EXHIBIT 10.1
▇▇▇▇▇ SYSTEMS, INC.
$100,000,000
11 3/8% SENIOR SUBORDINATED NOTES DUE 2003
_______________________
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF SEPTEMBER 30, 1998
_______________________
THE BANK OF NEW YORK,
TRUSTEE
______________________________________________________________
FIRST SUPPLEMENTAL INDENTURE, dated as of September 30, 1998 (the "FIRST
SUPPLEMENTAL INDENTURE") between ▇▇▇▇▇ SYSTEMS INC., a Delaware corporation (the
"COMPANY"), having its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "TRUSTEE"), for the Company's 11 3/8% Senior Subordinated Notes Due
2003 (the "NOTES").
The Company has heretofore executed and delivered to the Trustee an
Indenture, dated as of January 24, 1996 (the "INDENTURE"), under which the Notes
in the aggregate principal amount of $100,000,000 were issued and are
outstanding.
In accordance with Sections 9.02 and 9.05 of the Indenture, the Company
has obtained the written consents (the "Consents") of the Holders of a
majority in principal amount of the Notes as of July 29, 1998, the record
date for the Company's solicitation of Consents (the "Requisite Consents"),
to certain amendments to such Indenture. The Requisite Consents have been
delivered to the Trustee and the Company in accordance with Sections 1.05 and
9.02 of the Indenture. The Company is authorized to enter into this First
Supplemental Indenture by a Board Resolution and simultaneously herewith the
Trustee has received an Opinion of Counsel and an Officers' Certificate in
accordance with Section 9.07 of the Indenture stating that this First
Supplemental Indenture is authorized and permitted by the Indenture and that
all conditions precedent under the Indenture to the execution of this First
Supplemental Indenture have been satisfied.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH, that for and
in consideration of the premises and the purchase of the Notes by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE I
SECTION 101. SECTION 1.01 OF THE INDENTURE IS AMENDED BY ADDING THE
FOLLOWING DEFINITIONS IN ALPHABETICAL ORDER:
A. "DEMAND NOTE" means that certain promissory note of ▇▇▇▇▇▇ made
payable to the Company in connection with the Spin-Off.
B. "▇▇▇▇▇▇ CLASS B COMMON STOCK" means the Class B Common Stock of
▇▇▇▇▇▇.
C. "▇▇▇▇▇▇ CLASS C COMMON STOCK" means the Class C Common Stock of
▇▇▇▇▇▇.
D. "▇▇▇▇▇▇ COMMON STOCK" means the common stock, par value $0.01 per
share, of ▇▇▇▇▇▇.
E. "▇▇▇▇▇▇ COMPANIES" means ▇▇▇▇▇▇ and each of its Subsidiaries.
1
F. "SPIN-OFF" means the distribution by the Company to Pinnacle of
(i) all of the outstanding shares of ▇▇▇▇▇▇ Common Stock and (ii) all the
outstanding shares of ▇▇▇▇▇▇ Class B Common Stock and ▇▇▇▇▇▇ Class C Common
Stock, pursuant to that certain Distribution Agreement to be entered into
among Pinnacle, the Company and ▇▇▇▇▇▇.
G. "SPIN-OFF TRANSACTIONS" means the Spin-Off and the other
transactions contemplated by and payments made pursuant to the Distribution
Agreement to be entered into among Pinnacle, the Company and ▇▇▇▇▇▇ and the
Tax Sharing Agreement to be entered into among Pinnacle, the Company and
▇▇▇▇▇▇ and the Preferred Stock Exchange Agreement to be entered into among
Pinnacle, ▇▇▇▇▇▇ and the holders of the Series A, Series B and Series C
Preferred Stock of Pinnacle, in each case, in connection with the Spin-Off.
SECTION 102. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "APPROVE PINNACLE PREFERRED STOCKHOLDER" THEREFROM IN ITS ENTIRETY
AND REPLACING SUCH DEFINITION WITH THE FOLLOWING:
"APPROVED PINNACLE PREFERRED STOCKHOLDERS" means Vestar
Equity Partners, L.P., Chase Equity Associates, A California Limited
Partnership ("Chase"), Harbourvest Partners IV Direct Fund, L.P.
(formerly known as ▇▇▇▇▇▇▇ Venture Partners IV Direct Fund L.P.) and
any Person who controls or is controlled by or is under common control
with any of them including, in the case of Chase, The Chase Manhattan
Corporation, or any of their respective Subsidiaries.
SECTION 103. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "ASSET SALE" THEREFROM IN ITS ENTIRETY AND REPLACING SUCH
DEFINITION WITH THE FOLLOWING:
"ASSET SALE" means, with respect to any Person, the sale,
lease, conveyance or other disposition, that does not constitute a
Restricted Payment or an Investment, by such Person of any of its
assets (including, without limitation, by way of a sale and leaseback
and including the issuance, sale or other transfer of any Equity
Interests in any Subsidiary of such Person) other than to the Company
(including the receipt of proceeds of insurance paid on account of the
loss of or damage to any asset and awards of compensation for any
asset taken by condemnation, eminent domain or similar proceeding, and
including the receipt of proceeds of business interruption insurance),
in each case, in one or a series of related transactions; PROVIDED,
that notwithstanding the foregoing, the term "Asset Sale" shall not
include: (a) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of the Company, as
permitted pursuant to Section 5.01 hereof, (b) the sale or lease of
equipment, inventory, accounts receivable or other assets in the
ordinary course of business consistent with past practice, (c) a
transfer of assets by the Company to a Wholly Owned Subsidiary of the
Company or by a Wholly Owned Subsidiary of the Company to the Company
or to another Wholly Owned Subsidiary of the Company, (d) an issuance
of Equity Interests by a Wholly Owned Subsidiary of the Company to the
Company or to another Wholly Owned Subsidiary of the Company, PROVIDED
that
2
the consideration paid by the Company or such Wholly Owned
Subsidiary for such Equity Interests shall be deemed to be an
Investment, or (e) sale or other disposition of cash or Cash
Equivalents.
SECTION 104. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "CONSOLIDATED EBITDA" THEREFROM IN ITS ENTIRETY AND REPLACING SUCH
DEFINITION WITH THE FOLLOWING:
"CONSOLIDATED EBITDA" means, with respect to any Person for
any period, the sum of, without duplication, (i) the Consolidated Net
Income of such Person and its Subsidiaries for such period, plus
(ii) the Fixed Charges for such period, plus (iii) amortization of
deferred financing charges for such period, plus (iv) provision for
taxes based on income or profits for such period (to the extent such
income or profits were included in computing Consolidated Net Income
for such period), plus (v) consolidated depreciation, amortization and
other noncash charges of such Person and its Subsidiaries required to
be reflected as expenses on the books and records of such Person,
minus (vi) cash payments with respect to any nonrecurring, noncash
charges previously added back pursuant to clause (v), plus (vii) to
the extent deducted in determining Consolidated Net Income for such
period, any extraordinary or nonrecurring loss or expense incurred in
connection with the Spin-Off Transactions, and excluding (viii) the
impact of foreign currency translations. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of,
and the depreciation and amortization and other noncash charges of, a
Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated EBITDA only to the extent (and in the same
proportion) that the Net Income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination
to be dividended to such Person by such Subsidiary without prior
approval (unless such approval has been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments or
decrees applicable to that Subsidiary or its stockholders.
SECTION 105. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "CONSOLIDATED NET INCOME" THEREFROM IN ITS ENTIRETY AND REPLACING
SUCH DEFINITION WITH THE FOLLOWING:
"CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; PROVIDED that (i) the Net Income (but not loss)
of any Person that is not a Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid in cash to the referent
Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of
any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of
that Net Income is not at the date of determination permitted without
any prior governmental approval (unless such approval has been
obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment or decree applicable to
that Subsidiary or its
3
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition shall be excluded, and (iv) the cumulative effect of a change
in accounting principles shall be excluded.
SECTION 106. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "EXEMPT AFFILIATE TRANSACTIONS" THEREFROM IN ITS ENTIRETY AND
REPLACING SUCH DEFINITION WITH THE FOLLOWING:
"EXEMPT AFFILIATE TRANSACTIONS" means (a) transactions
between or among the Company and/or its Wholly Owned Subsidiaries,
(b) advances to officers of the Company or any Subsidiary of the
Company in the ordinary course of business to provide for the payment
of reasonable expenses incurred by such persons in the performance of
their responsibilities to the Company or such Subsidiary or in
connection with any relocation, (c) fees and compensation paid to and
indemnity provided on behalf of directors, officers or employees of
the Company or any Subsidiary of the Company in the ordinary course of
business, (d) any employment agreement that is in effect on the date
of this Indenture in the ordinary course of business and any such
agreement entered into by the Company or a Subsidiary after the date
of this Indenture in the ordinary course of business of the Company or
such Subsidiary, (e) any Restricted Payment that is not prohibited by
Section 4.11 hereof, (f) payments by the Company to Pinnacle in
respect of corporate expenses of Pinnacle and operating expenses of
Pinnacle attributable to its ownership of Capital Stock of the Company
and to pay taxes allocable to the net income of the Company and its
Subsidiaries, (g) payments or transactions pursuant to the Termination
Agreement dated as of December 31, 1995 by and among Pinnacle, the
Company and Lafarick, Inc. (formerly known as Raebarn Corporation), as
in effect on the date of this Indenture, (h) payments or transactions
pursuant to the Consulting Agreement dated as of December 31, 1995 by
and among Pinnacle, the Company and Mammoth Capital Inc., as in effect
on the date of this Indenture, (i) payments or transactions pursuant
to the Consulting Agreement dated as of the date of the consummation
of this Offering among Pinnacle, the Company and Vestar Capital
Partners, as in effect on the date of this Indenture, (j) payments or
transactions pursuant to Section 6.2 of the Recapitalization Agreement
dated as of September 28, 1995 by and among Pinnacle, the Company and
the selling stockholders named therein, as in effect on the date of
this Indenture, (k) payments made pursuant to the Non-Competition,
Working Capital Guarantee and Security Agreement dated April 15, 1992
by and among the Company, ▇▇▇▇▇ and certain of the former owners of
▇▇▇▇▇, as in effect on the date of this Indenture, (l) payments made
pursuant to that certain Lease, dated December 24, 1986, by and
between White Storage & Retrieval Systems, Inc. and Boright Realty (a
general partnership affiliated with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇), as in effect on
the date of this Indenture and (m) transactions included in the
Spin-Off Transactions.
SECTION 107. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "FIXED CHARGE COVERAGE RATIO" THEREFROM IN ITS ENTIRETY AND
REPLACING SUCH DEFINITION WITH THE FOLLOWING:
4
"FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person for any period, the ratio of the Consolidated EBITDA of such
Person and its Subsidiaries for such period to the Fixed Charges of
such Person and its Subsidiaries for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, Guarantees or
repays or redeems any Indebtedness (other than revolving credit
borrowings) or issues preferred stock subsequent to the commencement
of the four-quarter reference period for which the Fixed Charge
Coverage Ratio is being calculated but on or prior to the date on
which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment or redemption of Indebtedness, or
such issuance or redemption of preferred stock, as if the same had
occurred at the beginning of the applicable four-quarter reference
period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period, and (ii) if the
Spin-Off Transactions occur during the four-quarter reference period
or subsequent to such reference period and on or prior to the
Calculation Date, the Spin-Off Transactions shall be deemed to have
occurred on the first day of the four-quarter reference period, and
Consolidated EBITDA and Fixed Charges attributable to any of the
▇▇▇▇▇▇ Companies shall be excluded, and (iii) the Consolidated EBITDA
attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iv) the Fixed Charges
attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations
of the referent Person or any of its Subsidiaries following the
Calculation Date.
SECTION 108. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "MFA" THEREFROM IN ITS ENTIRETY AND REPLACING SUCH DEFINITION WITH
THE FOLLOWING:
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Software International, Inc., a
Delaware corporation.
SECTION 109. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "NET INCOME" THEREFROM IN ITS ENTIRETY AND REPLACING SUCH
DEFINITION WITH THE FOLLOWING:
"NET INCOME" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and
before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with any
related provision for taxes on such gain (but not for such loss),
realized in connection with (a) any Asset Sale (including, without
limitation,
5
dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (ii) any extraordinary or nonrecurring gain (but not
loss, except to the extent such loss is a noncash loss), together with
any related provision for taxes on such extraordinary or nonrecurring
gain (but not for such loss).
SECTION 110. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "PERMITTED INVESTMENTS" THEREFROM IN ITS ENTIRETY AND REPLACING
SUCH DEFINITION WITH THE FOLLOWING:
"PERMITTED INVESTMENTS" means (a) any Investments in the
Company; (b) any Investments in Cash Equivalents; (c) Investments made
as a result of the receipt of noncash consideration from an Asset Sale
that was made pursuant to and in compliance with Section 4.08 hereof;
(d) the Demand Note; (e) Investments outstanding as of the date of
this Indenture; and (f) Investments in Wholly Owned Subsidiaries and
any entity that, as a result of such Investment, is a Wholly Owned
Subsidiary that is engaged in the same or a similar line of business
as the Company or any of its Subsidiaries was engaged in on the date
of this Indenture or any reasonable extensions or expansions thereof.
SECTION 111. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "SUBSIDIARY" THEREFROM IN ITS ENTIRETY AND REPLACING SUCH
DEFINITION WITH THE FOLLOWING:
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such Person
or of one or more Subsidiaries of such Person (or any combination
thereof).
SECTION 112. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "UNRESTRICTED SUBSIDIARY" THEREFROM IN ITS ENTIRETY.
SECTION 113. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "▇▇▇▇▇▇▇" THEREFROM IN ITS ENTIRETY.
SECTION 114. SECTION 1.01 OF THE INDENTURE IS AMENDED BY DELETING THE
DEFINITION OF "WHOLLY OWNED SUBSIDIARY" THEREFROM IN ITS ENTIRETY AND REPLACING
SUCH DEFINITION WITH THE FOLLOWING:
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership
interests of which
6
(other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 115. SECTION 4.10 OF THE INDENTURE IS AMENDED BY DELETING SUCH
SECTION THEREFROM IN ITS ENTIRETY AND REPLACING SUCH SECTION WITH THE FOLLOWING:
SECTION 4.10. [Intentionally Omitted.]
SECTION 116. SECTION 4.11 OF THE INDENTURE IS AMENDED BY DELETING SUCH
SECTION THEREFROM IN ITS ENTIRETY AND REPLACING SUCH SECTION WITH THE FOLLOWING:
SECTION 4.11. RESTRICTED PAYMENTS. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any distribution
on account of the Company's or any of its Subsidiaries' Equity
Interests (including, without limitation, any payment to stockholders
of the Company in connection with a merger or consolidation involving
the Company), other than (x) dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned
Subsidiary of the Company or (y) the Spin-Off Transactions;
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any direct or indirect parent of
the Company or Subsidiary or other Affiliate of the Company (other
than any such Equity Interests owned by the Company); (iii) make any
principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is PARI PASSU with
or subordinated to the Notes (other than Notes), except at final
maturity, other than through the purchase, redemption or acquisition
by the Company of Indebtedness through the issuance in exchange
therefor of Equity Interests (other than Disqualified Stock) or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth under Section 4.12(a); and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv) and (v) of the next
succeeding paragraph), is less than the sum of (i) $3.7 million, plus
(ii) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the
7
date of this Indenture to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus (iii) 100%
of the aggregate net cash proceeds received by the Company from the issue
or sale after the date of this Indenture of Equity Interests of the
Company or of debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or convertible
debt securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock).
The foregoing clauses (b) and (c), however, will not
prohibit (i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would have complied with the provisions of this Indenture; (ii) the
making of any Restricted Investment in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other
than Disqualified Stock); PROVIDED, that any net cash proceeds that
are utilized for any such Restricted Investment, and any Net Income
resulting therefrom, shall be excluded from clause (c) of the
preceding paragraph; (iii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company (or
distribution of cash by the Company to Pinnacle to permit Pinnacle to
redeem, repurchase, retire or otherwise acquire any Equity Interests
of Pinnacle) in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any
Disqualified Stock); PROVIDED that any net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition, and any Net Income resulting therefrom, shall be excluded
from clause (c) of the preceding paragraph; (iv) the defeasance,
redemption or repurchase of PARI PASSU or subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other
than Disqualified Stock); PROVIDED, that any net cash proceeds that
are utilized for any such defeasance, redemption or repurchase, and
any Net Income resulting therefrom, shall be excluded from
clause (c) of the preceding paragraph; and (v) any payment by the
Company or any of its Subsidiaries pursuant to any agreement described
in clause (f), (g), (h), (i), (j), (k), or (l) of the definition of
"Exempt Affiliate Transactions," in each case as in effect on the date
of this Indenture, or any payment by the Company or any of its
Subsidiaries pursuant to the Spin-Off Transactions.
The amount of all Restricted Payments (other than cash)
shall be the fair market value (evidenced by a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the
Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the
date of making any Restricted Payment, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon
8
which the calculations required by this Section 4.11 were computed,
which calculations may be based upon the Company's latest available
financial statements.
SECTION 117. SECTION 4.12 OF THE INDENTURE IS AMENDED BY DELETING SUCH
SECTION THEREFROM IN ITS ENTIRETY AND REPLACING SUCH SECTION WITH THE FOLLOWING:
SECTION 4.12. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK. (a) The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and the Company shall
not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; PROVIDED,
HOWEVER, that the Company and its Subsidiaries may incur Indebtedness
(including Acquired Indebtedness) and the Company may issue shares of
Disqualified Stock if: (i) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.5 to 1,
determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had
been incurred, or the Disqualified Stock had been issued, as the case
may be, at the beginning of such four-quarter period; and (ii) no
Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; PROVIDED, that no Guarantee may
be incurred pursuant to this paragraph, unless the guaranteed
Indebtedness is incurred by the Company or a Subsidiary pursuant to
this paragraph.
(b) The foregoing provisions will not apply to:
(i) the incurrence by the Company of Indebtedness under
the Credit Agreement (and the incurrence by Subsidiaries of Guarantees
thereof) in an aggregate principal amount at any time outstanding
(with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) not to exceed $30 million prior to consummation of the
Spin-Off and not to exceed $40 million at the time of consummation of
the Spin-Off or at any time thereafter, less the aggregate amount of
all Net Proceeds of Asset Sales applied to permanently reduce the
outstanding amount or the commitments with respect to such
Indebtedness pursuant to Section 4.08 hereof;
(ii) the incurrence by the Company and its Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness
represented by the Notes;
(iv) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or
9
Purchase Money Obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of
construction or improvement of property used in the business of the
Company or such Subsidiary or any Permitted Refinancing
Indebtedness thereof (provided that the requirements of clause (ii)
of the definition of Permitted Refinancing Indebtedness need not be
met for the purposes of this clause (b)(iv)), in an aggregate
principal amount not to exceed $10 million at any time outstanding;
(v) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund, any Indebtedness described in
Sections 4.12(a) and 4.12(b)(ii) hereof;
(vi) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Subsidiaries or between or among any
Wholly Owned Subsidiaries; PROVIDED that, in the case of Indebtedness
of the Company, such obligations shall be unsecured and subordinated
in case of an event of default in all respects to the Company's
obligations pursuant to the Notes; and PROVIDED, HOWEVER, that (i) any
subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than a Wholly Owned
Subsidiary of the Company and (ii) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a
Wholly Owned Subsidiary of the Company shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or
such Subsidiary, as the case may be;
(vii) the incurrence by the Company of Hedging Obligations
that are incurred for the purpose of fixing or hedging interest rate
risk with respect to any floating rate Indebtedness that is permitted
by this Indenture to be incurred; and
(viii) the incurrence by the Company and its Subsidiaries
of Indebtedness (in addition to Indebtedness permitted by any other
clause of this Section 4.12) in an aggregate principal amount at any
time outstanding not to exceed $10 million.
Notwithstanding the foregoing, (A) the aggregate principal
amount outstanding of Indebtedness incurred by Subsidiaries of the
Company, other than Indebtedness consisting of Guarantees of the
Company's Indebtedness incurred under Section 4.12(b)(i) or Guarantees
of Permitted Refinancing Indebtedness of the Company specified in
clause (B) of this sentence and other than Indebtedness incurred under
Sections 4.12(b)(ii), (b)(iv), (b)(v) and (b)(vi), shall not exceed
$5.0 million, and (B) no Subsidiary shall incur Indebtedness
consisting of a Guarantee of the Company's Indebtedness, except a
Guarantee of Permitted Refinancing Indebtedness of the Company where
the Company's Indebtedness being refinanced was Guaranteed at
10
least in the same amount and to the same extent by such Subsidiary and
except a Guarantee permitted pursuant to clause (A) of this sentence.
SECTION 118. SECTION 4.15 OF THE INDENTURE IS AMENDED BY DELETING SUCH
SECTION THEREFROM IN ITS ENTIRETY AND REPLACING SUCH SECTION WITH THE FOLLOWING:
SECTION 4.15. LIMITATION ON LAYERING DEBT. The Company shall
not incur, create, issue, assume, guarantee or otherwise become liable for
(i) any Indebtedness incurred pursuant to Section 4.12(a) hereof that is
unsecured and senior in any respect in right of payment to the Notes or
(ii) any Indebtedness that is subordinated or junior in right of payment to
any Senior Indebtedness and senior in any respect in right of payment to
the Notes.
SECTION 119. THE INDENTURE IS AMENDED BY ADDING A NEW SECTION 4.22 AS
FOLLOWS:
SECTION 4.22. WAIVER RELATING TO SPIN-OFF TRANSACTIONS.
Notwithstanding any other provision of the Indenture to the contrary,
the Company and the ▇▇▇▇▇▇ Companies shall be permitted to consummate
the Spin-Off Transactions and the Holders of Notes waive (i) the
effect of any other provision of the Indenture that would otherwise
prohibit the Spin-Off or any other Spin-Off Transaction and (ii) any
Default or Event of Default, and any consequences thereof, resulting
from consummation of the Spin-Off or any other Spin-Off Transaction.
SECTION 119. THE INDENTURE IS AMENDED BY ADDING A NEW SECTION 4.23 AS
FOLLOWS:
SECTION 4.23. REPURCHASE AT THE OPTION OF HOLDERS UPON
SPIN-OFF.
(a) Upon consummation of the Spin-Off, the Company will
be required to make an offer to all Holders of Notes, as described in
Section 4.23(b) hereof (the "Spin-Off Offer"), to purchase from all
Holders, on a pro rata basis, Notes in an aggregate principal amount
equal to the maximum principal amount of Notes that may be purchased
for aggregate consideration equal to $33.9 million, at a purchase
price (the "Spin-Off Offer Purchase Price") in cash in an amount equal
to 113% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase.
(b) Within 10 calendar days after the date the Spin-Off
is consummated, the Company, or the Trustee at the request and expense
of the Company, shall send to each Holder by first class mail, postage
prepaid, a form entitled "Option of Holder to Elect Purchase upon
Spin-Off" and a notice prepared by the Company stating:
(i) that the Spin-Off Offer is being made pursuant to
this Section 4.23, and that all Notes that are timely tendered will be
accepted for payment, subject to proration in the event $30.0 million
is less than the aggregate principal amount of all Notes timely
tendered pursuant to the Spin-Off Offer;
11
(ii) the Spin-Off Offer Purchase Price, that $33.9 million
is available to be applied to purchase tendered Notes at the Spin-Off
Offer Purchase Price, the date the Spin-Off Offer expires (the
"Spin-Off Offer Expiration Date"), which date shall be the 20th Business
Day subsequent to the date such notice is mailed to Holders, and the
date Notes are to be purchased pursuant to the Spin-Off Offer
(the "Spin-Off Offer Payment Date"), which date shall be no later than
the third Business Day subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of
the Spin-Off Offer Purchase Price with respect thereto, all Notes or
portions thereof accepted for payment pursuant to the Spin-Off Offer
shall cease to accrue interest from and after the Spin-Off Offer
Payment Date;
(v) that any Holder electing to have any Notes or
portions thereof purchased pursuant to the Spin-Off Offer will be
required to surrender such Notes and to deliver a duly completed
"Option of Holder to Elect Purchase upon Spin-Off" form to the Paying
Agent at the address specified in the notice, prior to the third
Business Day preceding the Spin-Off Offer Payment Date;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Spin-Off Offer
Payment Date, a facsimile transmission or letter, setting forth the
name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such ▇▇▇▇▇▇ is withdrawing such
▇▇▇▇▇▇'s election to have such Notes or portions thereof purchased
pursuant to the Spin-Off Offer;
(vii) that any Holder electing to have Notes purchased
pursuant to the Spin-Off Offer must specify the principal amount that
is being tendered for purchase, which principal amount must be $1,000
or an integral multiple thereof;
(viii) if Certificated Notes have been issued pursuant to
Section 2.06, that any Holder of Certificated Notes whose Certificated
Notes are being purchased only in part will be issued new Certificated
Notes equal in principal amount to the unpurchased portion of the
Certificated Note or Notes surrendered, which unpurchased portion will
be equal in principal amount to $1,000 or an integral multiple
thereof;
(ix) that the Trustee will return to the Holder of a
Global Note that is being purchased in part, such Global Note with a
notation on Schedule A thereof adjusting the principal amount thereof
to be equal to the unpurchased portion of such Global Note; and
(x) any other information necessary to enable any Holder
to tender Notes and to have such Notes purchased pursuant to this
Section 4.23.
12
(c) If the aggregate principal amount of the Notes
surrendered by Holders exceeds $30.0 million, the Trustee shall select
the Notes to be purchased on a pro rata basis based on the principal
amount of the Notes tendered, with such adjustments as may be deemed
appropriate by the Trustee, so that only Notes in denominations of
$1,000 or integral multiples thereof shall be purchased.
(d) Upon consummation of the Spin-Off, the Company shall
irrevocably deposit with the Paying Agent, in immediately available
funds or a combination of immediately available funds and letters of
credit for the benefit of the Paying Agent, an amount equal to the
Spin-Off Offer Purchase Price in respect of $30 million principal
amount of Notes. On the Spin-Off Offer Payment Date, to the extent
lawful, the Company shall (i) accept for payment any Notes or portions
thereof properly tendered and selected for purchase pursuant to the
Spin-Off Offer and Section 4.23(c) hereof, (ii) deliver, or cause to
be delivered, to the Trustee the Notes so accepted together with an
Officers' Certificate listing the Notes or portions thereof tendered
to the Company and accepted for purchase and (iii) shall irrevocably
deposit with the Paying Agent, by 10:00 a.m. New York City time, on
such date, immediately available funds in an amount equal to accrued
and unpaid interest, if any, on the Notes or portions thereof tendered
and accepted for purchase. The Paying Agent shall promptly send by
first class mail, postage prepaid, to each Holder of Notes or portions
thereof so accepted for payment the Spin-Off Offer Purchase Price for
such Notes or portions thereof. The Company shall publicly announce
the results of the Spin-Off Offer on or as soon as practicable after
the Spin-Off Offer Payment Date. For purposes of this Section 4.23,
the Trustee shall act as the Paying Agent.
(e) Upon surrender and cancellation of a Certificated
Note that is purchased in part, the Company shall promptly issue and
the Trustee shall authenticate and deliver to the surrendering Holder
of such Certificated Note a new Certificated Note equal in principal
amount to the unpurchased portion of such surrendered Certificated
Note; provided that each such new Certificated Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part
pursuant to the Spin-Off Offer, the Paying Agent shall forward such
Global Note to the Trustee who shall make a notation on Schedule A
thereof to reduce the principal amount of such Global Note to an
amount equal to the unpurchased portion of such Global Note, as
provided in Section 2.05(c) hereof.
(f) Any funds or letters of credit deposited by the
Company with the Paying Agent pursuant to this Section 4.23 shall be
held in trust and applied by the Paying Agent in accordance with the
provisions of this Section 4.23, but such funds or letters of credit
need not be segregated from other assets except to the extent required
by law. On the Spin-Off Offer Payment Date, promptly following
payment by the Paying Agent of the Spin-Off Offer Payment Price
(together with accrued and unpaid interest, if any) in respect of the
Notes or portions thereof tendered and accepted for
13
payment, the Paying Agent shall pay over to the Company in immediately
available funds any remaining unused funds, and shall return to the
Company any undrawn letters of credit, deposited by the Company pursuant
to Section 4.23(d) hereof.
(g) The Company shall comply with the requirements of
Section 14(e) under the Exchange Act and any other securities laws or
regulations, to the extent such laws and regulations are applicable,
in connection with the purchase of Notes pursuant to the Spin-Off
Offer.
SECTION 120. SECTION 11.02 OF THE INDENTURE IS AMENDED BY DELETING SUCH
SECTION THEREFROM IN ITS ENTIRETY AND REPLACING SUCH SECTION WITH THE FOLLOWING:
SECTION 11.02. NOTICES. Any notice or communication shall
be in writing and delivered in person or mailed by first class mail,
postage prepaid, addressed as follows: if to the Company: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer; if to the Trustee: The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration.
The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications. Any notice or communication mailed to a Holder shall
be sent to the Holder by first class mail, postage prepaid, at the
Holder's address as it appears in the Security Register and shall be
duly given if so sent within the time prescribed. Failure to mail a
notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders. If a notice or
communication is mailed to the Company, the Trustee or a Holder in the
manner provided above, it is duly given, whether or not the addressee
receives it. In case by reason of the suspension of regular mail
service or by reason or any other cause it shall be impracticable to
give notice by mail to Holders, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
ARTICLE II
SECTION 201. EFFECT OF THIS FIRST SUPPLEMENTAL INDENTURE.
Upon execution of this First Supplemental Indenture on the date first
above written, the Indenture shall be modified in accordance herewith,
and this First Supplemental Indenture shall form a part of the Indenture
for all purposes; and every Holder of Notes heretofore or hereafter
authenticated and delivered under the Indenture shall be bound by the
Indenture as modified by this First Supplemental Indenture. In the
event that the Spin-Off is not consummated within 120 calendar days
after July 29, 1998, the record date (the "Record Date") for the
solicitation of Consents of Holders to the amendments to the Indenture
set forth in this First Supplemental Indenture, then on the 121st
calendar day after the Record Date this First Supplemental Indenture
shall cease to be of any effect and the Indenture shall be reinstated as
it existed immediately prior to the execution of this
14
First Supplemental Indenture. The Company previously has delivered to the
Trustee evidence of receipt by the Company of the Requisite Consents.
SECTION 202. COMPLIANCE WITH TRUST INDENTURE ACT.
This First Supplemental Indenture complies with the Trust Indenture Act as
in effect on the date first above written.
SECTION 203. INDENTURE RATIFIED.
Except as hereby otherwise expressly provided, the Indenture is in all
respects ratified and confirmed, and all the terms, provisions and conditions
thereof shall be and remain in full force and effect.
SECTION 204. TRUSTEE NOT RESPONSIBLE.
The recitals contained herein shall be taken as the statements of the
Company and the Trustee assumes no responsibility for their correctness.
SECTION 205. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts and by the parties thereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 206. DEFINITIONS AND TERMS.
Unless otherwise defined herein, all initially capitalized terms used
herein shall have the meanings assigned to such terms in the Indenture.
SECTION 207. GOVERNING LAW.
This First Supplemental Indenture shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State.
15
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be executed as of the day and year first above written.
▇▇▇▇▇ SYSTEMS, INC.
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Senior Vice President, Chief Financial
Officer and Secretary
THE BANK OF NEW YORK, AS TRUSTEE
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Assistant Vice President
16