration of transfer or registration of exchange after such Regular Record
Date; provided that, with respect to the payment of principal, the Company will
make payment to the Holder that surrenders this Exchange Debenture to any Paying
Agent on or after December 15, 2009.
On or prior to December 15, 2002, interest is payable in additional
Exchange Debentures having an aggregate principal amount equal to the amount of
such interest, or, at the option of the Company, in cash. Thereafter, all
interest will be payable only in cash.
The Company will pay principal (premium, if any) and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal (premium, if
any) and interest by its check payable in such money. The Company may pay
interest on the Exchange Debentures either (a) by mailing a check (or, if
Exchange Debentures have been issued as payment of interest in lieu of monies,
by such Exchange Debentures) for such interest to a Holder's registered address
(as reflected in the Exchange Debenture Register) or (b) by wire transfer to an
account located in the United States maintained by the payee. If a payment date
is a date other than a Business Day at a Place of Payment, payment may be made
at that place on the next succeeding day that is a Business Day and no interest
shall accrue for the intervening period.
3. Paying Agent and Registrar.
--------------------------
Initially, the Debenture Trustee will act as Paying Agent and
Debenture Registrar. The Company may change any Paying Agent or Debenture
Registrar upon written notice thereto. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Debenture Registrar or co-
registrar.
4. Exchange Indenture; Limitations.
-------------------------------
The Exchange Debentures may be issued under an Exchange Indenture
dated as of December 29, 1997 (the "Exchange Indenture"), among the Company, the
Subsidiary Debenture Guarantors and United States Trust Company of New York, as
trustee (the "Debenture Trustee"). Capitalized terms herein are used as defined
in the Exchange Indenture unless otherwise indicated. The terms of the Exchange
Debentures include those stated in the Exchange Indenture and those made part of
the Exchange Indenture by reference to the Trust Indenture Act. The Exchange
Debentures are subject to all such terms, and Holders are referred to the
Exchange Indenture and the Trust Indenture Act for a statement of all such
terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Exchange Debenture and the terms of the
Exchange Indenture, the terms of the Exchange Indenture shall control.
The Exchange Indenture limits the aggregate principal amount of the
Exchange Debentures to $50,000,000.
A-7
5. Redemption.
----------
Optional Redemption. The Exchange Debentures may be redeemed at the
-------------------
option of the Company, in whole or in part, at any time and from time to time on
or after December 15, 2002, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date), if redeemed during the 12-month period
beginning December 15 of each of the years set forth below:
Redemption
Year Price
---- ----------
2002............................... 109.938%
2003............................... 106.625%
2004............................... 103.313%
2005 and thereafter................ 100.000%
In addition to the optional redemption of the Exchange Debentures in
accordance with the provisions of the preceding paragraph, at any time prior to
December 15, 2001, the Company may redeem for cash all, but not less than all,
of the Outstanding Exchange Debentures originally issued under the Exchange
Indenture within 20 days of a Public Equity Offering with the net proceeds of
such offering at a redemption price equal to 113.25% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of holders of record on relevant record dates to
receive interest due on an Interest Payment Date that is on or prior to the
Redemption Date).
If less than all the Notes are to be redeemed pursuant to the first
paragraph, the Trustee shall select the Notes or portions thereof to be redeemed
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes being redeemed are listed, or if the Notes
are not so listed, on a pro rata basis, by lot or by such other method the
Trustee shall deem fair and appropriate; provided that no such partial
redemption shall reduce the portion of the principal amount of a Note not
redeemed to less than $1,000.
Notice of a redemption will be mailed, first-class postage prepaid, at
least 30 days but not more than 60 days before the Redemption Date to each
Holder to be redeemed at such Holder's last address as it appears in the
Exchange Debenture Register. Exchange Debentures in original denominations
larger than $1,000 may be redeemed in part in integral multiples of $1,000. On
and after the Redemption Date, interest ceases to accrue on Exchange Debentures
or portions of Exchange Debentures called for redemption, unless the Company
defaults in the payment of the Redemption Price.
▇-▇
▇. ▇▇▇▇▇▇▇▇▇▇ upon a Change in Control and Asset Sales.
---------------------------------------------------
Upon the occurrence of (a) a Change in Control, the Holders of the
Exchange Debentures will have the right to require that the Company purchase
such Holders outstanding Exchange Debentures, in whole or in part, at a price of
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase and (b) Asset Sales, the Company may be obligated to
make offers to purchase Exchange Debentures with a portion of the Net Cash
Proceeds of such Asset Sales at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase.
7. Denominations; Transfer; Exchange.
---------------------------------
The Exchange Debentures are in registered form without coupons, in
denominations of $1,000 and multiples of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Exchange Debentures in accordance with the
Exchange Indenture. The Exchange Debenture Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Exchange
Indenture. The Exchange Debenture Registrar need not register the transfer or
exchange of any Exchange Debentures selected for redemption (except the
unredeemed portion of any Exchange Debenture being redeemed in part).
8. Persons Deemed Owners.
---------------------
A Holder may be treated as the owner of an Exchange Debenture for all
purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal (premium, if any) or interest
remains unclaimed for two years, the Debenture Trustee and the Paying Agent will
pay the money back to the Company at its request. After that, Holders entitled
to the money must look to the Company for payment, unless an abandoned property
law designates another Person, and all liability of the Debenture Trustee and
such Paying Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company irrevocably deposits, or causes to be deposited, with
the Debenture Trustee money or U.S. Government Obligations sufficient to pay the
then outstanding principal of (premium, if any) and accrued interest on the
Exchange Debentures (a) redemption or maturity, the Company will be discharged
from the Exchange Indenture and the Exchange Debentures, except in certain
circumstances for certain sections thereof, and (b) to the Stated Maturity, the
Company will be discharged from certain covenants set forth in the Exchange
Indenture.
A-9
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Exchange Indenture or the Exchange
Debentures may be amended or supplemented with the consent of the Holders of at
least a majority in aggregate principal amount of the Exchange Debentures then
outstanding, and any existing default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Exchange Debentures then outstanding. Without notice to or the
consent of any Holder, the parties thereto may amend or supplement the Exchange
Indenture or the Exchange Debentures to, among other things, cure any ambiguity,
defect or inconsistency and make any change that does not adversely affect the
rights of any Holder.
12. Restrictive Covenants.
---------------------
The Exchange Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i) Indebtedness;
(ii) Restricted Payments; (iii) issuances and sales of Capital Stock of
Restricted Subsidiaries; (iv) transactions with Affiliates; (v) Liens; (vi)
purchase of Exchange Debentures upon a Change of Control; (vii) disposition of
proceeds of Asset Sales; (viii) guarantees of Indebtedness by Restricted
Subsidiaries; (ix) dividend and other payment restrictions affecting Restricted
Subsidiaries; (x) merger and certain transfers of assets; and (xi) limitation on
Unrestricted Subsidiaries. Within 120 days after the end of each fiscal year
and within 45 days after each fiscal quarter, the Company must report to the
Debenture Trustee on compliance with such limitations.
13. Successor Persons.
-----------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Exchange Debentures and the Exchange Indenture, the
predecessor person will be released from those obligations.
14. Remedies for Events of Default.
------------------------------
If an Event of Default, as defined in the Exchange Indenture, occurs
and is continuing, the Debenture Trustee or the Holders of not less than 25% in
aggregate principal amount of the Exchange Debentures then outstanding may
declare all the Exchange Debentures to be immediately due and payable; provided
that so long as the Senior Credit Agreement shall be in full force and effect,
if an Event of Default shall have occurred and be continuing (other than with
respect to certain bankruptcy or insolvency defaults with respect to the
Company), any such acceleration shall not be effective until the earlier to
occur of (x) five Business Days following delivery of a written notice of such
acceleration of the Exchange Debentures to the Agent Bank under the Senior
Credit Agreement and (y) the acceleration of any indebtedness under the Senior
Credit Agreement. If a bankruptcy or insolvency default with respect to the
Company or any of its Significant Subsidiaries occurs and is continuing, the
Exchange Debentures automatically become immediately due and payable. Holders
may not enforce the Exchange Indenture or the Exchange Debentures except as
provided in the Exchange Indenture. The Debenture Trustee may require indemnity
satisfactory to it before it enforces the Exchange Indenture or the Exchange
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Debentures. Subject to certain limitations, Holders of at least a majority in
aggregate principal amount of the Exchange Debentures then outstanding may
direct the Debenture Trustee in its exercise of any trust or power.
15. Debenture Guarantees.
--------------------
The Company's obligations under the Exchange Debentures are fully,
irrevocably and unconditionally guaranteed on a subordinated unsecured basis, to
the extent set forth in the Exchange Indenture, by each of the Subsidiary
Debenture Guarantors.
16. Debenture Trustee Dealings with Company.
---------------------------------------
The Debenture Trustee under the Exchange Indenture, in its individual
or any other capacity, may become the owner or pledgee of Exchange Debentures
and may make loans to, accept deposits from, perform services for, and otherwise
deal with, the Company and its Affiliates as if it were not the Debenture
Trustee.
17. Authentication.
--------------
This Exchange Debenture shall not be valid until the Debenture Trustee
signs the certificate of authentication on the other side of this Exchange
Debenture.
18. 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).
The Company will furnish to any Holder upon written request and
without charge a copy of the Exchange Indenture. Requests may be made to
Tuesday Morning Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer.
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[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
----------------------------------
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)
________________________________________________________________________________
the within Exchange Debenture and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
attorney to transfer such Exchange Debenture on the books of the Company with
full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE PHYSICAL
CERTIFICATES]
In connection with any transfer of this Exchange Debenture occurring
prior to the date which is the earlier of the date of an effective Registration
Statement or July 9, 1999, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
---------
[_] (a) this Exchange Debenture is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
--
[_] (b) this Exchange Debenture is being transferred other than in accordance
with (a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Exchange Debenture and the
Exchange Indenture.
If none of the foregoing boxes is checked, the Debenture Trustee or other
Debenture Registrar shall not be obligated to register this Exchange Debenture
in the name of any Person other than
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the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 311 and 312 of the Exchange
Indenture shall have been satisfied.
Date:_________________________
_________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:_________________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Exchange Debenture Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Exchange Debenture Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.
The undersigned represents and warrants that it is purchasing this
Exchange Debenture for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated:_______________________ ________________________________________
NOTICE: To be executed by an executive
officer
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Exchange Debenture purchased by the Company
pursuant to Section 1013 or Section 1014 of the Exchange Indenture, check the
Box: [_].
If you wish to have a portion of this Exchange Debenture purchased by
the Company pursuant to Section 1013 or Section 1014 of the Exchange Indenture,
state the amount (in original principal amount) below:
$_____________________.
Date:________________________
Your Signature:______________
(Sign exactly as your name appears on the other side of this Exchange Debenture)
Signature Guarantee:_______________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Exchange Debenture Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Exchange Debenture Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.
SCHEDULE A
Indebtedness of the Company or any Restricted
Subsidiary Outstanding on the Issuance Date
---------------------------------------------
Indebtedness under Pacific Atlantic Systems Leasing, Inc. Capital Lease
outstanding as of the Closing Date (monthly payment: $20,928.65).
Real Estate mortgages with Compass Bank outstanding as of the Closing Date.