EXHIBIT 4.1
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QUIKSILVER, INC.,
THE SUBSIDIARY GUARANTORS PARTIES
HERETO,
AND
WILMINGTON TRUST COMPANY
as Trustee
6-7/8% Senior Notes due 2015
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INDENTURE
Dated as of July 22, 2005
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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310(a)(1)........................................................ 7.10
(a)(2)........................................................ 7.10
(a)(3)........................................................ N.A.
(a)(4)........................................................ N.A.
(a)(5)........................................................ 7.10
(b)........................................................... 7.3; 7.8; 7.10
(c)........................................................... N.A.
311(a)........................................................... 7.11
(b)........................................................... 7.11
(c)........................................................... N.A.
312(a)........................................................... 2.5
(b)........................................................... 11.3
(c)........................................................... 11.3
313(a)........................................................... 7.6
(b)(1)........................................................ N.A.
(b)(2)........................................................ 7.6
(c)........................................................... 7.6
(d)........................................................... 7.6
314(a)........................................................... 3.2; 11.5
(b)........................................................... N.A.
(c)(1)........................................................ 11.4
(c)(2)........................................................ 11.4
(c)(3)........................................................ N.A.
(d)........................................................... N.A.
(e)........................................................... 11.5
(f)........................................................... N.A.
315(a)........................................................... 7.1
(b)........................................................... 7.5; 11.2
(c)........................................................... 7.1
(d)........................................................... 7.1
(e)........................................................... 6.11
316(a)(last sentence)............................................ 11.6
(a)(1)(A)..................................................... 6.5
(a)(1)(B)..................................................... 6.4
(a)(2)........................................................ N.A.
(b)........................................................... 6.7
(c)........................................................... 9.4
317(a)(1)........................................................ 6.8
(a)(2)........................................................ 6.9
(b)........................................................... 2.4
318(a)........................................................... 11.1
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Incorporation by Reference................................................... 1
SECTION 1.1. Definitions........................................................................ 1
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.................................. 30
SECTION 1.3. Rules of Construction.............................................................. 31
ARTICLE II The Notes................................................................................... 31
SECTION 2.1. Form, Dating and Terms............................................................. 31
SECTION 2.2. Execution and Authentication....................................................... 40
SECTION 2.3. Registrar and Paying Agent......................................................... 41
SECTION 2.4. Paying Agent To Hold Money in Trust................................................ 41
SECTION 2.5. Holder Lists....................................................................... 42
SECTION 2.6. Transfer and Exchange.............................................................. 42
SECTION 2.7. Form of Certificate to be Delivered in Connection with Transfers
to Institutional Accredited Investors............................................. 45
SECTION 2.8. Form of Certificate to be Delivered in Connection with Transfers
Pursuant to Regulation S.......................................................... 47
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Notes......................................... 48
SECTION 2.10. Outstanding Notes................................................................. 49
SECTION 2.11. Temporary Notes................................................................... 49
SECTION 2.12. Cancellation...................................................................... 49
SECTION 2.13. Payment of Interest; Defaulted Interest........................................... 50
SECTION 2.14. Computation of Interest........................................................... 51
SECTION 2.15. CUSIP Numbers..................................................................... 51
ARTICLE III Covenants.................................................................................. 51
SECTION 3.1. Payment of Notes................................................................... 51
SECTION 3.2. SEC Reports........................................................................ 52
SECTION 3.3. Limitation on Indebtedness......................................................... 52
SECTION 3.4. Limitation on Restricted Payments.................................................. 57
SECTION 3.5. Limitation on Liens................................................................ 62
SECTION 3.6. Limitation on Sale/Leaseback Transactions.......................................... 62
SECTION 3.7. Limitation on Restrictions on Distributions from Restricted
Subsidiaries...................................................................... 62
SECTION 3.8. Limitation on Sales of Assets and Subsidiary Stock................................. 64
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SECTION 3.9. Limitation on Transactions with Affiliates......................................... 67
SECTION 3.10. Change of Control................................................................. 68
SECTION 3.11. Future Subsidiary Guarantors...................................................... 70
SECTION 3.12. Limitation on Lines of Business................................................... 71
SECTION 3.13. Payments for Consent.............................................................. 71
SECTION 3.14. Limitation on Sale or Issuance of Capital Stock of Restricted Subsidiaries........ 71
SECTION 3.15. Effectiveness of Covenants........................................................ 72
SECTION 3.16. Maintenance of Office or Agency................................................... 72
SECTION 3.17. Money for Note Payments to Be Held in Trust....................................... 72
SECTION 3.18. Corporate Existence............................................................... 73
SECTION 3.19. Payment of Taxes and Other Claims................................................. 74
SECTION 3.20. Maintenance of Properties......................................................... 74
SECTION 3.21. Compliance with Laws.............................................................. 74
SECTION 3.22. Compliance Certificate............................................................ 74
SECTION 3.23. Additional Interest Notices....................................................... 75
ARTICLE IV Successor Company and Successor Subsidiary Guarantor........................................ 75
SECTION 4.1. Merger and Consolidation........................................................... 75
ARTICLE V Redemption of Notes.......................................................................... 77
SECTION 5.1. Optional Redemption................................................................ 77
SECTION 5.2. Applicability of Article........................................................... 77
SECTION 5.3. Election to Redeem; Notice to Trustee.............................................. 77
SECTION 5.4. Selection by Trustee of Notes to Be Redeemed....................................... 77
SECTION 5.5. Notice of Redemption............................................................... 78
SECTION 5.6. Deposit of Redemption Price........................................................ 78
SECTION 5.7. Notes Payable on Redemption Date................................................... 79
SECTION 5.8. Notes Redeemed in Part............................................................. 79
ARTICLE VI Defaults and Remedies....................................................................... 79
SECTION 6.1. Events of Default.................................................................. 79
SECTION 6.2. Acceleration....................................................................... 82
SECTION 6.3. Other Remedies..................................................................... 82
SECTION 6.4. Waiver of Past Defaults............................................................ 83
SECTION 6.5. Control by Majority................................................................ 83
SECTION 6.6. Limitation on Suits................................................................ 83
SECTION 6.7. Rights of Holders to Receive Payment............................................... 84
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SECTION 6.8. Collection Suit by Trustee......................................................... 84
SECTION 6.9. Trustee May File Proofs of Claim................................................... 84
SECTION 6.10. Priorities........................................................................ 84
SECTION 6.11. Undertaking for Costs............................................................. 85
ARTICLE VII Trustee.................................................................................... 85
SECTION 7.1. Duties of Trustee.................................................................. 85
SECTION 7.2. Rights of Trustee.................................................................. 86
SECTION 7.3. Individual Rights of Trustee....................................................... 87
SECTION 7.4. Trustee's Disclaimer............................................................... 88
SECTION 7.5. Notice of Defaults................................................................. 88
SECTION 7.6. Reports by Trustee to Holders...................................................... 88
SECTION 7.7. Compensation and Indemnity......................................................... 88
SECTION 7.8. Replacement of Trustee............................................................. 89
SECTION 7.9. Successor Trustee by Merger........................................................ 90
SECTION 7.10. Eligibility; Disqualification..................................................... 90
SECTION 7.11. Preferential Collection of Claims Against Company................................. 90
ARTICLE VIII Discharge of Indenture; Defeasance........................................................ 91
SECTION 8.1. Discharge of Liability on Notes; Defeasance........................................ 91
SECTION 8.2. Conditions to Defeasance........................................................... 92
SECTION 8.3. Application of Trust Money......................................................... 93
SECTION 8.4. Repayment to Company............................................................... 93
SECTION 8.5. Indemnity for U.S. Government Obligations.......................................... 94
SECTION 8.6. Reinstatement...................................................................... 94
ARTICLE IX Amendments.................................................................................. 94
SECTION 9.1. Without Consent of Holders......................................................... 94
SECTION 9.2. With Consent of Holders............................................................ 95
SECTION 9.3. Compliance with Trust Indenture Act................................................ 96
SECTION 9.4. Revocation and Effect of Consents and Waivers...................................... 96
SECTION 9.5. Notation on or Exchange of Notes................................................... 97
SECTION 9.6. Trustee To Sign Amendments......................................................... 97
ARTICLE X Subsidiary Guarantees........................................................................ 97
SECTION 10.1. Guarantees........................................................................ 97
SECTION 10.2. Limitation on Liability; Termination, Release and Discharge....................... 99
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SECTION 10.3. Right of Contribution............................................................. 100
SECTION 10.4. No Subrogation.................................................................... 100
SECTION 10.5. Execution and Delivery of Subsidiary Guarantee.................................... 100
ARTICLE XI Miscellaneous............................................................................... 101
SECTION 11.1. Trust Indenture Act Controls...................................................... 101
SECTION 11.2. Notices........................................................................... 101
SECTION 11.3. Communication by Holders with other Holders....................................... 101
SECTION 11.4. Certificate and Opinion as to Conditions Precedent................................ 102
SECTION 11.5. Statements Required in Certificate or Opinion..................................... 102
SECTION 11.6. When Notes Disregarded............................................................ 102
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar...................................... 103
SECTION 11.8. Legal Holidays.................................................................... 103
SECTION 11.9. Governing Law..................................................................... 103
SECTION 11.10. No Recourse Against Others....................................................... 103
SECTION 11.11. Successors....................................................................... 103
SECTION 11.12. Multiple Originals............................................................... 103
SECTION 11.13. Variable Provisions.............................................................. 103
SECTION 11.14. Qualification of Indenture....................................................... 103
SECTION 11.15. Table of Contents; Headings...................................................... 103
EXHIBITS
EXHIBIT A Form of the Series A Note
EXHIBIT B Form of the Series B Note
EXHIBIT C Form of Notation of Guarantee
EXHIBIT D Form of Indenture Supplement to Add Subsidiary Guarantors
SCHEDULES
SCHEDULE 3.7(b) Permitted Encumbrances
SCHEDULE 3.9(b) Transactions with Affiliates
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INDENTURE dated as of July 22, 2005 among Quiksilver, Inc., a
Delaware corporation (the "Company"), the Subsidiary Guarantors (as defined
herein) and Wilmington Trust Company, a Delaware banking corporation, as trustee
(the "Trustee").
Recitals Of The Company
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of (i) the Company's 6-7/8% Senior Notes,
Series A, due 2015, issued on the Issue Date (the "Initial Notes") and the
guarantee thereof by the Subsidiary Guarantors, (ii) if and when issued, an
unlimited principal amount of additional 6-7/8% Senior Notes, Series A, due 2015
that may be offered from time to time subsequent to the Issue Date in a
non-registered offering or 6-7/8% Senior Notes, Series B, due 2015 in a
registered offering of the Company that may be offered from time to time
subsequent to the Issue Date (the "Additional Notes") and the guarantee thereof
by certain of the Company's Subsidiaries and (iii) if and when issued, the
Company's 6-7/8% Senior Notes, Series B, due 2015 and the guarantees thereof by
certain of the Company's Subsidiaries that may be issued from time to time in
exchange for Initial Notes or Additional Notes pursuant to a Registration Rights
Agreement (as hereinafter defined, the "Exchange Notes" and together with the
Initial Notes and Additional Notes, the "Notes"). $400,000,000 in aggregate
principal amount of Initial Notes shall be initially issued on the date hereof.
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders:
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness (i) of a Person or any of
its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or (ii) assumed in connection with the acquisition of assets from
such Person, in each case whether or not Incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have
been Incurred, with respect to clause (i) of the preceding sentence, on the date
such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of
the preceding sentence, on the date of consummation of such acquisition of
assets.
"Acquisition" means the acquisition by the Company of up to 100% of
Rossignol in one or more related transactions as described in the Offering
Memorandum.
"Additional Assets" means (i) any property or long-term assets
(other than Indebtedness and Capital Stock) to be used by the Company or a
Restricted Subsidiary in a Related Business; (ii) the Capital Stock of a Person
that becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Company or a Restricted Subsidiary; or (iii)
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Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that, in the case of clauses (ii)
and (iii), such Restricted Subsidiary is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Disposition" means any direct or indirect sale, lease (other
than an operating lease entered into in the ordinary course of business),
transfer, issuance or other disposition, or a series of related sales, leases,
transfers, issuances or dispositions that are part of a common plan, of shares
of Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Restricted Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction.
Notwithstanding the preceding, the following items shall not be
deemed to be Asset Dispositions: (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to Restricted
Subsidiary (other than a Receivables Entity); provided that in the case of a
sale by a Restricted Subsidiary to another Restricted Subsidiary, the Company
directly or indirectly owns an equal or greater percentage of the Common Stock
of the transferee than of the transferor; (ii) the sale of Cash Equivalents in
the ordinary course of business; (iii) a disposition of inventory in the
ordinary course of business; (iv) a disposition of obsolete or worn out
equipment or equipment that is no longer useful in the conduct of the Company's
and/or its Restricted Subsidiaries' business and that is disposed of in each
case in the ordinary course of business; (v) transactions permitted under
Article IV; (vi) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Wholly Owned Subsidiary (other than a Receivables
Entity); (vii) for purposes of Section 3.8 only, the making of a Permitted
Investment or a disposition permitted under Section 3.4; (viii) sales of
accounts receivable and related assets or an interest therein of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Entity; (ix) dispositions of assets in a single transaction or
series of related transactions with an aggregate fair market value in any
calendar year of less than $2,500,000 (with unused amounts in any calendar year
being carried over to the next succeeding calendar year subject to a maximum of
$5,000,000 in such next succeeding fiscal year); (x) dispositions in connection
with Permitted Liens; (xi) dispositions of receivables in connection with the
compromise, settlement or collection thereof in the ordinary course of business
or in bankruptcy or similar proceedings and exclusive of factoring or similar
arrangements; (xii) the licensing or sublicensing of intellectual property or
other general intangibles and licenses, leases or subleases of other property in
the ordinary course of business, which do not materially interfere with the
business of the Company and its Restricted Subsidiaries; (xiii) foreclosure on
assets; (xiv) any release of claims or rights in the ordinary course of business
in connection with the loss or settlement of a bona fide lawsuit, dispute or
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controversy; and (xv) any transfer or disposition by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or another Restricted
Subsidiary in connection with the restructuring described in the Offering
Memorandum under "The Rossignol acquisition - Restructuring."
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Notes, compounded semi-annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Banking Services Obligations" means any and all obligations of the
Company and the Subsidiary Guarantors, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor) in
connection with any of the following bank services provided to the Company or
any Subsidiary Guarantor pursuant to a Credit Facility: (a) commercial credit
cards, (b) stored value cards and (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal or state law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of a company to have been duly adopted by
the Board of Directors of such company and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Borrowing Base" means, as of the date of determination, an amount
equal to the sum, without duplication of (i) 85% of the net book value of the
Company's and its Restricted Subsidiaries' accounts receivable at such date and
(ii) 75% of the net book value of the Company's and its Restricted Subsidiaries'
inventories at such date. Net book value shall be determined in accordance with
GAAP and shall be that reflected on the most recent available balance sheet (it
being understood that the accounts receivable and inventories of an acquired
business or Person may be included if such acquisition has been completed on or
prior to the date of determination).
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"Business Day" means each day that is not a Saturday, Sunday or
other day on which banking institutions in New York, New York or Wilmington,
Delaware are authorized or required by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company membership interests,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation at the time any determination thereof is to be made as determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Cash Equivalents" means: (i) U.S. dollars, pounds sterling, euros,
or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such
local currencies held by it from time to time in the ordinary course of
business; (ii) securities issued or directly and fully guaranteed or insured by
the U.S. government or any agency or instrumentality of the United States
(provided that the full faith and credit of the United States is pledged in
support thereof), having maturities of not more than one year from the date of
acquisition; (iii) marketable general obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition (provided that the full faith and credit of the United States is
pledged in support thereof) and, at the time of acquisition, having a credit
rating of "A" or better from either S&P or ▇▇▇▇▇'▇; (iv) certificates of
deposit, time deposits, eurodollar time deposits, overnight bank deposits or
bankers' acceptances having maturities of not more than one year from the date
of acquisition thereof issued by any commercial bank the long-term debt of which
is rated at the time of acquisition thereof at least "A" or the equivalent
thereof by S&P, or "A" or the equivalent thereof by ▇▇▇▇▇'▇, and having combined
capital and surplus in excess of $250,000,000; (v) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii), (iii) and (iv) entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) commercial paper rated at
the time of acquisition thereof at least "A-2" or the equivalent thereof by S&P
or "P-2" or the equivalent thereof by ▇▇▇▇▇'▇, or carrying an equivalent rating
by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments, and in any case maturing
within one year after the date of acquisition thereof; (vii) interests in any
investment company or money market fund which invests 95% or more of its assets
in instruments of the type specified in clauses (i) through (vi) above; and
(viii) foreign equivalents of the items described in clauses (ii) through (vii)
above.
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"Change of Control" means:
(1) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that such person or group shall be deemed to have "beneficial ownership"
of all shares that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the Voting
Stock of the Company (or its successor by merger, consolidation or purchase of
all or substantially all of its assets) (for the purposes of this clause, such
person or group shall be deemed to beneficially own any Voting Stock of the
Company held by a parent entity, if such person or group "beneficially owns" (as
defined above), directly or indirectly, more than 35% of the voting power of the
Voting Stock of such parent entity); or
(2) the first day on which a majority of the members of the Board of
Directors of the Company (excluding any committee thereof) are not Continuing
Directors; or
(3) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act); or
(4) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company.
"Clearstream" means Clearstream Banking, societe anonyme, or any
successor securities clearing agency.
"Cleveland Golf" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Golf Company, Inc., a
California corporation.
"Cleveland Shareholders' Agreement" means the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Shareholders' Agreement, dated April 12, 2005, among ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SDI Societe de
Services et Developpement, the Company, Rossignol Ski Company, Inc. and
Rossignol.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of such Person's common stock whether or not
outstanding on the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Consolidated Coverage Ratio" means as of any date of determination,
with respect to any Person, the ratio of (x) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which financial statements are in existence to (y) Consolidated Interest Expense
for such four fiscal quarters, provided, however, that:
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(1) if the Company or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period (except
that in making such computation, the amount of Indebtedness under any
revolving credit facility outstanding on the date of such calculation
shall be computed based on (i) the average daily balance of such
Indebtedness during such four fiscal quarters or such shorter period for
which such facility was outstanding or (ii) if such facility was created
after the end of such four fiscal quarters, the average daily balance of
such Indebtedness during the period from the date of creation of such
facility to the date of such calculation) and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period; or
(b) has repaid, repurchased, defeased or otherwise discharged
any Indebtedness since the beginning of the period that is no longer
outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio involves a
discharge of Indebtedness (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid and the related commitment terminated), Consolidated
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such discharge of
such Indebtedness, including with the proceeds of such new Indebtedness,
as if such discharge had occurred on the first day of such period;
(2) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition or disposed of any
company, division, operating unit, segment, business, group of related assets or
line of business or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition:
(a) the Consolidated EBITDA for such period shall be reduced
by an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Disposition
for such period or increased by an amount equal to the Consolidated EBITDA
(if negative) directly attributable thereto for such period; and
(b) Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent
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the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary
or is merged with or into the Company) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
a company, division, operating unit, segment, business, group of related assets
or line of business, Consolidated EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have Incurred any Indebtedness or discharged any Indebtedness, made any
disposition or Asset Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (2) or (3) above if made by
the Company or a Restricted Subsidiary during such period, Consolidated EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Incurrence, discharge, disposition,
Asset Disposition, Investment or acquisition of assets occurred on the first day
of such period.
For purposes of this definition, whenever pro forma effect is to be
given to any calculation under this definition, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting officer of
the Company (including any pro forma expense and cost reductions and related
adjustments calculated on a basis consistent with Regulation S-X under the
Securities Act). If any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has a
remaining term in excess of 12 months). If any Indebtedness that is being given
pro forma effect bears an interest rate at the option of the Company, the
interest rate shall be calculated by applying such optional rate chosen by the
Company.
"Consolidated EBITDA" for any period means, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated depreciation expense;
(4) consolidated amortization expense or impairment charges recorded
in connection with the application of Financial Accounting Standard No. 142
"Goodwill and Other Intangibles;"
8
(5) other non-cash items reducing Consolidated Net Income (excluding
any such non-cash charge to the extent it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid cash expense
that was paid in a prior period not included in the calculation); and
(6) up to $20 million aggregate cash charges Incurred within one
year from the Issue Date related to the restructuring of Rossignol and its
Subsidiaries.
Notwithstanding the preceding sentence, clauses (2) through (5)
relating to amounts of a Restricted Subsidiary of a Person shall be added to
Consolidated Net Income to compute Consolidated EBITDA of such Person only to
the extent (and in the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and, to the extent the amounts set forth in clauses (2) through (5)
are in excess of those necessary to offset a net loss of such Restricted
Subsidiary or if such Restricted Subsidiary has net income for such period
included in Consolidated Net Income, only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for
any period, taxes imposed upon such Person or other payments required to be made
by such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
whether paid or accrued, plus, to the extent not included in such interest
expense:
(1) interest expense attributable to Capitalized Lease Obligations
and the interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease giving rise thereto, determined as
if such lease were a capitalized lease in accordance with GAAP and the interest
component of any deferred payment obligations;
(2) amortization of debt discount (provided that any amortization of
bond premium shall be credited to reduce Consolidated Interest Expense unless,
pursuant to GAAP, such amortization of bond premium has otherwise reduced
Consolidated Interest Expense);
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed with
respect to letters of credit (to the extent not included in the cost of goods
sold in the Company's consolidated financial statements in accordance with GAAP)
and bankers' acceptance financing;
9
(5) the interest expense on Indebtedness of another Person that is
Guaranteed by the Company or a Restricted Subsidiary of the Company or secured
by a Lien on assets of the Company or one of its Restricted Subsidiaries if such
Person is not current in the payment of principal, interest or premium on such
Indebtedness;
(6) net cash costs associated with Hedging Obligations (including
amortization of fees) provided, however, that if Hedging Obligations result in
net cash benefits rather than costs, such net cash benefits shall be credited to
reduce Consolidated Interest Expense unless, pursuant to GAAP, such net cash
benefits are otherwise reflected in Consolidated Net Income;
(7) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period;
(8) the product of (a) all dividends (other than cash dividends or
other cash distributions pursuant to the Cleveland Shareholders' Agreement) paid
or payable, in cash, Cash Equivalents or Indebtedness or accrued during such
period on any series of Disqualified Stock of such Person or on Preferred Stock
of its Restricted Subsidiaries payable to a party other than the Company or a
Wholly Owned Subsidiary, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined Federal, state,
provincial and local statutory tax rate of such Person, expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP;
(9) Receivable Fees; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than the Company or any Restricted
Subsidiary of the Company) in connection with Indebtedness Incurred by such plan
or trust.
Any such interest expense of any Unrestricted Subsidiary of the
Company to the extent the related Indebtedness that is Guaranteed by or paid by
the Company or any Restricted Subsidiary of the Company shall be included in the
definition of "Consolidated Interest Expense."
For the purpose of calculating the Consolidated Coverage Ratio in
connection with the Incurrence of any Indebtedness described in the final
paragraph of the definition of "Indebtedness", the calculation of Consolidated
Interest Expense shall include all interest expense (including any amounts
described in clauses (1) through (10) above) relating to any Indebtedness of the
Company or any Restricted Subsidiary described in the final paragraph of the
definition of "Indebtedness."
For purposes of the foregoing, total interest expense shall be
determined (i) after giving effect to any net payments made or received by the
Company and its Subsidiaries with respect to Interest Rate Agreements and (ii)
exclusive of amounts classified as other comprehensive income in the balance
sheet of the Company. Notwithstanding anything to the contrary contained herein,
commissions, discounts, yield and other fees and charges Incurred in connection
with any transaction pursuant to which the Company or any of its Restricted
10
Subsidiaries may sell, convey or otherwise transfer or grant a security interest
in any accounts receivable or related assets shall be included in Consolidated
Interest Expense.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; provided, however, that there shall not be included in
such Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that:
(a) subject to the limitations contained in clauses (3), (4)
and (5) below, the Company's equity in the net income of any such Person
for such period shall be included in such Consolidated Net Income up to
the aggregate amount of cash actually distributed by such Person during
such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in
clause (2) below); and
(b) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be included
in determining such Consolidated Net Income to the extent such loss has
been funded with cash from the Company or a Restricted Subsidiary;
(2) any net income (but not loss) of any Restricted Subsidiary if
such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that:
(a) subject to the limitations contained in clauses (3), (4)
and (5) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash that could have
been distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in the
case of a dividend to another Restricted Subsidiary, to the limitation
contained in this clause); and
(b) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(3) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Capital Stock of any
Person;
(4) any extraordinary gain or loss; and
(5) the cumulative effect of a change in accounting principles.
11
"Consolidated Tangible Assets" of any Person as of any date means
the total amount of assets of such Person and its Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less (1)
Intangible Assets and (2) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who: (1) was a member of such
Board of Directors on the date of this Indenture; or (2) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election.
"Corporate Trust Office" means the principal office of the Trustee
at which at any time its corporate trust business shall be administered, which
office at the date hereof is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration, or such
other address as the Trustee may designate from time to time by notice to the
Holders and the Company, or the principal corporate trust office of any
successor Trustee (or such other address as such successor Trustee may designate
from time to time by notice to the Holders and the Company).
"Credit Facility" means, with respect to the Company or any
Subsidiary Guarantor, one or more debt facilities (including, without
limitation, the Revolving Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables), bankers acceptances or letters of credit or similar
instruments, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time (and whether or not
with the original administrative agent and lenders or another administrative
agent or agents or other lenders and whether provided under the original
Revolving Credit Facility or any other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement, futures contract, option contract or
other similar agreement as to which such Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section
2.13.
"Definitive Notes" means certificated securities.
12
"Depositary" means The Depository Trust Company, its nominees and
their respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event: (1) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise, (2) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible
or exchangeable solely at the option of the Company or a Restricted Subsidiary),
or (3) is redeemable at the option of the holder of the Capital Stock in whole
or in part; in each case on or prior to the date that is 91 days after the
earlier of the date (a) of the Stated Maturity of the Notes or (b) on which
there are no Notes outstanding, provided that only the portion of Capital Stock
which so matures or is mandatorily redeemable, is so convertible or exchangeable
or is so redeemable at the option of the holder thereof prior to such date shall
be deemed to be Disqualified Stock; provided, further that any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or asset disposition (each defined in a
substantially identical manner to the corresponding definitions in this
Indenture) shall not constitute Disqualified Stock if the terms of such Capital
Stock (and all such securities into which it is convertible or for which it is
ratable or exchangeable) provide that the Company may not repurchase or redeem
any such Capital Stock (and all such securities into which it is convertible or
for which it is ratable or exchangeable) pursuant to such provision prior to
compliance by the Company with the provisions contained in Sections 3.8 and 3.10
of this Indenture and such repurchase or redemption complies with Section 3.4 of
this Indenture.
"Domestic Subsidiary" means any Restricted Subsidiary that is
organized under the laws of the United States of America or any state thereof or
the District of Columbia, other than any Restricted Subsidiary that is a Foreign
Subsidiary.
"Euroclear" means Euroclear Bank S.A./N.V. or any successor
securities clearing agency.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Fiscal Year" means the fiscal year of the Company ending October 31
of each year or such other fiscal year as may be determined by the Company and
the Board of Directors and of which the Trustee shall receive written notice
pursuant to Section 3.22 hereof.
"Foreign Subsidiary" means any Restricted Subsidiary that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia and any Subsidiary of such Restricted Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including those
set forth in the opinions and
13
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) that is expressly
subordinate in right of payment to the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement (to the
extent such Currency Agreement relates to interest on Indebtedness for borrowed
money).
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"Incur" means issue, create, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication): (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) the principal
component of all obligations of such Person in respect of letters of credit,
bankers' acceptances or other similar instruments (including reimbursement
obligations with respect
14
thereto except to the extent such reimbursement obligation relates to a trade
payable and such obligation is satisfied within 30 days of Incurrence); (iv) the
principal component of all obligations of such Person to pay the deferred and
unpaid purchase price of property (except trade payables), which purchase price
is due more than six months after the date of placing such property in service
or taking delivery and title thereto; (v) Capitalized Lease Obligations and all
Attributable Indebtedness of such Person; (vi) the principal component or
liquidation preference of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary that is not a Subsidiary Guarantor, any Preferred
Stock (but excluding, in each case, any accrued dividends; (vii) the principal
component of all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of such Indebtedness shall be the lesser of
(A) the fair market value of such asset at such date of determination and (B)
the amount of such Indebtedness of such other Persons; (viii) the principal
component of Indebtedness of other Persons to the extent Guaranteed by such
Person; (ix) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and Interest Rate
Agreements (the amount of any such obligations to be equal at any time of
determination to the termination value of such agreement or arrangement giving
rise to such obligation that would be payable by such Person at such time) and
(x) to the extent not otherwise included in this definition, the amount then
outstanding (i.e., advanced, and received by, and available for use by such
Person) under any receivables financing (as set forth in the books and records
of such Person and confirmed by the agent, trustee or other representative of
the institution or group providing such receivables financing).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability at such date, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary (a "Joint Venture");
(2) such Person or a Restricted Subsidiary of such Person is a
general partner of the Joint Venture (a "General Partner"); and
(3) there is recourse, by contract or operation of law, with respect
to the payment of such Indebtedness to property or assets of such Person or a
Restricted Subsidiary of such Person; and then such Indebtedness shall be
included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner
and (ii) the amount of such obligations to the extent that there is
recourse, by contract or operation of law, to the property or assets of
such Person or a Restricted Subsidiary of such Person; or
15
(b) if less than the amount determined pursuant to clause (a)
immediately above, the actual amount of such Indebtedness that is recourse
to such Person or a Restricted Subsidiary of such Person, if the
Indebtedness is evidenced by a writing and is for a determinable amount
and the related interest expense shall be included in Consolidated
Interest Expense to the extent actually paid by the Company or its
Restricted Subsidiaries.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Intangible Assets" means, with respect to any Person, all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, write-ups of assets
over their carrying value at the Issue Date or the date of acquisition, if
acquired subsequent thereto, and all other items which would be treated as
intangibles on the consolidated balance sheet of such Person and its Restricted
Subsidiaries prepared in accordance with GAAP.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances or extensions of credit to customers
in the ordinary course of business) or other extensions of credit (including by
way of Guarantee or similar arrangement, but excluding any debt or extension of
credit represented by a bank deposit other than a time deposit) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that none of the following shall be deemed to be an Investment:
(1) Hedging Obligations and Currency Agreements entered into in the
ordinary course of business and in compliance with this Indenture;
(2) endorsements of negotiable instruments and documents in the
ordinary course of business; and
(3) an acquisition of assets, Capital Stock or other securities by
the Company or a Subsidiary for consideration to the extent such consideration
consists of Capital Stock (other than Disqualified Stock) of the Company.
For purposes of Section 3.4, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company
16
shall be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (a) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (b) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets (as conclusively determined by the Board of
Directors of the Company in good faith) of such Subsidiary at the time that such
Subsidiary is so redesignated a Restricted Subsidiary; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors of the Company. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Voting Stock of any
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such entity is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value (as conclusively determined in
good faith by the Board of Directors of the Company) of the Capital Stock of
such Subsidiary not sold or disposed of.
"Investment Grade Rating" means a rating equal to or higher than
Baa3 by Moody's and BBB- by S&P, in each case with at least a stable outlook;
provided, however, that if (a) either Moody's or S&P changes its rating system,
such ratings shall be the equivalent ratings after such changes or (b) if S&P or
Moody's or both shall not make a rating of the Notes publicly available, the
references above to S&P or Moody's or both, as the case may be, shall be to a
nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company and the references to the ratings categories above shall
be to the corresponding rating categories of such rating agency or rating
agencies, as the case may be.
"Issue Date" means July 22, 2005.
"Leasehold Improvement Lender" means Union Bank of California, N.A.,
in its individual capacity, as lender of the Leasehold Improvement Loan, and any
successor or assignee thereof.
"Leasehold Improvement Loan" means the term loan in the original
principal amount of $12,300,000 made by the Leasehold Improvement Lender to the
Company and referred to in the Intercreditor Agreement dated as of April 12,
2005 among Quiksilver Americas, Inc., a California corporation, JPMorgan Chase
Bank, N.A., as administrative agent for the lenders party to the Revolving
Credit Facility, and the Leasehold Improvement Lender, as the same may be
amended, modified or restated from time to time.
"Legal Holiday" has the meaning ascribed to it in Section 11.8.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received by the Company or any Restricted Subsidiary of the Company (including
any cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or
17
otherwise and net proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring person
of Indebtedness or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any other non-cash
form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording
tax expenses, commissions and other fees and expenses Incurred, and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available tax credits or
deductions and any tax sharing agreements), as a consequence of such Asset
Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition; and
(4) the deduction of appropriate amounts (as determined or
reasonably estimated by the seller thereof) to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds" with respect to any issuance or sale of Capital
Stock or in respect of any capital contribution, means the cash proceeds of such
issuance, sale or capital contribution net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, listing fees, discounts or
commissions and brokerage, consultant and other fees and charges actually
Incurred in connection with such issuance, sale or capital contribution and net
of taxes paid or payable as a result of such issuance, sale or capital
contribution (after taking into account any available tax credit or deductions
and any tax sharing arrangements).
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides any Guarantee or credit support of any kind (including
any undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor
or otherwise);
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
18
(3) the explicit terms of which provide that there is no recourse
against any of the assets of the Company or any of its Restricted Subsidiaries,
except that Standard Securitization Undertakings shall not be considered
recourse.
"Note Register" means the register of Notes, maintained by the
Registrar, pursuant to Section 2.3.
"Notes" means the Notes issued under this Indenture.
"Notes Custodian" means the custodian with respect to the Global
Notes (as appointed by the Depositary), or any successor Person thereto and
shall initially be the Trustee.
"Offering Memorandum" means the Offering Memorandum for the
Company's 6-7/8% Senior Notes due 2015 dated July 14, 2005.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer or the Secretary of the
Company. Officer of any Subsidiary Guarantor has a correlative meaning.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and either a Treasurer or an Assistant Secretary of the
Company.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
"Pari Passu Indebtedness" means Indebtedness that ranks equally in
right of payment to the Notes.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) a Restricted Subsidiary (other than a Receivables Entity) or a
Person which shall, upon the making of such Investment, become a Restricted
Subsidiary (other than a Receivables Entity); provided, however, that the
primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary (other
than a Receivables Entity); provided, however, that such Person's primary
business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to the Company or any Restricted Subsidiary
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however, that
such trade terms may include such concessionary
19
trade terms as the Company or any such Restricted Subsidiary deems reasonable
under the circumstances;
(5) payroll, travel, moving and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business;
(6) to the extent permitted by law, loans or advances to employees
(other than executive officers) made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary;
(7) Capital Stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of a debtor;
(8) Investments made as a result of the receipt of non-cash
consideration from an Asset Disposition that was made pursuant to and in
compliance with Section 3.8;
(9) (i) Investments in existence on the Issue Date or (ii) made
pursuant to legally binding commitments in existence on the Issue Date as
described in the Offering Memorandum;
(10) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 3.3;
(11) Investments by the Company or any of its Restricted
Subsidiaries, together with all other Investments pursuant to this clause (11),
in an aggregate amount at the time of such Investment not to exceed $30,000,000
outstanding at any one time (with the fair market value of such Investment being
measured at the time made and without giving effect to subsequent changes in
value);
(12) Guarantees issued in accordance with Section 3.3;
(13) Investments constituting prepayments or credits made to
customers or suppliers in the ordinary course of business and consistent with
past practice; and
(14) Investments by the Company or a Restricted Subsidiary of the
Company in a Receivables Entity or any Investment by a Receivables Entity in any
other Person, in each case, in connection with a Qualified Receivables
Transaction, provided, however, that any Investment in any such Person is in the
form of a Purchase Money Note, or any equity interest or interests in
Receivables and related assets generated by the Company or a Restricted
Subsidiary and transferred to any Person in connection with a Qualified
Receivables Transaction or any such Person owning such Receivables.
"Permitted Liens" means, with respect to any Person:
20
(1) Liens securing Indebtedness and other obligations under a Credit
Facility, including under the Revolving Credit Facility, and related Hedging
Obligations and Banking Services Obligations and Liens on assets of Subsidiary
Guarantors securing Guarantees of Indebtedness and other obligations under a
Credit Facility, including under the Revolving Credit Facility, and related
Hedging Obligations and such Banking Services Obligations, in each case, to the
extent the Indebtedness is permitted to be Incurred under clause (1) of Section
3.3(b);
(2) Liens securing Indebtedness and related Hedging Obligations of
Foreign Subsidiaries permitted to be Incurred under clause (11) of Section
3.3(b);
(3) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or U.S.
government bonds to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or import or customs duties
or for the payment of rent, in each case Incurred in the ordinary course of
business;
(4) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens in each case for sums not yet due or being contested in good
faith by appropriate proceedings if a reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made in respect thereof;
(5) Liens for taxes, assessments or other governmental charges not
yet subject to penalties for non-payment or which are being contested in good
faith by appropriate proceedings provided appropriate reserves required pursuant
to GAAP have been made in respect thereof;
(6) Liens in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the request of and
for the account of such Person in the ordinary course of its business; provided,
however, that such letters of credit do not constitute Indebtedness;
(7) encumbrances, ground leases, easements or reservations of, or
rights of others for, licenses, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning, building codes or
other restrictions (including, without limitation, minor defects or
irregularities in title and similar encumbrances) as to the use of real
properties or liens incidental to the conduct of the business of such Person or
to the ownership of its properties which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;
(8) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture, secured by a Lien
on the same property securing such Hedging Obligation;
(9) leases, licenses, subleases and sublicenses of assets
(including, without limitation, real property and intellectual property rights)
which do not materially interfere with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries;
21
(10) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment have not been
finally terminated or the period within which such proceedings may be initiated
has not expired;
(11) Liens for the purpose of securing the payment (or the
refinancing of the payment) of all or a part of the purchase price of, or
Capitalized Lease Obligations, purchase money obligations or other payments
Incurred to finance the acquisition, improvement or construction of, assets or
property acquired or constructed in the ordinary course of business provided
that:
(a) the aggregate principal amount of Indebtedness secured by
such Liens is otherwise permitted to be Incurred under this Indenture and
does not exceed the cost of the assets or property acquired or
constructed; and
(b) such Liens are created within 180 days of construction or
acquisition of such assets or property and do not encumber any other
assets or property of the Company or any Restricted Subsidiary other than
such assets or property and assets affixed or appurtenant thereto;
(12) Liens arising solely by virtue of any statutory or common law
provision relating to banker's Liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a depositary
institution; provided that:
(a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the Company
in excess of those set forth by regulations promulgated by the Federal
Reserve Board; and
(b) such deposit account is not intended by the Company or any
Restricted Subsidiary to provide collateral to the depository institution;
(13) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company and its
Restricted Subsidiaries in the ordinary course of business;
(14) Liens existing on the Issue Date;
(15) Liens on property or shares of stock of a Person at the time
such Person becomes a Restricted Subsidiary; provided, however, that such Liens
are not created, Incurred or assumed in connection with, or in contemplation of,
such other Person becoming a Restricted Subsidiary; provided further, however,
that any such Lien may not extend to any other property owned by the Company or
any other Restricted Subsidiary;
(16) Liens on property at the time the Company or a Restricted
Subsidiary acquired the property, including any acquisition by means of a merger
or consolidation with or into the Company or any Restricted Subsidiary;
provided, however, that such Liens are not created, Incurred or assumed in
connection with, or in contemplation of, such acquisition;
22
provided further, however, that such Liens may not extend to any other property
owned by the Company or any other Restricted Subsidiary;
(17) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Company or another Restricted Subsidiary
(other than a Receivables Entity);
(18) Liens securing the Notes and Subsidiary Guarantees;
(19) Liens securing Refinancing Indebtedness Incurred to refinance
Indebtedness that was previously so secured, provided that any such Lien is
limited to all or part of the same property or assets (plus improvements,
accessions, proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the original Lien arose,
could secure) the Indebtedness being refinanced or is in respect of property
that is the security for a Permitted Lien hereunder;
(20) Liens in favor of customs and revenue authorities to secure
payment of customs duties in connection with the importation of goods;
(21) Liens securing Indebtedness (other than Subordinated
Obligations and Guarantor Subordinated Obligations) in an aggregate principal
amount outstanding at any one time not to exceed $10,000,000;
(22) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(23) Liens on QIPL's trademark rights to the Company's name and logo
and related intellectual property rights in the territories of Australia and New
Zealand, in favor of the former shareholders of QIPL, to secure the obligation
of QAPL to pay the final installment of the purchase price for the acquisition
of shares of QIPL by QAPL; and
(24) Liens on assets transferred to a Receivables Entity or on
assets of a Receivables Entity, in either case Incurred in connection with a
Qualified Receivables Transaction.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Public Equity Offering" means a public offering for cash by the
Company of its Common Stock, or options, warrants or rights with respect to its
Common Stock made pursuant to a registration statement that has been declared
effective by the SEC, other than public
23
offerings with respect to the Company's Common Stock, or options, warrants or
rights, registered on Form S-4 or S-8.
"Purchase Money Note" means a promissory note of a Receivables
Entity evidencing the deferred purchase price of Receivables (and related
assets) and/or a line of credit, which may be irrevocable, from the Company or
any Restricted Subsidiary of the Company in connection with a Qualified
Receivables Transaction with a Receivables Entity, which deferred purchase price
or line is repayable from cash available to the Receivables Entity, other than
amounts required to be established as reserves pursuant to agreements, amounts
paid to investors in respect of interest, principal and other amounts owing to
such investors and amounts owing to such investors and amounts paid in
connection with the purchase of newly generated Receivables.
"QAPL" means Quiksilver Australia Pty Ltd. a corporation organized
under the laws of the State of Victoria, Australia.
"QIB" means any "qualified institutional buyer" (as defined in Rule
144A under the Securities Act).
"QIPL" means Quiksilver International Pty Ltd. a corporation
organized under the laws of the State of Victoria, Australia.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a Receivables Entity (in the case
of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any
other Person (in the case of a transfer by a Receivables Entity), or may grant a
security interest in, any Receivables (whether now existing or arising in the
future) of the Company or any of its Restricted Subsidiaries, and any assets
related thereto including, without limitation, all collateral securing such
Receivables, all contracts and all guarantees or other obligations in respect of
such accounts receivable, the proceeds of such Receivables and other assets
which are customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization involving
Receivables.
"Receivable" means a right to receive payment arising from a sale or
lease of goods or the performance of services by a Person pursuant to an
arrangement with another Person pursuant to which such other Person is obligated
to pay for goods or services under terms that permit the purchase of such goods
and services on credit and shall include, in any event, any items of property
that would be classified as an "account," "chattel paper," "payment intangible"
or "instrument" under the Uniform Commercial Code as in effect in the State of
New York and any "supporting obligations" as so defined.
"Receivables Entity" means a Wholly Owned Subsidiary (or another
Person in which the Company or any Restricted Subsidiary of the Company makes an
Investment and to which the Company or any Restricted Subsidiary of the Company
transfers Receivables and related assets) which engages in no activities other
than in connection with the financing of
24
Receivables and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Entity:
(1) no portion of the Indebtedness or any other obligations (contingent
or otherwise) of which:
(a) is guaranteed by the Company or any Restricted Subsidiary of
the Company (excluding guarantees of Obligations (other than
the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings);
(b) is recourse to or obligates the Company or any Restricted
Subsidiary in any way other than pursuant to Standard
Securitization Undertakings; or
(c) subjects any property or asset of the Company or any
Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) with which neither the Company nor any Restricted Subsidiary has any
material contract, agreement, arrangement or understanding (except
in connection with a Purchase Money Note or Qualified Receivables
Transaction) other than on terms no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the
time from Persons that are not Affiliates of the Company, other than
fees payable in the ordinary course of business in connection with
servicing Receivables; and
(3) to which neither the Company nor any Restricted Subsidiary has any
obligation to maintain or preserve such entity's financial condition
or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Directors of the Company giving effect to
such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"Receivables Fees" means any fees or interest paid to purchasers or
lenders providing the financing in connection with a Qualified Receivables
Transaction, factoring agreement or other similar agreement, including any such
amounts paid by discounting the face amount of Receivables or participations
therein transferred in connection with a Qualified Receivables Transaction,
factoring agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, exchange, renew, repay or extend (including pursuant
to any defeasance or discharge mechanism) (collectively, "refinance,"
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on the date of this Indenture or Incurred in compliance
with this Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that
25
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness
that refinances Refinancing Indebtedness, provided, however, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced
is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness
has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness
being refinanced or (b) if the Stated Maturity of the Indebtedness being
refinanced is later than the Stated Maturity of the Notes, the Refinancing
Indebtedness has a Stated Maturity at least 91 days later than the Stated
Maturity of the Notes;
(2) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced (plus, without duplication, any
additional Indebtedness Incurred to pay interest or premiums required by the
instruments governing such existing Indebtedness and fees Incurred in connection
therewith); and
(4) if the Indebtedness being extended, refinanced, replaced,
defeased or refunded is subordinated in right of payment to the Notes or the
Subsidiary Guarantees, such Refinancing Indebtedness is subordinated in right of
payment to the Notes or the Subsidiary Guarantees on terms at least as favorable
to the Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Registration Rights Agreement" means that certain registration
rights agreement dated as of the date of this Indenture by and among the
Company, the Subsidiary Guarantors and the initial purchasers set forth therein,
and, with respect to any Additional Notes, one or more substantially similar
registration rights agreements among the Company and the other parties thereto,
in each case, as such agreements may be amended, supplemented or otherwise
modified from time to time.
"Related Business" means any business that is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries or of Rossignol and its Subsidiaries on the date of
this Indenture.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Investment" means any Investment other than a Permitted
Investment.
26
"Restricted Note" means a Note that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
conclusively rely on an opinion of counsel with respect to whether any Note
constitutes a Restricted Note.
"Restricted Notes Legend" means the Private Placement Legend set
forth in clause (A) of Section 2.1(d) or the Regulation S Legend set forth in
clause (B) of Section 2.1(d), as applicable.
"Restricted Period" means, in relation to the Initial Notes, the 40
consecutive days beginning on and including the later of (A) the day on which
the Initial Notes are offered to persons other than distributors (as defined in
Regulation S under the Securities Act) and (B) the Issue Date and, in relation
to any Additional Notes that are Restricted Notes, it means the comparable
period of 40 consecutive days.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Amended and Restated Credit
Facility dated as of June 3, 2005, among Quiksilver Americas, Inc., as Borrower,
Quiksilver, Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as
administrative agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Rossignol" means Skis Rossignol S.A., a French corporation.
"Rossignol Purchase Agreement" means the purchase agreement, dated
April 12, 2005, entered into among Quiksilver, Inc., ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SDI Societe de
Services et Developpement.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary of the Company whereby the Company or such Restricted Subsidiary
transfers such property to a Person and the Company or such Restricted
Subsidiary leases it from such Person.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
27
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary of the Company that are reasonably customary in
securitization of Receivables transactions.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" of any Person means (a) any corporation, association or
other business entity (other than a partnership, joint venture, limited
liability company or similar entity) of which more than 50% of the total
ordinary 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 (or persons performing similar functions) or (b) any
partnership, joint venture, limited liability company or similar entity of which
more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, is,
in the case of clauses (a) and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of
such Person or (3) one or more Subsidiaries of such Person. Unless otherwise
specified herein, each reference to a Subsidiary shall refer to a Subsidiary of
the Company.
"Subsidiary Guarantee" means, with respect to any Subsidiary
Guarantor, any Guarantee of payment of the Notes and Exchange Notes by a
Subsidiary Guarantor pursuant to the terms of this Indenture and any
supplemental indenture thereto, and, collectively, all such Guarantees. Each
such Subsidiary Guarantee shall be executed and delivered pursuant to the terms
of this Indenture and any supplemental indenture (including pursuant to Exhibit
C).
"Subsidiary Guarantor" means each current or future Domestic
Subsidiary of the Company that (i) Guarantees any Indebtedness of the Company or
any other Restricted Subsidiary, or (ii) is an obligor under a Credit Facility.
"Successor Company" shall have the meaning assigned thereto in
clause (i) of Section 4.1.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as in effect from time to time.
"Transactions" means the Acquisition and the transactions related
thereto, the offering of the Notes being issued on the Issue Date and borrowings
made pursuant to the Revolving Credit Facility in connection therewith.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means such successor.
28
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary or a
Person becoming a Subsidiary through merger or consolidation or Investment
therein) to be an Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own any
Capital Stock or Indebtedness of or have any Investment in, or own or hold any
Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries
shall, at the date of designation, and shall at all times thereafter, consist of
Non-Recourse Debt;
(3) such designation and the Investment of the Company in such
Subsidiary complies with Section 3.4;
(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of the Company and its Subsidiaries;
(5) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation:
(a) to subscribe for additional Capital Stock of such Person;
or
(b) to maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of operating
results; and
(6) on the date such Subsidiary is designated an Unrestricted
Subsidiary, such Subsidiary is not a party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary with
terms substantially less favorable to the Company than those that might have
been obtained from Persons who are not Affiliates of the Company.
Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a resolution of the Board
of Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary
29
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred
as of such date.
The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and the Company could
Incur at least $1.00 of additional Indebtedness under the first paragraph of
Section 3.3 on a pro forma basis taking into account such designation.
"U.S. Government Obligations" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) 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 of 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 depositary 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 Obligations or a specific payment of principal of or interest on any
such U.S. Government Obligations held by such custodian for the account of the
holder of such depositary 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 depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of principal of or interest on the U.S. Government Obligations evidenced by such
depositary receipt.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary, all of the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
Other Definitions.
Defined in
Term Section
---- ----------
"Additional Interest Notice"........................................... 3.23
"Additional Notes"..................................................... Recitals
"Additional Restricted Notes" ......................................... 2.1(b)
"Affiliate Transaction"................................................ 3.9(a)
"Agent Members"........................................................ 2.1(e)
"Asset Disposition Offer".............................................. 3.8(b)
"Asset Disposition Offer Amount"....................................... 3.8(c)
"Asset Disposition Offer Period"....................................... 3.8(c)
"Asset Disposition Purchase Date"...................................... 3.8(c)
"Authenticating Agent"................................................. 2.2
30
Defined in
Term Section
---- ----------
"Change of Control Offer" ............................................. 3.10(b)
"Change of Control Payment" ........................................... 3.10(b)
"Change of Control Payment Date" ...................................... 3.10(b)
"Company Order" ....................................................... 2.2
"covenant defeasance option"........................................... 8.1(b)
"Event of Default"..................................................... 6.1
"Exchange Global Note" ................................................ 2.1(b)
"Exchange Notes" ...................................................... Recitals
"Excess Proceeds" ..................................................... 3.8(b)
"Global Notes"......................................................... 2.1(b)
"IAI" ................................................................. 2.1(b)
"Initial Notes" ....................................................... Recitals
"Institutional Accredited Investor Global Note" ....................... 2.1(b)
"Institutional Accredited Investor Notes" ............................. 2.1(b)
"legal defeasance option".............................................. 8.1(b)
"Obligations" ......................................................... 10.1
"Pari Passu Notes"..................................................... 3.8(b)
"Paying Agent"......................................................... 2.3
"Private Placement Legend" ............................................ 2.1(d)
"Redemption Date" ..................................................... 5.3
"Registrar"............................................................ 2.3
"Regulation S"......................................................... 2.1(b)
"Regulation S Global Note"............................................. 2.1(b)
"Regulation S Legend" ................................................. 2.1(d)
"Regulation S Notes"................................................... 2.1(b)
"Resale Restriction Termination Date".................................. 2.6(a)
"Restricted Payment"................................................... 3.4(a)
"Rule 144A Global Note"................................................ 2.1(b)
"Rule 144A Note"....................................................... 2.1(b)
"Notes" ............................................................... Recitals
"Series B Global Note" ................................................ 2.1(b)
"Special Interest Payment Date" ....................................... 2.13(a)
"Special Record Date" ................................................. 2.13(a)
SECTION 1.2. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA term has the following meaning:
"Commission" means the SEC.
"indenture notes" means the Notes.
"indenture security holder" means a Noteholder.
31
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by the TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) "$" and "U.S. dollars" each refer to United States dollars, or
such other money of the United States of America that at the time of
payment is legal tender for payment of public and private debts.
ARTICLE II
The Notes
SECTION 2.1. Form, Dating and Terms. (a) The aggregate principal
amount of Notes that may be authenticated and delivered under this Indenture is
unlimited. The Initial
32
Notes issued on the date hereof will be in an aggregate principal amount of
$400,000,000. In addition, the Company may issue, from time to time in
accordance with the provisions of this Indenture, including, without limitation,
Section 3.3(a) hereof, Additional Notes and Exchange Notes. Furthermore, Notes
may be authenticated and delivered upon registration or transfer, or in lieu of,
other Notes pursuant to Section 2.6, 2.9, 2.11 or 9.5 or in connection with an
Asset Disposition Offer pursuant to Section 3.8 or a Change of Control Offer
pursuant to Section 3.10.
The Initial Notes shall be known and designated as "6-7/8% Senior
Notes, Series A, due 2015" of the Company. Additional Notes issued as Restricted
Notes shall be known and designated as "6-7/8% Senior Notes, Series A, due 2015"
of the Company. Additional Notes issued other than as Restricted Notes shall be
known and designated as "6-7/8% Senior Notes, Series B, due 2015" of the
Company, and Exchange Notes shall be known and designated as "6-7/8% Senior
Notes, Series B, due 2015" of the Company.
With respect to any Additional Notes, the Company shall set forth in
(a) a Board Resolution and (b)(i) an Officers' Certificate or (ii) one or more
indentures supplemental hereto, the following information:
(i) the aggregate principal amount of such Additional Notes to be
authenticated and delivered pursuant to this Indenture;
(ii) the issue price and the issue date of such Additional Notes;
and
(iii) whether such Additional Notes shall be Restricted Notes issued
in the form of Exhibit A hereto and/or shall be issued in the form of
Exhibit B hereto.
The Initial Notes, the Additional Notes and the Exchange Notes shall
be considered collectively as a single class for all purposes of this Indenture.
Holders of the Initial Notes, the Additional Notes and the Exchange Notes shall
vote and consent together on all matters to which such Holders are entitled to
vote or consent as one class, and none of the Holders of the Initial Notes, the
Additional Notes or the Exchange Notes shall have the right to vote or consent
as a separate class on any matter to which such Holders are entitled to vote or
consent.
(b) The Initial Notes are being offered and sold by the Company
pursuant to a Purchase Agreement, dated July 14, 2005, among the Company, the
Subsidiary Guarantors, ▇.▇. ▇▇▇▇▇▇ Securities Inc., Banc of America Securities
LLC, SG Americas Securities, LLC, BNP Paribas Securities Corp., Calyon
Securities (USA) Inc., Natexis Bleichroeder Inc., CIBC World Markets Corp. and
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. The Initial Notes and any Additional Notes (if issued as
Restricted Notes) ("Additional Restricted Notes") shall be resold initially only
to (A) QIBs and (B) Persons other than U.S. Persons (as defined in Regulation S
under the Securities Act ("Regulation S")) in reliance on Regulation S. Such
Initial Notes and Additional Restricted Notes may thereafter be transferred to,
among others, QIBs, purchasers in reliance on Regulation S and institutional
"accredited investors" (as defined in Rules 501(a)(1), (2), (3) and (7) under
the Securities Act) who are not QIBs ("IAIs") in accordance with Rule 501 of the
Securities Act in accordance with the procedure described herein. Additional
Notes offered after the date
33
hereof may be offered and sold by the Company from time to time pursuant to one
or more purchase agreements in accordance with applicable law.
Initial Notes and Additional Restricted Notes offered and sold to
QIBs in the United States of America in reliance on Rule 144A (the "Rule 144A
Notes") shall be issued in the form of a permanent global Note substantially in
the form of Exhibit A, which is hereby incorporated by reference and made a part
of this Indenture, including appropriate legends as set forth in Section 2.1(d)
(the "Rule 144A Global Note"), deposited with the Notes Custodian, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Rule 144A Global Note may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate. The aggregate principal amount of the Rule
144A Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee, as
hereinafter provided.
Initial Notes and any Additional Restricted Notes offered and sold
outside the United States of America (the "Regulation S Notes") in reliance on
Regulation S shall initially be issued in the form of a permanent global Note
substantially in the form of Exhibit A including appropriate legends as set
forth in Section 2.1(d) (the "Regulation S Global Note"). The Regulation S Note
shall be deposited upon issuance with the Notes Custodian in the manner
described in this Article II for credit by the Depositary to the respective
accounts of the purchasers (or to such other accounts as they may direct),
including, but not limited to, accounts at Euroclear or Clearstream.
Investors may hold their interests in the Regulation S Global Note
directly through Euroclear or Clearstream, if they are participants in such
systems, or indirectly through organizations that are participants in such
systems. Investors may also hold such interests through organizations other than
Euroclear or Clearstream that are participants in the Depositary's system. If
interests in the Regulation S Global Note are held through Euroclear or
Clearstream, Euroclear and Clearstream shall hold such interests in the
Regulation S Global Note through the Depositary on behalf of their participants
through customers' securities accounts in their respective names on the books of
their respective depositaries. Such depositaries, in turn, shall hold such
interests in the applicable Regulation S Global Note in customers' securities
accounts in the depositaries' names on the books of the Depositary. The
Regulation S Global Note may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, and the Depositary or its
nominee, as hereinafter provided.
Initial Notes and any Additional Restricted Notes resold to IAIs
(the "Institutional Accredited Investor Notes") in the United States of America
shall be issued in the form of a permanent global Note substantially in the form
of Exhibit A including appropriate legends as set forth in Section 2.1(d) (the
"Institutional Accredited Investor Global Note") deposited with the Notes
Custodian, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Institutional Accredited Investor Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount
34
to be represented by a single certificate. The aggregate principal amount of the
Institutional Accredited Investor Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the
Depositary, as hereinafter provided.
Exchange Notes exchanged for interests in the Rule 144A Note, the
Regulation S Note and the Institutional Accredited Investor Note, as the case
may be, shall be issued in the form of a permanent global Note substantially in
the form of Exhibit B hereto, which is hereby incorporated by reference and made
a part of this Indenture, deposited with the Notes Custodian as hereinafter
provided, including the appropriate legend set forth in Section 2.1(d) hereof
(the "Exchange Global Note"). The Exchange Global Note may be represented by
more than one certificate, if so required by the Depositary's rules regarding
the maximum principal amount to be represented by a single certificate.
Any Additional Notes issued other than as Restricted Notes shall be
issued in the form of one or more permanent global Notes substantially in the
form of Exhibit B (each, a "Series B Global Note") deposited with the Notes
Custodian, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. A Series B Global Note may be represented by more than one
certificate, if so required by the Depositary's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Series B Global Notes may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as hereinafter provided.
The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Accredited Investor Global Note, the Exchange Global Note, and the
Series B Global Note are sometimes collectively herein referred to as the
"Global Notes."
The principal of (and premium, if any) and interest on the Notes
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 pursuant to Section 2.3; provided,
however, that, at the option of the Company, each installment of interest may be
paid by (i) check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Note Register or (ii) wire transfer or to an
account located in the United States maintained by the payee. Payments in
respect of Notes represented by a Global Note (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by the Depositary. Payments in respect of Notes represented
by Definitive Notes (including principal, premium, if any, and interest) held by
a Holder of at least $1,000,000 aggregate principal amount of Notes represented
by Definitive Notes shall be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 15 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept).
The Exchange Notes shall be in the form of Exhibit B. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage, in addition to those set forth on Exhibit A and Exhibit B and in Section
2.1(d). The Company shall approve
35
the forms of the Notes and any notation, endorsement or legend on them. Any such
notation, endorsement or legend shall be furnished to the Trustee in writing.
Each Note shall be dated the date of its authentication. The terms of the Notes
set forth in Exhibit A and Exhibit B are part of the terms of this Indenture
and, to the extent applicable, the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to be bound by such terms.
(c) Denominations. The Notes shall be issuable only in fully
registered form, without coupons, and only in denominations of $100,000 or an
integral multiple of $1,000 in excess thereof.
(d) Restrictive Legends. Unless and until (i) an Initial Note or an
Additional Note issued as a Restricted Note is sold under an effective
registration statement or (ii) an Initial Note or an Additional Note issued as a
Restricted Note is exchanged for an Exchange Note in connection with an
effective registration statement, in each case pursuant to the Registration
Rights Agreement,
(A) the Rule 144A Global Note and the Institutional Accredited
Investor Global Note shall (x) be subject to the restrictions on transfer set
forth in Section 2.6 (including those set forth in the legend below) and (y)
bear the following legend (the "Private Placement Legend") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. 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 SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH
IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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 THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL
36
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, 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 (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
PLAN, ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS
UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS
THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"),
OR OF ANY ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN
ASSETS" OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (II) THE ACQUISITION
AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A
VIOLATION UNDER ANY APPLICABLE SIMILAR LAW."
(B) the Regulation S Global Note shall (x) be subject to the
restrictions on transfer set forth in Section 2.6 (including those set forth in
the legend below) and (y) bear the following legend (the "Regulation S Legend")
on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. 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 SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
37
HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR
WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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 THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT
IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000,
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
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF
REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
PLAN, ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
38
PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR
REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE
("SIMILAR LAWS"), OR OF ANY ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED
TO INCLUDE "PLAN ASSETS" OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (II)
THE ACQUISITION AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE OR A VIOLATION UNDER ANY APPLICABLE SIMILAR LAW."
(C) Each Global Note, whether or not an Initial Note, shall 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"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR 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 DTC, TO NOMINEES OF DTC 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 THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."
(e) Book-Entry Provisions. (i) This Section 2.1(e) shall apply only
to Global Notes deposited with the Notes Custodian.
(ii) Each Global Note initially shall (x) be registered in the name
of the Depositary for such Global Note or the nominee of such Depositary, (y) be
delivered to the Notes Custodian for such Depositary and (z) bear legends as set
forth in Section 2.1(d).
(iii) Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary or by the Trustee as the custodian
of the Depositary or under such Global Note, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other
39
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of the Depositary
governing the exercise of the rights of a Holder of a beneficial interest in any
Global Note.
(iv) The registered Holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
(v) In connection with any transfer of a portion of the beneficial
interest in a Global Note pursuant to subsection (f) of this Section 2.1 to
beneficial owners who are required to hold Definitive Notes, the Trustee shall
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Definitive Notes of
like tenor and amount.
(vi) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to subsection (e) of this Section, such Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in such Global Note, an equal aggregate principal amount of Definitive
Notes of authorized denominations.
(vii) Any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book-entry system maintained by (a) the Holder of
such Global Note (or its agent) or (b) any Holder of a beneficial interest in
such Global Note, and that ownership of a beneficial interest in such Global
Note shall be required to be reflected in a book entry.
(f) Definitive Notes. Except as provided below, owners of beneficial
interests in Global Notes shall not be entitled to receive Definitive Notes. If
required to do so pursuant to any applicable law or regulation, beneficial
owners may obtain Definitive Notes in exchange for their beneficial interests in
a Global Note upon written request in accordance with the Depositary's and the
Registrar's procedures. In addition, Definitive Notes shall be delivered to all
beneficial owners in exchange for their beneficial interests in a Global Note if
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as depositary for such Global Note or the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered in order to act as Depositary, and in each case
a successor depositary is not appointed by the Company within 90 days of such
notice or, (ii) the Company executes and delivers to the Trustee and Registrar
an Officers' Certificate stating that such Global Note shall be so exchangeable
or (iii) an Event of Default has occurred and is continuing and the Registrar
has received a request from the Depositary.
(g) Any Definitive Note delivered in exchange for an interest in a
Global Note pursuant to Section 2.1(e)(v) or (vi) shall, except as otherwise
provided by paragraph (c) of
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Section 2.6, bear the applicable legend regarding transfer restrictions
applicable to the Definitive Note set forth in Section 2.1(d).
(h) In connection with the exchange of a portion of a Definitive
Note for a beneficial interest in a Global Note, the Trustee shall cancel such
Definitive Note, and the Company shall execute, and the Trustee shall
authenticate and deliver, to the transferring Holder a new Definitive Note
representing the principal amount not so transferred and the relevant Global
Note shall be increased by an adjustment made on the records of the Trustee and
the Depositary.
SECTION 2.2. Execution and Authentication. Two Officers shall sign
the Notes for the Company by manual or facsimile signature. If an Officer whose
signature is on a Note no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually authenticates the Note. The signature of the Trustee on a Note
shall be conclusive evidence that such Note has been duly and validly
authenticated and issued under this Indenture. A Note shall be dated the date of
its authentication.
At any time and from time to time after the execution and delivery
of this Indenture, the Trustee shall authenticate and make available for
delivery: (1) Initial Notes for original issue on the Issue Date in an aggregate
principal amount of $400,000,000, (2) subject to the terms of this Indenture,
Additional Notes for original issue in an unlimited principal amount and (3)
Exchange Notes for issue only in an Exchange Offer pursuant to a Registration
Rights Agreement or upon resale under an effective Shelf Registration Statement,
and only in exchange for Initial Notes or Additional Notes, as the case may be,
of an equal principal amount, in each case upon a written order of the Company
signed by two Officers or by an Officer and either a Treasurer or an Assistant
Secretary of the Company (the "Company Order"). Such Company Order shall specify
the amount of the Notes to be authenticated and the date on which the original
issue of Notes is to be authenticated and whether the Notes are to be Initial
Notes, Additional Notes or Exchange Notes.
The Trustee may (at the expense of the Company) appoint an agent
(the "Authenticating Agent") reasonably acceptable to the Company to
authenticate the Notes. Unless limited by the terms of such appointment, any
such Authenticating Agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent.
In case the Company, pursuant to Article IV 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, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company 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 Trustee pursuant to Article IV, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the
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successor Person, be exchanged for other Notes 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 Notes surrendered
for such exchange and of like principal amount; and the Trustee, upon Company
Order of the successor Person, shall authenticate and deliver Notes as specified
in such order for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon registration of
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
outstanding for Notes authenticated and delivered in such new name.
SECTION 2.3. Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar") and an office or agency where Notes may be
presented for payment (the "Paying Agent"). The Company shall cause each of the
Registrar and the Paying Agent to maintain an office or agency in the Borough of
Manhattan, The City of New York. The Registrar shall keep a register of the
Notes and of their transfer and exchange (the "Note Register"). The Company may
have one registrar and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee in writing of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.7.
The Company or any of its Wholly Owned Subsidiaries that is a Domestic
Subsidiary may act as Paying Agent, Registrar or transfer agent.
The Company initially appoints the Trustee as Notes Custodian,
Registrar and Paying Agent for the Notes. The Company may remove any Notes
Custodian, Registrar or Paying Agent upon written notice to such Notes
Custodian, Registrar or Paying Agent and to the Trustee; provided, however, that
no such removal shall become effective until (i) acceptance of any appointment
by a successor as evidenced by an appropriate agreement entered into by the
Company and such successor Notes Custodian, Registrar or Paying Agent, as the
case may be, and delivered to the Trustee or (ii) notification to the Trustee
that the Trustee shall serve as Notes Custodian, Registrar or Paying Agent until
the appointment of a successor in accordance with clause (i) above. The Notes
Custodian, Registrar or Paying Agent may resign at any time upon written notice
to the Company and the Trustee.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least 10:00
a.m. (New York City time) on the date on which any principal of (premium, if
any) or interest on any Note is due and payable, the Company shall irrevocably
deposit with the Paying Agent a sum sufficient in immediately available funds to
pay such principal (premium, if any) or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that such
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all money held by such Paying Agent for the payment of principal of or interest
on the Notes and shall notify the Trustee in writing of any default by the
Company or any Subsidiary Guarantor in
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making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by such Paying Agent. Upon complying with this Section, the Paying
Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money delivered to the Trustee. Upon any bankruptcy,
reorganization or similar proceeding with respect to the Company, the Trustee
shall serve as Paying Agent for the Notes.
SECTION 2.5. Holder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar or to the extent otherwise required
under the TIA, the Company, on its own behalf and on behalf of each Subsidiary
Guarantor, shall furnish to the Trustee, in writing at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing within 15 days, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders and the
Company shall otherwise comply with TIA Section 312(a).
SECTION 2.6. Transfer and Exchange.
(a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Note or an Institutional Accredited Investor
Note prior to the date which is two years after the later of the date of its
original issue and the last date on which the Company or any Affiliate of the
Company was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date"):
(i) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to a QIB shall be made upon
the representation of the transferee in the form as set forth on the
reverse of the Note that it is purchasing the Note for its own account or
an account with respect to which it exercises sole investment discretion
and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A;
(ii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to an IAI shall be made
upon receipt by the Trustee or its agent of a certificate substantially in
the form set forth in Section 2.7 hereof from the proposed transferee and,
if requested by the Company or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them; and
(iii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to a Non-U.S. Person shall
be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.8 hereof
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from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:
(i) a transfer of a Regulation S Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee,
in the form of assignment on the reverse of the certificate, that it is
purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding 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 its foregoing representations in order to claim
the exemption from registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial interest
therein to an IAI shall be made upon receipt by the Trustee or its agent
of a certificate substantially in the form set forth in Section 2.7 hereof
from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) a transfer of a Regulation S Note or a beneficial interest
therein to a Non-U.S. Person shall be made upon receipt by the Trustee or
its agent of a certificate substantially in the form set forth in Section
2.8 hereof from the proposed transferee and, if requested by the Company
or the Trustee, receipt by the Trustee or its agent of an opinion of
counsel, certification and/or other information satisfactory to each of
them.
After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred in accordance with applicable law without
requiring the certification set forth in Section 2.8 or any additional
certification.
(c) Restricted Notes Legend. Upon the transfer, exchange or
replacement of Notes not bearing a Restricted Notes Legend, the Registrar shall
deliver Notes that do not bear a Restricted Notes Legend. Upon the transfer,
exchange or replacement of Notes bearing a Restricted Notes Legend, the
Registrar shall deliver only Notes that bear such Restricted Notes Legend unless
(i) Initial Notes are being exchanged for Exchange Notes in a Exchange Offer in
which case the Exchange Notes shall not bear a Restricted Notes Legend, (ii) an
Initial Note is being transferred pursuant to an effective registration
statement or (iii) there is delivered to the Registrar an Opinion of Counsel 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. Any Additional Notes sold in a registered offering shall not be required to
bear the Restricted Notes Legend.
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(d) The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.1 or this Section
2.6 in accordance with its records retention policy. The Company shall have the
right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
(e) Obligations with Respect to Transfers and Exchanges of Notes.
(i) To permit registrations of transfers and exchanges, the Company
shall, subject to the other terms and conditions of this Article II,
execute and the Trustee shall authenticate Definitive Notes and Global
Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Sections 3.8, 3.10 or 9.5).
(iii) The Registrar shall not be required to register the transfer
of or exchange of any Note for a period beginning (1) 15 Business Days
before the mailing of a notice of an offer to repurchase Notes and ending
at the close of business on the day of such mailing or (2) 15 Business
Days before an interest payment date and ending on such interest payment
date.
(iv) Prior to the due presentation for registration of transfer of
any Note, the Company, the Trustee, the Paying Agent or the Registrar may
deem and treat the Person in whose name a Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of (premium, if any) and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(v) All Notes issued upon any transfer or exchange pursuant to the
terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Notes surrendered upon
such transfer or exchange.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Note, a member
of, or a participant in, the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any participant
or member thereof, with respect to any ownership interest in the Notes or with
respect to the delivery to any participant, member, beneficial owner or other
Person (other than the Depositary) of any notice or the payment of any amount or
delivery of any Notes (or other security or property) under or with respect to
such Notes. All notices and communications to be given to the Holders and all
payments to be made to Holders in respect of the Notes shall be given or made
only to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Note). The rights of
beneficial owners in any Global Note shall be exercised only through the
Depositary subject to the applicable rules
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and procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Note) other than, if
the Trustee has received prior notice of a transfer, to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.
SECTION 2.7 Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors.
[Date]
Quiksilver, Inc.
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Attention: Chief Financial Officer
and
Wilmington Trust Company
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Attention: Corporate Trust Administration
Re: Quiksilver, Inc.
6-7/8% Senior Notes due 2015 (the "Notes")
Dear Sirs:
This certificate is delivered to request a transfer of $__________
principal amount of the Notes of Quiksilver, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
Name: ______________________________________
Address: ___________________________________
Taxpayer ID Number: ________________________
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The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) 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" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and we invest
in or purchase securities similar to the Notes in the normal course of our
business. 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 that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date that 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 Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified
institutional buyer under 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 that occur
outside the United States within the meaning of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing
for its own account or for the account of such an institutional "accredited
investor," in each case in a minimum principal amount of Notes of $250,000 or
(f) 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 in
compliance with any applicable state securities laws. The foregoing restrictions
on resale shall not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and
that it is acquiring such Notes for investment purposes and not for distribution
in violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e)
or (f) above to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Company and the Trustee.
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TRANSFEREE: ____________________
BY: ____________________________
SECTION 2.8. Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S.
[Date]
Quiksilver, Inc.
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
and
Wilmington Trust Company
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Attention: Corporate Trust Administration
Re: Quiksilver, Inc.
6-7/8% Senior Notes due 2015 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Notes was not made to a person in the United
States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States or
(ii) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(c) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
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In addition, if the sale is made during a restricted period and the
provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may be.
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 Transferor]
By: ____________________________
Authorized Signature
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Notes. If a
mutilated Note is surrendered to the Registrar or if the Holder of a Note claims
that the Note has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee, upon Company Order, shall authenticate a replacement
Note. The Holder shall meet the requirements of Section 8-405 of the Uniform
Commercial Code, such that the Holder (a) notifies the Company and the Trustee
within a reasonable time after such Holder has notice of such loss, destruction
or wrongful taking and the Registrar has not registered a transfer prior to
receiving such notification, (b) makes such request to the Company prior to the
Company having notice that the Note has been acquired by a protected purchaser
as defined in Section 8-303 of the Uniform Commercial Code (a "protected
purchaser") and (c) satisfies any other reasonable requirements of the Company
and the Trustee. Such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent and the Registrar from any loss which any of them may suffer if a
Note is replaced, then, in the absence of notice to the Company, any Subsidiary
Guarantor or the Trustee that such Note has been acquired by a protected
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in exchange for any such mutilated Note or in lieu of
any such destroyed, lost or stolen Note, a new Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note 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 Trustee) in connection
therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the
49
Company, any Subsidiary Guarantor and any other obligor upon the Notes, whether
or not the mutilated, destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.
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 Notes.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are
all Notes authenticated by the Trustee except for those canceled by it, those
paid pursuant to Section 2.9, those delivered to it for cancellation and those
described in this Section as not outstanding. A Note does not cease to be
outstanding in the event the Company or an Affiliate of the Company holds the
Note except that the Company or an Affiliate of the Company shall not obtain
voting rights with respect to such Note.
If a Note is replaced pursuant to Section 2.9, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a maturity date money sufficient to pay all principal
and interest payable on that date with respect to the Notes maturing and the
Paying Agent is not prohibited from paying such money to the Holders on that
date pursuant to the terms of this Indenture, then on and after that date such
Notes cease to be outstanding and interest on them ceases to accrue.
SECTION 2.11. Temporary Notes. In the event that Definitive Notes
are to be issued under the terms of this Indenture, until such Definitive Notes
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of Definitive Notes but may have variations that the Company considers
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Notes. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at any office or agency
maintained by the Company for that purpose and such exchange shall be without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute, and the Trustee shall authenticate
and make available for delivery in exchange therefor, one or more Definitive
Notes representing an equal principal amount of Notes. Until so exchanged, the
Holder of temporary Notes shall in all respects be entitled to the same benefits
under this Indenture as a Holder of Definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver
Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
return to the Company all Notes surrendered for registration of transfer,
exchange, payment or cancellation. The Company may not issue new Notes to
replace Notes it has paid or delivered to the Trustee for cancellation.
50
At such time as all beneficial interests in a Global Note have
either been exchanged for Definitive Notes, transferred, redeemed, repurchased
or canceled, such Global Note shall be returned by the Depositary to the Trustee
for cancellation or retained and canceled by the Trustee. At any time prior to
such cancellation, if any beneficial interest in a Global Note is exchanged for
Definitive Notes, transferred in exchange for an interest in another Global
Note, redeemed, repurchased or canceled, the principal amount of Notes
represented by such Global Note shall be reduced and an adjustment shall be made
on the Global Note and on the books and records of the Trustee (if it is then
the Notes Custodian for such Global Note) with respect to such Global Note, by
the Trustee or the Notes Custodian, to reflect such reduction.
SECTION 2.13. Payment of Interest; Defaulted Interest. Interest on
any Note which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Note (or
one or more predecessor Notes) is registered at the close of business on the
regular record date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 2.3.
Any interest on any Note which is payable, but is not paid when the
same becomes due and payable and such nonpayment continues for a period of 30
days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Notes (such defaulted interest and interest thereon herein collectively called
"Defaulted Interest") shall be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date
(as defined below) for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date (not less than 30 days after such notice) of the
proposed payment (the "Special Interest Payment Date"), and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the Trustee
shall fix a record date (the "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 Special Interest Payment Date and not less than
10 days after the receipt by the Trustee of the notice of the proposed
payment. The 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 and Special Interest Payment Date therefor to be given
in the manner provided for in Section 11.2, 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 and Special Interest Payment Date
therefor having been so given, such Defaulted Interest shall be paid on
the Special Interest Payment Date to the Persons in whose names the Notes
(or their respective
51
predecessor Notes) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 2.14. Computation of Interest. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.15. CUSIP Numbers. The Company in issuing the Notes may
use "CUSIP" numbers (if then generally in use). The Trustee shall not be
responsible for the use of CUSIP numbers, and the Trustee makes no
representation as to their correctness as printed on any Note or notice to
Holders and that reliance may be placed only on the other identification numbers
printed on the Notes, and any redemption shall not be affected by any defect in
or omission of such CUSIP numbers. The Company shall promptly notify the Trustee
in writing of any change in the CUSIP numbers.
ARTICLE III
Covenants
SECTION 3.1. Payment of Notes. The Company shall promptly pay the
principal of and interest on the Notes on the dates and in the manner provided
in the Notes and in this Indenture. Principal and interest shall be considered
paid on the date due if on such date the Trustee or the Paying Agent holds in
accordance with this Indenture money sufficient to pay all principal and
interest then due and the Trustee or the Paying Agent, as the case may be, is
not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Notes, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
52
SECTION 3.2. SEC Reports. Notwithstanding that the Company may not
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, to the extent permitted by the Exchange Act, the Company shall file with
the SEC, and make available to the Trustee and the Holders, the annual reports
and the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act within the time periods
specified therein. In the event that the Company is not permitted to file such
reports, documents and information with the SEC pursuant to the Exchange Act,
the Company shall nevertheless make available such Exchange Act information to
the Trustee and the Holders as if the Company were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act within the time periods
specified therein. The Company shall also comply with the other provisions of
TIA Section 314(a).
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes to the financial
statements and in Management's Discussion and Analysis of Results of Operations
and Financial Condition, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries.
SECTION 3.3. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (including Acquired Indebtedness); provided, however, that the
Company or any Subsidiary Guarantor may Incur Indebtedness if on the date
thereof:
(1) the Consolidated Coverage Ratio for the Company and its
Restricted Subsidiaries is at least 2.0 to 1.0; and
(2) no Default or Event of Default shall have occurred or be
continuing or shall occur as a consequence of Incurring the Indebtedness
or transactions relating to such Incurrence.
(b) The foregoing paragraph (a) shall not prohibit the Incurrence of the
following Indebtedness:
(1) Indebtedness of the Company or any Subsidiary Guarantor Incurred
pursuant to a Credit Facility, together with the principal component of
amounts outstanding under Qualified Receivables Transactions, in an
aggregate amount up to the greater of (a) the Borrowing Base, less the
aggregate principal amount of Indebtedness outstanding at any one time
under clause (11), and (b) $300,000,000 less the aggregate principal
amount of repayments with the proceeds from Asset Dispositions that are
required under this Indenture to reduce permanently the revolving
commitments under a Credit Facility and Guarantees of Restricted
Subsidiaries in respect of the Indebtedness Incurred pursuant to a Credit
Facility under this clause (1);
(2) Guarantees by the Company or any Subsidiary Guarantor of
Indebtedness Incurred in accordance with the provisions of this Indenture;
provided that in the event
53
such Indebtedness that is being Guaranteed is a Subordinated Obligation or
a Guarantor Subordinated Obligation, then the related Guarantee shall be
subordinated in right of payment to the Notes or the Subsidiary Guarantee,
as the case may be;
(3) Indebtedness of the Company owing to and held by any Restricted
Subsidiary (other than a Receivables Entity) or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or any other
Restricted Subsidiary (other than a Receivables Entity); provided,
however,
(a) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full
in cash of all obligations with respect to the Notes;
(b) if a Subsidiary Guarantor is the obligor on such
Indebtedness and the Company or a Subsidiary Guarantor is not the
obligee, such Indebtedness constitutes a Guarantor Subordinated
Obligation; and
(c) (i) any subsequent issuance or transfer of Capital Stock
or any other event which results in any such Indebtedness being
beneficially held by a Person other than the Company or a Restricted
Subsidiary (other than a Receivables Entity) of the Company; and
(ii) any sale or other transfer of any such Indebtedness to a
Person other than the Company or a Restricted Subsidiary (other than
a Receivables Entity) 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.
(4) (a) Indebtedness represented by the Notes on the Issue Date and
the related Subsidiary Guarantees and the exchange notes and exchange
guarantees issued in a registered exchange offer pursuant to the
Registration Rights Agreement, (b) any Indebtedness (other than the
Indebtedness described in clauses (1), (2), (3), (6), (8), (9), (10) and
(11)) outstanding on the Issue Date and (c) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (4) or
clause (5) or Incurred pursuant to Section 3.3(a);
(5) Indebtedness of a Subsidiary Guarantor Incurred and outstanding
on the date on which such Subsidiary Guarantor was acquired by the Company
or a Restricted Subsidiary and Indebtedness of a Foreign Subsidiary
Incurred and outstanding on the date on which such Foreign Subsidiary was
acquired by the Company or a Restricted Subsidiary (other than
Indebtedness Incurred (a) to provide all or any portion of the funds
utilized to consummate the transaction or series of related transactions
pursuant to which such Subsidiary Guarantor or Foreign Subsidiary, as the
case may be, became a Subsidiary Guarantor or Foreign Subsidiary, as the
case may be, or was otherwise acquired by the Company or (b) otherwise in
connection with, or in contemplation of, such acquisition); provided,
however, that at the time such Subsidiary Guarantor is acquired by the
Company or such Restricted Subsidiary, the Company would have been
54
able to Incur $1.00 of additional Indebtedness pursuant to Section 3.3(a)
after giving effect to the Incurrence of such Indebtedness pursuant to
this clause (5) or, in the case of an acquisition of a Foreign Subsidiary,
such Foreign Subsidiary would have been able to Incur $1.00 of additional
Indebtedness pursuant to clause (11) after giving effect to the Incurrence
of such Indebtedness pursuant to this clause (5);
(6) Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements,
such Currency Agreements are related to business transactions of the
Company or its Restricted Subsidiaries entered into in the ordinary course
of business or in the case of Currency Agreements and Interest Rate
Agreements, such Currency Agreements and Interest Rate Agreements are
entered into for bona fide hedging purposes of the Company or its
Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of the Company) and substantially
correspond in terms of notional amount, duration, currencies and interest
rates, as applicable, to Indebtedness of the Company or its Restricted
Subsidiaries Incurred without violation of this Indenture;
(7) the Incurrence by the Company or any Subsidiary Guarantor of
Indebtedness represented by Capitalized Lease Obligations, the Leasehold
Improvement Loan, mortgage financings or purchase money obligations with
respect to assets other than Capital Stock or other Investments, in each
case Incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvements of property used in the
business of the Company or such Subsidiary Guarantor, in an aggregate
principal amount not to exceed $40,000,000 at any time outstanding;
(8) Indebtedness Incurred in respect of workers' compensation
claims, self-insurance obligations, performance, surety and similar bonds
and completion guarantees provided by the Company or a Restricted
Subsidiary in the ordinary course of business;
(9) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price, deferred purchase price (to the extent not reflected as a
liability on the consolidated financial statements of the Company in
accordance with GAAP) or similar obligations, in each case, Incurred or
assumed in connection with the acquisition or disposition of any business,
assets or Capital Stock of a Restricted Subsidiary in accordance with the
terms of this Indenture, other than Guarantees by the Company or any
Restricted Subsidiary of Indebtedness Incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary of the Company for
the purpose of financing such acquisition, provided that, in the case of a
disposition, the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds (including all
cash and non-cash proceeds) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(10) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, provided,
55
however, that such Indebtedness is extinguished within seven Business Days
of Incurrence;
(11) Indebtedness of Foreign Subsidiaries in an amount which, when
taken together with the principal amount of all other Indebtedness
Incurred pursuant to this clause (11) and then outstanding, does not
exceed the greater of (a) 75% of such Foreign Subsidiaries' Consolidated
Tangible Assets or (b) $300,000,000, in each case, less the aggregate
principal amount of Indebtedness of a Foreign Subsidiary Incurred (x)
pursuant to clause (5) of this Section 3.3(b) and (y) pursuant to clause
(4) of this Section 3.3(b) to refinance Indebtedness Incurred pursuant to
clause (5) of this Section 3.3(b);
(12) Indebtedness of the Company or any Restricted Subsidiary to the
extent that the net proceeds thereof are used substantially
contemporaneously (i) to redeem the Notes (and any Additional Notes, if
any) in full or (ii) to defease or discharge the Notes (and any Additional
Notes, if any) in full, in each case in accordance with the terms of this
Indenture; and
(13) in addition to the items referred to in clauses (1) through
(12) above, Indebtedness of the Company or any Subsidiary Guarantor
Incurred after the Issue Date in an aggregate outstanding principal amount
which, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this clause (13) and then outstanding,
shall not exceed $40,000,000 at any time outstanding.
(c) The Company shall not Incur any Indebtedness under the preceding
paragraph if the proceeds thereof are used, directly or indirectly, to refinance
any Subordinated Obligations of the Company unless such Indebtedness shall be
subordinated to the Notes to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor shall Incur any Indebtedness under the
preceding paragraph if the proceeds thereof are used, directly or indirectly, to
refinance any Guarantor Subordinated Obligations of such Subsidiary Guarantor
unless such Indebtedness shall be subordinated to the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee to at least the same extent
as such Guarantor Subordinated Obligations. No Restricted Subsidiary may Incur
any Indebtedness if the proceeds are used to refinance Indebtedness of the
Company or any Subsidiary Guarantor.
(d) The Company shall not, directly or indirectly, Incur, or permit any
Subsidiary Guarantor to Incur, any Indebtedness which by its terms (or by the
terms of any agreement governing such Indebtedness) is expressly subordinated in
right of payment to any other Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or
the by the terms of any agreement governing such Indebtedness) made expressly
subordinate to the Notes, in the case of the Company, or the Subsidiary
Guarantees, in the case of a Subsidiary Guarantor, to the same extent and the
same manner as such Indebtedness is subordinated to other Indebtedness of the
Company or such Subsidiary Guarantor. For purposes of the foregoing, no
Indebtedness shall be deemed to be subordinated in right of payment to any other
Indebtedness solely by virtue of such Indebtedness being unsecured or by virtue
of the fact that the holders of such Indebtedness have entered into one or more
intercreditor agreements giving one or more of such holders priority over the
other holders in the collateral held by them.
56
(e) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 3.3:
(1) in the event that Indebtedness meets the criteria of more than
one of the types of Indebtedness described in paragraphs (a) and (b) of
this Section 3.3, the Company, in its sole discretion, may classify such
item of Indebtedness on the date of Incurrence and only be required to
include the amount and type of such Indebtedness in one of such
paragraphs, or later classify or reclassify all or a portion of such
Indebtedness, in any manner that complies with this Section 3.3; provided
that, the Company shall not be able to reclassify Indebtedness Incurred
under clause (1) or clause (14) of paragraph (b) of this Section 3.3;
(2) all Indebtedness outstanding on the date of this Indenture under
the Revolving Credit Facility shall be deemed initially Incurred on the
Issue Date under clause (1) of paragraph (b) of this Section 3.3 and not
paragraph (a) or clause (4) of paragraph (b) of this Section 3.3;
(3) Guarantees of, or obligations in respect of letters of credit
relating to, Indebtedness which is otherwise included in the determination
of a particular amount of Indebtedness shall not be included;
(4) if obligations in respect of letters of credit are Incurred
pursuant to a Credit Facility and are being treated as Incurred pursuant
to clause (1) of paragraph (b) of this Section 3.3 and the letters of
credit relate to other Indebtedness, then such other Indebtedness shall
not be included;
(5) the principal amount of any Disqualified Stock of the Company or
a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary
that is not a Subsidiary Guarantor, shall be equal to the greater of the
maximum mandatory redemption or repurchase price (not including, in either
case, any redemption or repurchase premium) or the liquidation preference
thereof;
(6) Indebtedness permitted by this Section 3.3 need not be permitted
solely by reference to one provision permitting such Indebtedness but may
be permitted in part by one such provision and in part by one or more
other provisions of this Section 3.3 permitting such Indebtedness; and
(7) the amount of Indebtedness issued at a price that is less than
the principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in accordance with GAAP.
(f) Accrual of interest, accrual of dividends, the accretion of accreted
value, the payment of interest in the form of additional Indebtedness and the
payment of dividends in the form of additional shares of Preferred Stock or
Disqualified Stock shall not be deemed to be an Incurrence of Indebtedness for
purposes of this Section 3.3. The amount of any Indebtedness outstanding as of
any date shall be (i) the accreted value thereof in the case of any Indebtedness
issued with original issue discount and (ii) the principal amount or liquidation
preference thereof,
57
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.
(g) In addition, the Company shall not permit any of its Unrestricted
Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be Incurred as of such date under
this Section 3.3, the Company shall be in Default of this Section 3.3).
(h) For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
provided that if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollar-dominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. Notwithstanding any
other provision of this Section 3.3, the maximum amount of Indebtedness that the
Company or a Restricted Subsidiary may Incur pursuant to this Section 3.3 shall
not be deemed to be exceeded solely as a result of fluctuations in the exchange
rate of currencies. The principal amount of any Indebtedness Incurred to
refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency
exchange rate applicable to the currencies in which such Refinancing
Indebtedness is denominated that is in effect on the date of such refinancing.
SECTION 3.4. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any of its Restricted Subsidiaries, directly or
indirectly, to:
(1) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) except:
(a) dividends or distributions payable solely in the Capital
Stock of the Company (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock of the
Company; and
(b) dividends or distributions payable to the Company or a
Restricted Subsidiary of the Company (and if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to its other holders of
Capital Stock on a pro rata basis);
(2) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company or any direct or indirect parent of the
Company held by Persons other than
58
the Company or a Restricted Subsidiary of the Company (other than in
exchange for Capital Stock of the Company (other than Disqualified
Stock));
(3) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase, redemption,
defeasance or other acquisition or retirement of Subordinated Obligations
or Guarantor Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of purchase,
repurchase, redemption, defeasance or other acquisition or retirement); or
(4) make any Restricted Investment in any Person;
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Restricted Investment referred to in clauses
(1) through (4) shall be referred to herein as a "Restricted Payment"), if at
the time the Company or such Restricted Subsidiary makes such Restricted
Payment:
(a) a Default shall have occurred and be continuing (or would
result therefrom); or
(b) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of Section 3.3 after giving
effect, on a pro forma basis, to such Restricted Payment; or
(c) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made subsequent to the Issue
Date would exceed the sum of:
(i) 50% of the Consolidated Net Income for the period
(treated as one accounting period) from the beginning of the
first fiscal quarter commencing after the date the issuance of
the Notes occurs to the end of the most recent fiscal quarter
ending prior to the date of such Restricted Payment for which
financial statements are in existence (or, in case such
Consolidated Net Income is a deficit, minus 100% of such
deficit);
(ii) 100% of the aggregate Net Cash Proceeds received by
the Company from the issue or sale of its Capital Stock (other
than Disqualified Stock) or other capital contributions
subsequent to the Issue Date (other than Net Cash Proceeds
received from an issuance or sale of such Capital Stock to a
Subsidiary of the Company or an employee stock ownership plan,
option plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by
loans from or Guaranteed by the Company or any Restricted
Subsidiary unless such loans have been repaid with cash on or
prior to the date of determination);
59
(iii) the amount by which Indebtedness of the Company or
its Restricted Subsidiaries is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company or its Restricted Subsidiaries
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any
cash, or the fair market value of any other property,
distributed by the Company upon such conversion or exchange);
and
(iv) the amount equal to the net reduction in Restricted
Investments made by the Company or any of its Restricted
Subsidiaries in any Person resulting from:
(A) repurchases or redemptions of such Restricted
Investments by such Person, proceeds realized upon the
sale of such Restricted Investment to an unaffiliated
purchaser, repayments of loans or advances or other
transfers of assets (including by way of dividend or
distribution) by such Person to the Company or any
Restricted Subsidiary; or
(B) the redesignation of Unrestricted Subsidiaries
as Restricted Subsidiaries (valued, in each case, as
provided in the definition of "Investment") not to
exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or
any Restricted Subsidiary in such Unrestricted
Subsidiary,
which amount in each case under this clause (iv) was
included in the calculation of the amount of Restricted
Payments; provided, however, that no amount shall be
included under this clause (iv) to the extent it is
already included in Consolidated Net Income.
The provisions of the preceding paragraph shall not prohibit:
(1) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement of Capital Stock, Disqualified Stock or
Subordinated Obligations of the Company or Guarantor Subordinated
Obligations of any Subsidiary Guarantor made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary or an employee stock ownership plan or similar
trust to the extent such sale to an employee stock ownership plan or
similar trust is financed by loans from or Guaranteed by the Company or
any Restricted Subsidiary unless such loans have been repaid with cash on
or prior to the date of determination); provided, however, that (a) such
purchase, repurchase, redemption, defeasance, acquisition or retirement
shall be excluded in subsequent calculations of the amount of Restricted
Payments and (b) the Net Cash Proceeds from such sale of Capital Stock
shall be excluded from clause (c)(ii) of the preceding paragraph;
60
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement of Subordinated Obligations of the Company or
Guarantor Subordinated Obligations of any Subsidiary Guarantor made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Subordinated Obligations of the Company or any purchase, repurchase,
redemption, defeasance or other acquisition or retirement of Guarantor
Subordinated Obligations made by exchange for or out of the proceeds of
the substantially concurrent sale of Guarantor Subordinated Obligations
that, in each case, is permitted to be Incurred pursuant to Section 3.3
and that in each case constitutes Refinancing Indebtedness; provided,
however, that such purchase, repurchase, redemption, defeasance,
acquisition or retirement shall be excluded in subsequent calculations of
the amount of Restricted Payments;
(3) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement of Disqualified Stock of the Company or a
Restricted Subsidiary made by exchange for or out of the proceeds of the
substantially concurrent sale of Disqualified Stock of the Company or such
Restricted Subsidiary, as the case may be, that, in each case, is
permitted to be Incurred pursuant to Section 3.3 and that in each case
constitutes Refinancing Indebtedness; provided, however, that such
purchase, repurchase, redemption, defeasance, acquisition or retirement
shall be excluded in subsequent calculations of the amount of Restricted
Payments;
(4) so long as no Default or Event of Default has occurred and is
continuing, any purchase or redemption of Subordinated Obligations or
Guarantor Subordinated Obligations of a Subsidiary Guarantor from Net
Available Cash to the extent permitted under Section 3.8; provided,
however, that such purchase or redemption shall be excluded in subsequent
calculations of the amount of Restricted Payments;
(5) dividends paid within 60 days after the date of declaration if
at such date of declaration such dividends would have complied with this
provision; provided, however, that such dividends shall be included in
subsequent calculations of the amount of Restricted Payments;
(6) so long as no Default or Event of Default has occurred and is
continuing,
(a) the purchase, redemption or other acquisition,
cancellation or retirement for value of Capital Stock, or options,
warrants, equity appreciation rights or other rights to purchase or
acquire Capital Stock of the Company or any Restricted Subsidiary of
the Company or any parent of the Company held by any existing or
former employees or management of the Company or any Subsidiary of
the Company or their assigns, estates or heirs, in each case in
connection with the repurchase provisions under employee stock
option or stock purchase agreements or other agreements to
compensate management employees; provided that such redemptions or
repurchases pursuant to this clause shall not exceed $5,000,000 in
the aggregate during any calendar year and $20,000,000 in the
aggregate for all such redemptions and repurchases; provided,
however, that the amount of any such repurchase or redemption shall
be included in subsequent calculations of the amount of Restricted
Payments; and
61
(b) to the extent permitted by law, loans or advances to
employees of the Company or any Subsidiary of the Company the
proceeds of which are used to purchase Capital Stock of the Company
(other than Disqualified Stock), in an aggregate amount not in
excess of $5,000,000 at any one time outstanding; provided, however,
that the amount of such loans and advances shall be included in
subsequent calculations of the amount of Restricted Payments;
(7) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of the Company issued in accordance
with the terms of this Indenture to the extent such dividends are included
in the definition of "Consolidated Interest Expense"; provided that the
payment of such dividends shall be excluded in subsequent calculations of
the amount of Restricted Payments;
(8) repurchases of Capital Stock deemed to occur upon the exercise
of stock options, warrants or other convertible securities if such Capital
Stock represents a portion of the exercise price thereof; provided,
however, that such repurchases shall be excluded from subsequent
calculations of the amount of Restricted Payments;
(9) any payments made in connection with the Transactions pursuant
to or contemplated by the Rossignol Purchase Agreement and pursuant to any
other agreements or documents related to the Transactions that are
otherwise described in the Offering Memorandum; provided, however, that
such amounts shall be excluded in subsequent calculations of the amount of
Restricted Payments;
(10) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of any Subordinated Obligation (i) at
a purchase price not greater than 101% of the principal amount of such
Subordinated Obligation in the event of a Change of Control in accordance
with provisions similar to Section 3.10 or (ii) at a purchase price not
greater than 100% of the principal amount thereof in accordance with
provisions similar to Section 3.8; provided that, prior to or
simultaneously with such purchase, repurchase, redemption, defeasance or
other acquisition or retirement, the Company has made the Change of
Control Offer or Asset Disposition Offer, as applicable, as provided in
Section 3.10 or Section 3.8, respectively, with respect to the Notes and
has completed the repurchase or redemption of all Notes validly tendered
for payment in connection with such Change of Control Offer or Asset
Disposition Offer; provided, however, that such payment shall be included
in subsequent calculations of the amount of Restricted Payments; and
(11) Restricted Payments in an amount not to exceed $25,000,000;
provided that the amount of such Restricted Payments shall be included in
subsequent calculations of the amount of Restricted Payments.
The amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of such Restricted Payment of the asset(s) or securities
proposed to be paid, transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair
market value of any cash Restricted Payment shall be its face
62
amount and the fair market value of any non-cash Restricted Payment shall be
determined conclusively by the Board of Directors of the Company acting in good
faith whose resolution with respect thereto shall be delivered to the Trustee,
such determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value is estimated in good faith by the Board of Directors of the
Company to exceed $25,000,000. Not later than the date of making any Restricted
Payment in excess of $10,000,000, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by Section 3.4 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
SECTION 3.5. Limitation on Liens. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, Incur or permit to exist any Lien (other than Permitted Liens) upon any
of its property or assets (including Capital Stock of Restricted Subsidiaries),
whether owned on the date of this Indenture or acquired after that date, which
Lien secures any Indebtedness, unless contemporaneously with the Incurrence of
such Liens effective provision is made to secure the obligations under this
Indenture and Indebtedness represented by the Notes or, in respect of Liens on
any Restricted Subsidiary's property or assets, any Subsidiary Guarantee of such
Restricted Subsidiary, equally and ratably with (or prior to in the case of
Liens with respect to Subordinated Obligations or Guarantor Subordinated
Obligations, as the case may be) the Indebtedness secured by such Lien for so
long as such Indebtedness is so secured.
SECTION 3.6. Limitation on Sale/Leaseback Transactions. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, enter
into any Sale/Leaseback Transaction unless: (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such
Sale/Leaseback Transaction at least equal to the fair market value (as evidenced
by a resolution of the Board of Directors of the Company) of the property
subject to such transaction; (ii) the Company or such Restricted Subsidiary
could have Incurred Indebtedness in an amount equal to the Attributable
Indebtedness in respect of such Sale/Leaseback Transaction pursuant to Section
3.3; (iii) the Company or such Restricted Subsidiary would be permitted under
Section 3.5 to create a Lien on the property subject to such Sale/Leaseback
Transaction without securing the Notes; and (iv) the Sale/Leaseback Transaction
is treated as an Asset Disposition and all of the conditions of this Indenture
described in Section 3.8 (including the provisions concerning the application of
Net Available Cash) are satisfied with respect to such Sale/Leaseback
Transaction, treating all of the consideration received in such Sale/Leaseback
Transaction as Net Available Cash for purposes of Section 3.8 (it being
understood that only such portion of the Net Available Cash as is required to be
applied on or before the date of such Sale/Leaseback Transaction in accordance
with the terms of this Indenture needs to be applied in accordance therewith at
such time).
SECTION 3.7. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. (a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual restriction on the
ability of any Restricted Subsidiary to: (1) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other obligation
owed to the Company or any Restricted Subsidiary (it being understood that the
priority of any Preferred
63
Stock in receiving dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not be deemed a
restriction on the ability to make distributions on Capital Stock); (2) make any
loans or advances to the Company or any Restricted Subsidiary (it being
understood that the subordination of loans or advances made to the Company or
any Restricted Subsidiary to other Indebtedness Incurred by the Company or any
Restricted Subsidiary shall not be deemed a restriction on the ability to make
loans or advances); or (3) transfer any of its property or assets to the Company
or any Restricted Subsidiary.
(b) The provisions of paragraph (a) of this Section 3.7 shall not
prohibit: (i) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the date of this Indenture and identified in Schedule
3.7(b) hereto, including, without limitation, this Indenture, the Revolving
Credit Facility, the Leasehold Improvement Loan in effect on such date and, to
the extent disclosed in the Offering Memorandum, the Rossignol Purchase
Agreement; (ii) any encumbrance or restriction with respect to a Foreign
Subsidiary pursuant to any agreement relating to Indebtedness Incurred by such
Foreign Subsidiary under clause (11) of paragraph (b) of Section 3.3; (iii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Capital Stock or Indebtedness Incurred by such
Restricted Subsidiary on or before the date on which such Restricted Subsidiary
was acquired by the Company (other than Capital Stock or Indebtedness Incurred
as consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary of the Company or was acquired by the Company or in contemplation of
the transaction) and outstanding on such date, provided, that any such
encumbrance or restriction shall not extend to any assets or property of the
Company or any other Restricted Subsidiary other than the assets and property so
acquired; (iv) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement effecting a refunding, replacement or
refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (i), (ii) or (iii) of this paragraph or this clause (iv) or contained in
any amendment to an agreement referred to in clause (i), (ii) or (iii) of this
paragraph or this clause (iv); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any such
agreement or amendment are no less favorable in any material respect to the
Holders than the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in such agreements referred to in clauses (i), (ii) or
(iii) of this paragraph on the Issue Date or the date such Restricted Subsidiary
became a Restricted Subsidiary, whichever is applicable; (v) in the case of
clause (3) of Section 3.7(a), any encumbrance or restriction: (a) that restricts
in a customary manner the subletting, assignment or transfer of any property or
asset that is subject to a lease, license or similar contract, or the assignment
or transfer of any such lease, license or other contract; (b) contained in
mortgages, pledges or other security agreements permitted under this Indenture
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such encumbrances or restrictions restrict the transfer of the property subject
to such mortgages, pledges or other security agreements; or (c) pursuant to
customary provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Company or any Restricted
Subsidiary; (vi) (a) purchase money obligations for property acquired in the
ordinary course of business and (b) Capitalized Lease Obligations permitted
under this Indenture, in each case, that impose encumbrances or restrictions of
the nature described in clause (3) of Section 3.7(a) on the property so
acquired; (vii) any Purchase Money
64
Note or other Indebtedness or contractual requirements Incurred with respect to
a Qualified Receivables Transaction relating exclusively to a Receivables Entity
that, in the good faith determination of the Board of Directors, are necessary
to effect such Qualified Receivables Transaction; (viii) any restriction with
respect to a Restricted Subsidiary (or any of its property or assets) imposed
pursuant to an agreement entered into for the direct or indirect sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; (ix) any customary
provisions in joint venture agreements that are not Restricted Subsidiaries and
other similar agreements entered into in the ordinary course of business; (x)
net worth provisions in leases and other agreements entered into by the Company
or any Restricted Subsidiary in the ordinary course of business; (xi)
encumbrances or restrictions arising or existing by reason of applicable law or
any applicable rule, regulation or order; and (xii) customary restrictions
imposed on the transfer of, or in licenses related to, copyrights, patents,
trademarks or other intellectual property and contained in agreements entered
into in the ordinary course of business.
SECTION 3.8. Limitation on Sales of Assets and Subsidiary Stock. (a)
The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, make any Asset Disposition unless: (1) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Disposition at least equal to the fair market value (such fair market value to
be determined on the date of contractually agreeing to such Asset Disposition),
as determined in good faith by the Company's Board of Directors (including as to
the value of all non-cash consideration), of the shares and assets subject to
such Asset Disposition; (2) at least 75% of the consideration from such Asset
Disposition received by the Company or such Restricted Subsidiary, as the case
may be, is in the form of cash or Cash Equivalents; and (3) an amount equal to
100% of the Net Available Cash from such Asset Disposition is applied by the
Company or such Restricted Subsidiary, as the case may be: (a) first, to the
extent the Company or any Restricted Subsidiary, as the case may be, elects (or
is required by the terms of any Indebtedness of the Company or any Restricted
Subsidiary), to prepay, repay or purchase Indebtedness of the Company (other
than Disqualified Stock or Subordinated Obligations) or Indebtedness of a Wholly
Owned Subsidiary (other than any Disqualified Stock or Guarantor Subordinated
Obligations of a Wholly Owned Subsidiary) (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company) within 360 days from the
later of the date of such Asset Disposition or the receipt of such Net Available
Cash; provided, however, that, in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to this clause (a), the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the related
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased; and (b) second, to the extent
of the balance of such Net Available Cash after application in accordance with
clause (a), to the extent the Company or such Restricted Subsidiary elects, to
acquire Additional Assets within 360 days from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; provided that
pending the final application of any such Net Available Cash in accordance with
clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may
temporarily reduce Indebtedness or otherwise invest such Net Available Cash in
any manner not prohibited by this Indenture. Notwithstanding the foregoing, the
Company may issue to senior officers of the Company or a Restricted Subsidiary
Voting Stock or options to purchase Voting Stock of (1) Rossignol in an
aggregate amount not to exceed 5% of the outstanding Capital Stock
65
of Rossignol and (2) Cleveland Golf in an aggregate amount not to exceed 3% of
the outstanding Capital Stock of Cleveland Golf.
(b) Any Net Available Cash from Asset Dispositions that are not applied or
invested as provided in the preceding paragraph (a) shall be deemed to
constitute "Excess Proceeds." On the 361st day after an Asset Disposition, if
the aggregate amount of Excess Proceeds exceeds $25,000,000, the Company shall
be required to make an offer ("Asset Disposition Offer") to all Holders and to
the extent required by the terms of other Pari Passu Indebtedness, to all
holders of other Pari Passu Indebtedness outstanding with similar provisions
requiring the Company to make an offer to purchase such Pari Passu Indebtedness
with the proceeds from any Asset Disposition ("Pari Passu Notes"), to purchase
the maximum principal amount of Notes and any such Pari Passu Notes to which the
Asset Disposition Offer applies that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount of the Notes and Pari Passu Notes plus accrued and unpaid interest to the
date of purchase, in accordance with the procedures set forth in this Indenture
or the agreements governing the Pari Passu Notes, as applicable, in each case in
minimum denominations of $100,000 and in integral multiples of $1,000 in excess
thereof. To the extent that the aggregate amount of Notes and Pari Passu Notes
so validly tendered and not properly withdrawn pursuant to an Asset Disposition
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes, subject to the other covenants
contained in this Indenture. If the aggregate principal amount of Notes
surrendered by Holders thereof and other Pari Passu Notes surrendered by holders
or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee
shall select the Notes and the Pari Passu Notes to be purchased pro rata on the
basis of the aggregate principal amount of tendered Notes and Pari Passu Notes.
Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds
shall be reset at zero.
(c) The Asset Disposition Offer shall remain open for a period of 20
Business Days following its commencement, except to the extent that a longer
period is required by applicable law (the "Asset Disposition Offer Period"). No
later than five Business Days after the termination of the Asset Disposition
Offer Period (the "Asset Disposition Purchase Date"), the Company shall purchase
the principal amount of Notes and Pari Passu Notes required to be purchased
pursuant to this Section 3.8 (the "Asset Disposition Offer Amount") or, if less
than the Asset Disposition Offer Amount has been so validly tendered, all Notes
and Pari Passu Notes validly tendered in response to the Asset Disposition
Offer.
(d) If the Asset Disposition Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Asset Disposition Offer.
(e) On or before the Asset Disposition Purchase Date, the Company shall,
to the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Disposition Offer Amount of Notes and Pari Passu Notes or
portions of Notes and Pari Passu Notes so validly tendered and not properly
withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset
Disposition Offer Amount has been validly tendered and not properly
66
withdrawn, all Notes and Pari Passu Notes so validly tendered and not properly
withdrawn, in each case in minimum denominations of $100,000 and in integral
multiples of $1,000 in excess thereof. The Company shall deliver to the Trustee
an Officers' Certificate stating that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
3.8 and, in addition, the Company shall deliver all certificates and notes
required, if any, by the agreements governing the Pari Passu Notes. The Company
or the Paying Agent, as the case may be, shall promptly (but in any case not
later than five Business Days after termination of the Asset Disposition Offer
Period) mail or deliver to each tendering Holder or holder or lender of Pari
Passu Notes, as the case may be, an amount equal to the purchase price of the
Notes or Pari Passu Notes so validly tendered and not properly withdrawn by such
holder or lender, as the case may be, and accepted by the Company for purchase,
and the Company shall promptly issue a new Note, and the Trustee, upon delivery
of an Officers' Certificate from the Company, shall authenticate and mail or
deliver such new Note to such holder, in a principal amount equal to any
unpurchased portion of the Note surrendered; provided that each such new Note
shall be in a principal amount of $100,000 or an integral multiple of $1,000 in
excess thereof. In addition, the Company shall take any and all other actions,
if any, required by the agreements governing the Pari Passu Notes. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the holder
thereof. The Company shall publicly announce the results of the Asset
Disposition Offer on the Asset Disposition Purchase Date.
(f) For the purposes of this Section 3.8, the following shall be deemed to
be cash: (x) the assumption by the transferee of Indebtedness (other than
Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness
of a Wholly Owned Subsidiary (other than Guarantor Subordinated Obligations or
Disqualified Stock of any Wholly Owned Subsidiary that is a Subsidiary
Guarantor) and the release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset Disposition (in
which case the Company shall, without further action, be deemed to have applied
such deemed cash to Indebtedness in accordance with clause (a) of Section 3.8
above); and (y) securities, notes or other obligations received by the Company
or any Restricted Subsidiary of the Company from the transferee that are
promptly converted by the Company or such Restricted Subsidiary into cash.
(g) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 3.8. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.8, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Indenture by virtue of any
conflict.
(h) For the purposes of this Section 3.8, Holders electing to have a Note
purchased shall be required to surrender the Note, with an appropriate form duly
completed, to the Company at the address specified in the notice at least three
Business Days prior to the purchase date. Each Holder shall be entitled to
withdraw its election if the Company receives, not later than one Business Day
prior to the purchase date, a telegram, telex, facsimile transmission or letter
from such Holder setting forth the name of such Holder, the principal amount of
the Note or Notes which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Note or
Notes purchased.
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SECTION 3.9. Limitation on Transactions with Affiliates. (a) The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or conduct any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless:
(1) the terms of such Affiliate Transaction are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than those that could be
obtained in a comparable transaction at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate; (2) in the
event such Affiliate Transaction involves an aggregate consideration in excess
of $5,000,000, the terms of such transaction have been approved by a majority of
the members of the Board of Directors of the Company and by a majority of the
members of such Board having no personal stake in such transaction, if any (and
such majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in clause (1) above); and (3) in the event
such Affiliate Transaction involves an aggregate consideration in excess of
$10,000,000 the Company has received a written opinion from an independent
investment banking, accounting or appraisal firm of nationally recognized
standing that such Affiliate Transaction is not materially less favorable than
those that might reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate.
(b) The provisions of paragraph (a) of this Section 3.9 shall not apply
to: (1) any Restricted Payment (other than a Restricted Investment) permitted to
be made pursuant to Section 3.4; (2) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment agreements and other compensation arrangements, options
to purchase Capital Stock of the Company, restricted stock plans, long-term
incentive plans, stock appreciation rights plans, participation plans or similar
employee benefits plans and/or indemnity provided on behalf of officers and
employees approved by the Board of Directors; (3) to the extent permitted by
law, loans or advances to employees or directors in the ordinary course of
business of the Company or any of its Restricted Subsidiaries but in any event
not to exceed $5,000,000 in the aggregate outstanding at any one time with
respect to all loans or advances made since the Issue Date; (4) any transaction
(i) between the Company and a Restricted Subsidiary (other than a Receivables
Entity) or between Restricted Subsidiaries (other than a Receivables Entity or
Receivables Entities) and (ii) Guarantees issued by the Company or a Restricted
Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the
case may be, in accordance with Section 3.3; (5) the payment of reasonable and
customary fees paid to, and indemnity provided on behalf of, employees or
directors of the Company or any Restricted Subsidiary of the Company in
connection with providing services to the Company or any Restricted Subsidiary
of the Company; (6) the performance of obligations of the Company or any of its
Restricted Subsidiaries under the terms of any agreement to which the Company or
any of its Restricted Subsidiaries is a party as of or on the Issue Date and
identified on Schedule 3.9(b) hereto as these agreements may be amended,
modified, supplemented, extended or renewed from time to time; provided,
however, that any future amendment, modification, supplement, extension or
renewal entered into after the Issue Date shall be permitted to the extent that
its terms are not more disadvantageous to the Holders than the terms of the
agreements in effect on the Issue Date; (7) sales or other transfers or
dispositions of accounts receivable and other related assets customarily
transferred in an asset securitization transaction involving accounts receivable
to a Receivables Entity in a Qualified Receivables Transaction, and acquisitions
of Permitted Investments in connection with a Qualified
68
Receivables Transaction; and (8) any transaction with a customer or supplier of
the Company or a Restricted Subsidiary so long as such transaction is in the
ordinary course of business and the terms of such transaction are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained in a comparable transaction at the time of such
transaction in arm's length dealings with a Person who is not an Affiliate;
provided that, if such transaction or a series of related transactions exceeds
$5,000,000, the terms of such transaction must be approved by a majority of the
members of the Board of Directors of the Company and by a majority of the
members of such Board having no personal stake in such transaction.
SECTION 3.10. Change of Control. (a) If a Change of Control occurs,
each Holder shall have the right to require the Company to repurchase all or any
part (equal to $100,000 or an integral multiple of $1,000 in excess thereof) of
such Holder's Notes at a purchase price in cash equal to 101% of the principal
amount of the Notes, plus accrued and unpaid interest and additional interest,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however that notwithstanding the foregoing, the Company
shall not be obligated to repurchase Notes pursuant to this Section 3.10 if the
Company has previously exercised its right to redeem Notes pursuant to Section
5.1.
(b) Within 30 days following any Change of Control, the Company shall mail
a notice (the "Change of Control Offer") to each Holder (with a copy to the
Trustee) describing the transaction or transactions that constitute the Change
of Control and offering to repurchase Notes on the Change of Control payment
date specified in the notice, and such notice shall otherwise include:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Notes at a
purchase price in cash equal to 101 % of the principal amount of such
Notes plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on a record date to receive
interest on the relevant interest payment date) (the "Change of Control
Payment");
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed) (the "Change of
Control Payment Date");
(4) that any Note not tendered shall continue to accrue interest
pursuant to its terms;
(5) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest on and after the Change of Control
Payment Date; and
(6) the procedures determined by the Company, consistent with this
Section 3.10, that a Holder must follow in order to have its Notes
repurchased or to cancel such order of purchase.
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(c) Holders electing to have a Note purchased shall be required to
surrender the Note, with an appropriate form duly completed, to the Company at
the address specified in the notice at least three Business Days prior to the
purchase date. Each Holder shall be entitled to withdraw its election if the
Company receives, not later than one Business Day prior to the purchase date, a
telegram, telex, facsimile transmission or letter from such Holder setting forth
the name of such Holder, the principal amount of the Note or Notes which were
delivered for purchase by such Holder and a statement that such Holder is
withdrawing his election to have such Note or Notes purchased.
(d) Prior to mailing a Change of Control Offer, and as a condition to such
mailing (i) the requisite holders of each issue of Indebtedness issued under an
indenture or other agreement that may be violated by such payment shall have
consented to such Change of Control Offer being made and waived the event of
default, if any, caused by the Change of Control or (ii) the Company shall repay
all outstanding Indebtedness issued under an indenture or other agreement that
may be violated by a payment to the Holders under a Change of Control Offer or
(iii) the Company must offer to repay all such Indebtedness, and make payment to
the holders of such Indebtedness that accept such offer, and obtain waivers of
any event of default from the remaining holders of such Indebtedness. The
Company covenants to effect such repayment or obtain such consent within 30 days
following any Change of Control, it being a default of the Change of Control
provisions of this Indenture if the Company fails to comply with this Section
3.10. A default under either Indenture may result in a cross-default under the
Revolving Credit Facility.
(e) On the Change of Control Payment Date, the Company shall, to the
extent lawful: (i) accept for payment all Notes or portions of Notes (equal to
$100,000 or an integral multiple of $1,000 in excess thereof) properly tendered
pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions of Notes so tendered; and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate specifying
the Notes or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail, to the Holders of Notes so accepted, payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and deliver (or cause to be transferred by book entry) to such Holders a new
Note equal in principal amount to any unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued shall be
in a principal amount of $100,000 or an integral multiple of $1,000 in excess
thereof.
(f) If the Change of Control Payment Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender pursuant to the Change of
Control Offer.
(g) The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(h) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times
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and otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not properly withdrawn under such Change of Control
Offer.
(i) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 3.10. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.10, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Indenture by virtue of the
conflict.
SECTION 3.11. Future Subsidiary Guarantors. (a) The Company shall
not permit any current or future Domestic Subsidiary to Guarantee the payment of
any Indebtedness of the Company or any other Restricted Subsidiary or otherwise
become an obligor, including as a co-borrower, under a Credit Facility, unless
(i) such Domestic Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture, substantially in the form attached as Exhibit D
hereto, providing for a Subsidiary Guarantee of such Domestic Subsidiary
pursuant to which such Domestic Subsidiary shall unconditionally Guarantee, on a
joint and several basis, all of the obligations of the Company and the other
Subsidiary Guarantors under this Indenture, including the full and prompt
payment of the principal of, premium, if any and interest on the Notes on a
senior basis and all other obligations under this Indenture; provided that if
such Indebtedness is by its express terms subordinated in right of payment to
the Notes or the Subsidiary Guarantees, as the case may be, any such Guarantee
of such Domestic Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Domestic Subsidiary's Subsidiary
Guarantee with respect to the Notes substantially to the same extent as such
Indebtedness is subordinated to the Notes; (ii) such Domestic Subsidiary waives
and shall not in any manner whatsoever claim or take the benefit or advantage
of, any rights or reimbursement, indemnity or subrogation or any other rights
against the Company or any other Restricted Subsidiary as a result of any
payment by such Domestic Subsidiary under its Subsidiary Guarantee of the Notes
so long as any of the Notes remain outstanding; and (iii) such Domestic
Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that
(A) such Subsidiary Guarantee has been duly executed and authorized and (B) such
Subsidiary Guarantee constitutes valid, binding and enforceable obligations of
such Domestic Subsidiary, except insofar as enforcement thereof may be limited
by bankruptcy, insolvency or similar laws (including, without limitation, all
laws relating to fraudulent transfers) and except insofar as enforcement thereof
is subject to general principles of equity.
(b) The foregoing notwithstanding, in the event a Subsidiary Guarantor is
released and discharged from all of its obligations (other than contingent
indemnification obligations) (1) under Guarantees of Indebtedness and other
obligations under a Credit Facility and all other Indebtedness of the Company
and its Restricted Subsidiaries, and (2) as an obligor, including as a
co-borrower, under a Credit Facility, then the Subsidiary Guarantee of such
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged.
(c) The Company shall use its commercially reasonable efforts to cause
each Domestic Subsidiary of Rossignol to execute and deliver as soon as is
reasonably practicable, but in no event later than 180 calendar days after the
Issue Date, a supplemental indenture to this
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Indenture, substantially in the form attached as Exhibit D hereto, providing for
a Subsidiary Guarantee of such Domestic Subsidiary pursuant to which such
Domestic Subsidiary shall unconditionally Guarantee, on a joint and several
basis, all of the obligations of the Company and the other Subsidiary Guarantors
under this Indenture, including the full and prompt payment of the principal of,
premium, if any and interest on the Notes on a senior basis and all other
obligations under this Indenture. Notwithstanding the foregoing, in the event
that, subsequent to the date such Domestic Subsidiary issues such Guarantee, it
is released from its Guarantees of, and all pledges and security interests
granted in connection with, the Revolving Credit Facility, including but not
limited to its Guarantee under Section 5.14(d) of the Revolving Credit Facility,
and any other Indebtedness of the Company or any Restricted Subsidiary, such
Domestic Subsidiary shall be released from its Guarantee under this Indenture.
SECTION 3.12. Limitation on Lines of Business. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any business
other than a Related Business.
SECTION 3.13. Payments for Consent. Neither the Company nor any of
its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fees or otherwise, to any
Holder of any Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture or the Notes unless such
consideration is offered to be paid or is paid to all Holders that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or amendment.
SECTION 3.14. Limitation on Sale or Issuance of Capital Stock of
Restricted Subsidiaries. (a) The Company shall not, and shall not permit any
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Voting Stock of any Restricted Subsidiary or to issue
any Voting Stock of a Restricted Subsidiary (other than, if necessary, shares of
its Voting Stock constituting directors' qualifying shares) to any Person
except:
(1) to the Company or a Wholly Owned Subsidiary (other than a
Receivables Entity) or to another Restricted Subsidiary pursuant to the
restructuring described in the Offering Memorandum; or
(2) in compliance with Section 3.8 and immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would continue
to be a Restricted Subsidiary.
(b) Notwithstanding the preceding paragraph, the Company or any Restricted
Subsidiary may (1) sell all the Voting Stock of a Restricted Subsidiary as long
as the Company complies with the terms of Section 3.8 or (2) issue to senior
officers of the Company or a Restricted Subsidiary Voting Stock or options to
purchase Voting Stock of (a) Rossignol in an aggregate amount not to exceed 5%
of the outstanding Capital Stock of Rossignol and (b) Cleveland Golf in an
aggregate amount not to exceed 3% of the outstanding Capital Stock of Cleveland
Golf.
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SECTION 3.15. Effectiveness of Covenants. Following the first
Business Day on which:
(a) the Notes have an Investment Grade Rating;
(b) no Default has occurred and is continuing under this Indenture; and
(c) the Company has delivered an Officers' Certificate to the Trustee,
the Company and its Restricted Subsidiaries shall not be subject to the
provisions of this Indenture described in Sections 3.3, 3.4, 3.7, 3.8, 3.9,
3.12, 3.14 and 4.1(iii).
SECTION 3.16. Maintenance of Office or Agency. The Company shall
maintain in The City of New York, an office or agency where the Notes may be
presented or surrendered for payment, where, if applicable, the Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The office of the Trustee, at Wilmington Trust Company, c/o
ComputerShare Trust Company of New York, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, shall be such office or agency of the Company for payment, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company shall give prompt written notice to the Trustee of
any change in the location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes 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 the Borough of Manhattan, The City of New York
for such purposes. The Company shall give prompt written notice to the Trustee
of any such designation or rescission and any change in the location of any such
other office or agency.
SECTION 3.17. Money for Note Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent, it shall, on or before
each due date of the principal of (or premium, if any) or interest on any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal of (or 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 shall promptly notify the Trustee
in writing of its action or failure to so act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it shall, on or before each due date of the principal of (or premium, if
any) or interest on any Notes, deposit with any Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) that shall be
73
available to the Trustee by 10:00 a.m. New York City time on such due date
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
Trustee) the Company shall promptly notify the Trustee in writing of such action
or any failure to so act.
The Company shall cause each Paying Agent (other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Notes 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;
(b) give the Trustee prompt written notice of any default by the Company
(or any other obligor upon the Notes) in the making of any payment of principal
(and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the 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 Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (or premium,
if any) or interest on any Note and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on Company Order, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the 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 Trustee or such Paying Agent, before being required
to make any such repayment to the Company, shall at the expense of the Company
cause to be published once, in a leading daily newspaper (if practicable, The
Wall Street Journal (Eastern Edition)) printed in the English language and of
general circulation in New York City, 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 publication nor shall it be later than two years after
such principal (or premium, if any) or interest shall have become due and
payable, any unclaimed balance of such money then remaining shall be repaid to
the Company.
SECTION 3.18. Corporate Existence. Subject to Article IV, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect its
74
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 the Company shall not be required
to preserve any such existence (except the Company), right, license or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof
is not, and shall not be, disadvantageous in any material respect to the
Holders.
SECTION 3.19. Payment of Taxes and Other Claims. The Company shall
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material 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 (ii) all lawful claims for labor,
materials and supplies, which, if unpaid, might 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 3.20. Maintenance of Properties. The Company shall 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 normal condition, repair and working
order and shall 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 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 3.21. Compliance with Laws. The Company shall comply, and
shall cause each of its Restricted Subsidiaries to comply, with all applicable
statutes, rules, regulations, orders and restrictions of the United States of
America, all states and municipalities thereof, and of any governmental
regulatory authority, in respect of the conduct of their respective businesses
and the ownership of their respective properties, except for such noncompliances
as would not in the aggregate have a material adverse effect on the financial
condition or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.
SECTION 3.22. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each Fiscal Year of the Company a
certificate executed by the Company's principal executive officer, principal
accounting officer or principal financial officer stating that in the course of
the performance by the signer of his or her duties as such officer he or she
would normally have knowledge of any Default or Event of Default and whether or
not the signer knows of any Default or Event of Default that occurred during
such
75
period. If he or she does, the certificate shall describe the Default or Event
of Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
An Officers' Certificate shall also notify the Trustee should the then current
Fiscal Year be changed to end on any date other than on the date as herein
defined.
SECTION 3.23. Additional Interest Notices. In the event that the
Company is required to pay additional interest to Holders pursuant to the
Registration Rights Agreement, the Company shall provide written notice
("Additional Interest Notice") to the Trustee of its obligation to pay
additional interest no later than five Business Days prior to the proposed
payment date set for the amount of additional interest, and the Additional
Interest Notice shall set forth the amount of additional interest to be paid by
the Company on such Payment Date. The Trustee shall not at any time be under any
duty or responsibility to any Holder to determine the additional interest, or
with respect to the nature, extent, or calculation of the amount of additional
interest when made, or with respect to the method employed in such calculation
of the additional interest.
ARTICLE IV
Successor Company and Successor Subsidiary Guarantor
SECTION 4.1. Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of the
United States of America, any State of the United States or the District of
Columbia and the Successor Company (if not the Company) shall expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in form and
substance satisfactory to the Trustee, all the obligations of the Company under
the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as having
been Incurred by the Successor Company or such Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction, the Successor
Company would be able to Incur at least an additional $1.00 of Indebtedness
pursuant to paragraph (a) of Section 3.3(a);
(iv) each Subsidiary Guarantor (unless it is the other party to the
transactions above, in which case clause (i) shall apply) shall have by
supplemental indenture confirmed that its Subsidiary Guarantee shall apply to
such Person's obligations in respect of this Indenture and the
76
Notes and its obligations under the Registration Rights Agreement shall continue
to be in effect; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, transfer or lease and such supplemental indenture (if any) comply with
this Indenture.
For purposes of this Article IV, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but, in
the case of a lease of all or substantially all its assets, the predecessor
Company shall not be released from the obligation to pay the principal of and
interest on the Notes.
Notwithstanding the preceding clause (iii), (x) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (y) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits; provided that,
in the case of a Restricted Subsidiary that merges into the Company, the Company
shall not be required to comply with the preceding clause (v).
In addition, the Company shall not permit any Subsidiary Guarantor
to consolidate with or merge with or into any person (other than the Company or
another Subsidiary Guarantor) and shall not permit the conveyance, transfer or
lease of substantially all of the assets of any Subsidiary Guarantor to any
Person (other than the Company or another Subsidiary Guarantor) unless: (i) (a)
the resulting, surviving or transferee Person shall be a corporation,
partnership, trust or limited liability company organized and existing under the
laws of the United States, any State of the United States or the District of
Columbia and, in each case, such Person (if not such Subsidiary Guarantor) shall
expressly assume, by supplemental indenture, executed and delivered to the
Trustee, all the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantees; (b) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the resulting, surviving
or transferee Person or any Restricted Subsidiary of such Person as a result of
such transaction as having been Incurred by such Person or such Restricted
Subsidiary at the time of such transaction), no Default of Event of Default
shall have occurred and be continuing; and (c) the Company shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture; or (ii) the transaction is made in compliance
with Section 3.8.
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ARTICLE V
Redemption of Notes
SECTION 5.1. Optional Redemption. The Notes may be redeemed, as a
whole or from time to time in part, subject to the conditions and at the
redemption prices specified in paragraph 5 of the form of Notes set forth in
Exhibit A and Exhibit B hereto, which are hereby incorporated by reference and
made a part of this Indenture, together with accrued and unpaid interest to the
Redemption Date (as defined below).
SECTION 5.2. Applicability of Article. Redemption of Notes at the
election of the Company or otherwise, as permitted or required by any provision
of this Indenture, shall be made in accordance with such provision and this
Article.
SECTION 5.3. Election to Redeem; Notice to Trustee. The election of
the Company to redeem any Notes pursuant to Section 5.1 shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Company, the
Company shall, upon not later than the earlier of the date that is 45 days prior
to the redemption date (the "Redemption Date") fixed by the Company or 15 days
prior to the date on which notice is given to the Holders (except as provided in
Section 5.5 or unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed and shall deliver to the Trustee such documentation and records
as shall enable the Trustee to select the Notes to be redeemed pursuant to
Section 5.4. Any such notice may be cancelled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 5.4. Selection by Trustee of Notes to Be Redeemed. If less
than all the Notes are to be redeemed at any time pursuant to an optional
redemption, the particular Notes to be redeemed shall be selected not more than
60 days prior to the Redemption Date by the Trustee, from the outstanding Notes
not previously called for redemption, in compliance with the requirements of the
principal securities exchange, if any, on which such Notes are listed, or, if
such Notes are not so listed, on a pro rata basis among the classes of Notes, by
lot or by such other method as the 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 the
Notes; provided, however, such redemption equals $100,000 or an integral
multiple of $1,000 in excess thereof. If any Note is to be redeemed in part
only, the notice of redemption relating to such Note will state the portion of
the principal amount thereof to be redeemed.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the method it has chosen for the selection of Notes and the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
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SECTION 5.5. Notice of Redemption. Notice of redemption shall be
given in the manner provided for in Section 11.2 not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Notes to be redeemed. At
the Company's request, the 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 Trustee, at least 35 days (or such shorter period of time
as shall be satisfactory to the Trustee) prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice at the
Company's expense and setting forth the information to be stated in such notice
as provided in the following items.
All notices of redemption shall state:
(i) the Redemption Date,
(ii) the redemption price and the amount of accrued interest to the
Redemption Date payable as provided in Section 5.7, if any,
(iii) if less than all outstanding Notes are to be redeemed, the method
for selecting the Notes to be redeemed, as well as the aggregate principal
amount of Notes to be redeemed and the aggregate principal amount of Notes to be
outstanding after such partial redemption,
(iv) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date, upon
surrender of such Note, the Holder shall receive, without charge, a new Note or
Notes of authorized denominations for the principal amount thereof remaining
unredeemed,
(v) that on the Redemption Date the redemption price (and accrued
interest, if any, to the Redemption Date payable as provided in Section 5.7)
shall become due and payable upon each such Note, or the portion thereof, to be
redeemed, and, unless the Company defaults in making the redemption payment,
that interest on Notes called for redemption (or the portion thereof) shall
cease to accrue on and after said date,
(vi) the place or places where such Notes are to be surrendered for
payment of the redemption price and accrued interest, if any,
(vii) the name and address of the Paying Agent,
(viii) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price,
(ix) the CUSIP number, 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 Notes, and any redemption shall not be affected by any defect in such CUSIP
numbers, and
(x) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
SECTION 5.6. Deposit of Redemption Price. Prior to 10:00 a.m., New
York City time, on any Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company or a Wholly Owned Subsidiary that is a Domestic
Subsidiary is a Paying Agent, shall
79
segregate and hold in trust as provided in Section 2.4) an amount of money
sufficient to pay the redemption price of, and accrued interest on, all the
Notes which are to be redeemed on that date other than Notes or portions of
Notes called for redemption that are beneficially owned by the Company and have
been delivered by the Company to the Trustee for cancellation.
SECTION 5.7. Notes Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Notes or portions of Notes 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 Notes shall cease to
bear interest. Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the redemption price,
together with accrued interest, if any, to the Redemption Date (subject to the
rights of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date).
If any Note 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 borne by the
Notes.
SECTION 5.8. Notes Redeemed in Part. Any Note which is to be
redeemed only in part (pursuant to the provisions of this Article) shall be
surrendered at the office or agency of the Company maintained for such purpose
pursuant to Section 3.16 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of such
Note at the expense of the Company, a new Note or Notes, 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 Note so
surrendered, provided, that each such new Note will be issued in denominations
of $100,000 or an integral multiple of $1,000 in excess thereof.
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. Each of the following is an "Event
of Default":
(1) default in any payment of interest or additional interest (as required
by the Registration Rights Agreement) on any Note when due, continued for 30
days;
(2) default in the payment of principal of or premium, if any, on any Note
when due at its Stated Maturity, upon optional redemption, required repurchase,
upon declaration or otherwise;
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(3) failure by the Company or any Subsidiary Guarantor to comply with its
obligations under Article IV;
(4) failure by the Company to comply for 30 days after notice with any of
its obligations pursuant to Section 3.2 through Section 3.14 inclusive (in each
case, other than a failure to purchase Notes which shall constitute an Event of
Default under clause (2) above and other than a failure to comply with Article
IV which is covered by clause (3) above);
(5) failure by the Company to comply for 60 days after notice with its
other agreements in this Indenture or under the Notes (other than those referred
to in (1), (2), (3) or (4) above);
(6) intentionally omitted;
(7) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of its Restricted
Subsidiaries), other than Indebtedness owed to the Company or a Restricted
Subsidiary, whether such Indebtedness or Guarantee now exists, or is created
after the date of this Indenture, which default:
(a) is caused by a failure to pay at the final Stated Maturity the
stated principal amount of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness ("payment default") or
(b) results in the acceleration of such Indebtedness prior to its
maturity (the "cross acceleration provision");
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there bas been a
payment default or the maturity of which has been so accelerated, aggregates
$20,000,000 or more;
(8) the Company or a Significant Subsidiary or a group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries) would
constitute a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property;
(D) makes a general assignment for the benefit of its creditors;
(E) consents to or acquiesces in the institution of a bankruptcy or
an insolvency proceeding against it;
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(F) takes any corporate action to authorize or effect any of the
foregoing; or
(G) takes any comparable action under any foreign laws relating to
insolvency;
(9) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief in an involuntary case against the Company or any
Significant Subsidiary or a group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for
the Company and its Restricted Subsidiaries), would constitute a
Significant Subsidiary pursuant to or within the meaning of the Bankruptcy
Law;
(B) appoints a Custodian for all or substantially all of the
property of the Company or any Significant Subsidiary or a group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries) would constitute a Significant Subsidiary pursuant to or
within the meaning of the Bankruptcy Law;
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary or a group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for
the Company and its Restricted Subsidiaries) would constitute a
Significant Subsidiary pursuant to or within the meaning of the Bankruptcy
Law; and
(D) in each case, the order, decree or relief remains unstayed and
in effect for 60 days;
(10) failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary to pay final judgments
aggregating in excess of $20,000,000 (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing), which
judgments are not paid, discharged or stayed for a period of 60 days (the
"judgment default provision"); or
(11) any Subsidiary Guarantee of a Significant Subsidiary or group of
Restricted Subsidiaries that, taken together as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries, would constitute a Significant Subsidiary ceases to be in full
force and effect (except as contemplated by the terms of this Indenture) or is
declared null and void in a judicial proceeding or any Subsidiary Guarantor
denies or disaffirms its obligations under this Indenture or its Subsidiary
Guarantee.
However, a default under clauses (4) and (5) of this paragraph shall not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the outstanding Notes provide written notice to the Company
of the default and the Company does not cure such
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default within the time specified in clauses (4) and (5) of this paragraph after
receipt of such notice.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The Company shall deliver to the Trustee, promptly, but in no event
later than 30 days after, a senior officer of the Company becomes aware of any
events which would constitute an Event of Default under clauses (3), (4), (5),
(7), (8), (9), (10) or (11) of this Section 6.1 in the form of an Officers'
Certificate, which Officers' Certificate shall provide their status and what
action the Company is taking or proposing to take in respect thereof.
SECTION 6.2. Acceleration. If an Event of Default (other than an
Event of Default described in clauses (8) and (9) of Section 6.1) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the outstanding Notes by written notice to the Company
and the Trustee, may, and the Trustee at the request of such Holders shall,
declare the principal of, premium, if any, and accrued and unpaid interest, if
any, on all the Notes to be due and payable. Upon such a declaration, such
principal, premium and accrued and unpaid interest shall be due and payable
immediately.
In the event of a declaration of acceleration of the Notes because
an Event of Default described in clause (7) of Section 6.1 has occurred and is
continuing, the declaration of acceleration of the Notes shall be automatically
annulled if the event of default or payment default triggering such Event of
Default pursuant to clause (7) of Section 6.1 shall be remedied or cured by the
Company or a Restricted Subsidiary or waived by the holders of the relevant
Indebtedness within 20 days after the declaration of acceleration with respect
thereto and if (1) the annulment of the acceleration of the Notes would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, except nonpayment of principal, premium or
interest on the Notes that became due solely because of the acceleration of the
Notes, have been cured or waived.
If an Event of Default described in clauses (8) and (9) of Section
6.1 occurs and is continuing, the principal of, premium, if any, and accrued and
unpaid interest on all the Notes shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
SECTION 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of (or premium, if any) or
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair
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the right or remedy or constitute a waiver of or acquiescence in the Event of
Default. No remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
principal amount of the outstanding Notes by notice to the Trustee may waive
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes) an existing Default or Event
of Default and its consequences except (i) a Default or Event of Default in the
payment of the principal of, premium or interest on, a Note or (ii) a Default or
Event of Default in respect of a provision that under Section 9.2 cannot be
amended without the consent of each Holder affected; provided that (i) such
waiver would not conflict with any judgment or decree of a court of competent
jurisdiction and (2) all existing Events of Default, other than the nonpayment
of the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived. When
a Default or Event of Default is waived, it is deemed cured, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Sections 7.1 and 7.2, that the Trustee determines is unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. Subject to the provisions of this
Indenture relating to the duties of the Trustee, if an Event of Default occurs
and is continuing, the Trustee shall be under no obligation to exercise any of
the rights or powers under this Indenture at the request or direction of any of
the Holders unless such Holders have offered to the Trustee reasonable indemnity
or security against any loss, liability or expense. Except to enforce the right
to receive payment of principal, premium, if any, or interest when due, no
Holder may pursue any remedy with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice that an Event of
Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding Notes
have requested the Trustee to pursue the remedy;
(3) such Holders have offered the Trustee security or indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after
the receipt of the request and the offer of security or indemnity; and
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(5) the Holders of a majority in principal amount of the outstanding Notes
have not given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture (including, without limitation, Section
6.6), the right of any Holder to receive payment of principal of, premium, if
any, or interest on the Notes held by such Holder, on or after the respective
due dates expressed in the Notes, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default
specified in clauses (1) or (2) of Section 6.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company, its Subsidiaries or its or their respective
creditors or properties and, unless prohibited by law or applicable regulations,
may be entitled and empowered to participate as a member of any official
committee of creditors appointed in such matter and may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it, its agents and its counsel
pursuant to Section 7.7 and any other amounts due the Trustee hereunder. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Third: to the Company.
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The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section. At least 15 days before such record date,
the Company shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in outstanding principal
amount of the Notes.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee shall be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered the Trustee
indemnity or security satisfactory to the Trustee against loss, liability or
expense.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or otherwise verify the contents thereof).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
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(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5 or Section 6.6.
(d) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(e) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any 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 to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
(h) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses (including reasonable
attorneys' fees and expenses) and liabilities that might be incurred by it in
compliance with such request or direction.
SECTION 7.2. Rights of Trustee. (a) The Trustee may conclusively
rely and shall be protected in acting or refraining from acting upon any paper
or document believed by it to be genuine and to have been signed or presented by
the proper Person or Persons. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
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(e) The Trustee may consult with counsel of its selection, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond or other paper or
document; but the Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company and its Subsidiaries at reasonable
times and in a reasonable manner, personally or by agent or attorney at the sole
cost of the Company and shall incur no liability or additional liability of any
kind by reason of such inquiry or investigation.
(g) The Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i), during any period it is serving as Registrar and
Paying Agent for the Notes, any Event of Default occurring pursuant to Section
6.1(1) and 6.1(2), or (ii) any Default or Event of Default of which a
Responsible Officer shall have received written notification or obtained "actual
knowledge." "Actual knowledge" shall mean the actual fact or statement of
knowing by a Responsible Officer without independent investigation with respect
thereto.
(h) Delivery of the reports, information and documents to the Trustee
pursuant to Section 3.2 is for informational purposes only and the Trustee's
receipt of such shall not constitute 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
Trustee is entitled to rely exclusively on Officers' Certificates).
(i) In no event shall the Trustee be responsible or liable for special,
indirect, or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
(j) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder.
(k) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying
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Agent, Registrar or co-paying agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11. In addition, the Trustee
shall be permitted to engage in transactions with the Company; provided,
however, that if the Trustee acquires any conflicting interest the Trustee must
(i) eliminate such conflict within 90 days of acquiring such conflicting
interest, (ii) apply to the SEC for permission to continue acting as Trustee or
(iii) resign.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the Notes or the proceeds from the Notes, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication or for the use or application of any funds
received by any Paying Agent other than the Trustee.
SECTION 7.5. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if a Responsible Officer has actual knowledge
thereof, the Trustee shall mail to each Holder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium (if any), or interest on any Note
(including payments pursuant to the required repurchase provisions of such Note,
if any), the Trustee may withhold the notice if and so long as its board of
directors, a committee of its board of directors or a committee of its
Responsible Officers and/or a Responsible Officer in good faith determines that
withholding the notice is in the interests of Holders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each January 15 beginning with the January 15 following the
date of this Indenture, and in any event prior to February 15 in each year, the
Trustee shall mail to each Holder a brief report dated as of such January 15
that complies with TIA Section 313(a), if and to the extent such report may be
required by the TIA. The Trustee also shall comply with TIA Section 313(b). The
Trustee shall also transmit by mail all reports required by TIA Section 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange (if any) on which the Notes are
listed. The Company agrees to notify promptly the Trustee in writing whenever
the Notes become listed on any stock exchange and of any delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company and the
Subsidiary Guarantors, jointly and severally, shall pay to the Trustee from time
to time such compensation for its services as the parties shall agree in writing
from time to time. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and the Subsidiary
Guarantors, jointly and severally, shall reimburse the Trustee upon request for
all reasonable out-of-pocket expenses, disbursements and advances incurred or
made by it, including, but not limited to, costs of collection, costs of
preparing and reviewing reports, certificates and other documents, costs of
preparation and mailing of notices to Holders and reasonable costs of counsel
retained by the Trustee in connection with the delivery of an Opinion of Counsel
or otherwise, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
and the Subsidiary
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Guarantors, jointly and severally, shall indemnify the Trustee, and each of its
officers, directors, counsel and agents, against any and all loss, liability or
expense (including, but not limited to, reasonable attorneys' fees and expenses)
incurred by it in connection with the acceptance or administration of this trust
and the performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 7.7) and the Notes and of
defending itself against any claims (whether asserted by any Holder, the Company
or otherwise). The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee may have separate counsel and the Company shall
pay the fees and expenses of such counsel. The Company and the Subsidiary
Guarantors need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith, subject to the exceptions contained in
Section 7.1(c) hereof.
To secure the Company's and the Subsidiary Guarantors' payment
obligations in this Section, the Trustee shall have a lien prior to the Notes on
all money or property held or collected by the Trustee other than money or
property held in trust to pay principal of and interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.7
shall not be subordinate to any other liability or indebtedness of the Company
or the Subsidiary Guarantors.
The Company's payment obligations pursuant to this Section and any
lien arising hereunder shall survive the discharge of this Indenture and the
resignation or removal of the Trustee. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(8) or (9), the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Notes may remove the Trustee by so notifying the Company and the Trustee
in writing and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Notes and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring
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Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Holders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, provided that all sums owing to the Trustee hereunder have been paid
and subject to the lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Notes may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation, banking
association or other entity, the resulting, surviving or transferee entity
without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall have
a combined capital and surplus of at least $50 million as set forth in its most
recent filed annual report of condition. The Trustee shall comply with TIA
Section 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. If
and when the Trustee shall be or become a creditor of the Company, the Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Notes; Defeasance. (a)
Subject to Section 8.1(c), when (i)(x) the Company delivers to the Trustee all
outstanding Notes (other than Notes replaced pursuant to Section 2.9) for
cancellation or (y) all outstanding Notes not theretofore delivered for
cancellation have become due and payable at maturity, whether at maturity or
upon redemption or shall become due and payable within one year or are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption pursuant to Article V hereof and
the Company or any Subsidiary Guarantor irrevocably deposits or causes to be
deposited with the Trustee as trust funds in trust solely for the benefit of the
Holders money in U.S. dollars, non-callable U.S. Government Obligations, or a
combination thereof, in such amounts as shall be sufficient without
consideration of any reinvestment of interest to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date of
maturity or redemption; (ii) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit shall not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company or any
Subsidiary Guarantor is a party or by which the Company or any Subsidiary
Guarantor is bound; (iii) the Company or any Subsidiary Guarantor has paid or
cause to be paid all sums payable under this Indenture and the Notes; and (iv)
the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of such Notes at
maturity or the Redemption Date, as the case may be, then the Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) at the
cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at its option and at
any time may terminate (i) all the obligations of the Company and any Subsidiary
Guarantor under the Notes, the Subsidiary Guarantees and this Indenture ("legal
defeasance option"), and after giving effect to such legal defeasance, any
omission to comply with such obligations shall no longer constitute a Default or
Event of Default or (ii) the obligations of the Company and any Subsidiary
Guarantor under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14 and 4.1 (iii) and the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant or provision, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or provision or by reason of any
reference in any such covenant to any other provision herein or in any other
document and such omission to comply with such covenants or provisions shall no
longer constitute a Default or an Event of Default under Sections 6.1(3) ,
6.1(4), 6.1(5), 6.1(7), 6.1(8) (but only with respect to a Significant
Subsidiary or a group of Restricted Subsidiaries that would constitute a
Significant Subsidiary), 6.1(9) (but only with respect to a Significant
Subsidiary or group of Restricted Subsidiaries that would constitute a
Significant Subsidiary), 6.1(10) and 6.1(11) ("covenant defeasance option"), but
except as specified above, the remainder of this Indenture and the Notes shall
be unaffected thereby. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default, and the Subsidiary
Guarantees in effect at such time shall terminate. If the Company exercises its
covenant defeasance option, payment of the Notes
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may not be accelerated because of an Event of Default specified in Sections
6.1(3) (but only as it relates to an Event of Default as a result of a default
under Section 4.1(iii)), 6.1(4) (as such Section relates to Sections 3.2, 3.3,
3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13 and 3.14), 6.1(5), 6.1(7),
6.1(8) (but only with respect to a Significant Subsidiary or a group of
Restricted Subsidiaries that would constitute a Significant Subsidiary), 6.1(9)
(but only with respect to a Significant Subsidiary or a group of Restricted
Subsidiaries that would constitute a Significant Subsidiary), 6.1(10) and
6.1(11) or because of the failure to comply with clause (iii) of Article IV.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b), the
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 7.1, 7.2,
7.7, 7.8, 8.4, 8.5 and 8.6 shall survive until the Notes have been paid in full.
Thereafter, the Company's and the Subsidiary Guarantors' obligations in Sections
7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee for the
benefit of the Holders money in U.S. dollars or U.S. Government Obligations or a
combination thereof the principal of and interest (without reinvestment) on
which shall be sufficient, or a combination thereof sufficient, for the payment
of principal, premium, if any, and interest on the Notes to redemption or
maturity;
(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment shall provide cash at such times and in such amounts as shall be
sufficient to pay principal, premium, if any, and interest when due on all the
Notes to redemption or maturity;
(3) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default with
respect to this Indenture resulting from the incurrence of Indebtedness, all or
a portion of which shall be used to defease the Notes concurrently with such
incurrence);
(4) such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(5) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that (A) the Notes and (B) assuming no intervening bankruptcy of
the Company between the date of deposit and the 91st day following the deposit
and that no Holder is an insider of the Company, after the 91st day following
the deposit, the trust funds shall not be subject to the
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effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' right generally;
(6) the deposit does not constitute a default under any other agreement
binding on the Company;
(7) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
(8) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States stating that
(i) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders shall not recognize income, gain or loss for federal income tax purposes
as a result of such legal defeasance and shall be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such legal defeasance had not occurred;
(9) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States to the
effect that the Holders shall not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and shall 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;
and
(10) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the defeasance
and discharge of the Notes and this Indenture as contemplated by this Article
VIII have been complied with.
SECTION 8.3. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Notes.
SECTION 8.4. Repayment to Company. Anything herein to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Order any money or U.S. Government Obligations held by it as
provided in this Article VIII which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect legal defeasance or covenant
defeasance, as applicable, provided that the Trustee shall not be required to
liquidate any U.S. Government Obligations in order to comply with the provisions
of this paragraph.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon written request any money held by
them for the payment
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of principal of or interest on the Notes that remains unclaimed for two years,
and, thereafter, Holders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII 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 obligations of the Company under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VII; provided, however, that, if the
Company has made any payment of interest on or principal of any Notes because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, a Subsidiary
Guarantee or the Notes without notice to or consent of any Holder to:
(1) cure any ambiguity, omission, defect or inconsistency; provided that
such modification or amendment does not adversely affect the interests of the
Holders in any material respect; provided, further, that any amendment made
solely to conform the provisions of this Indenture to the description of the
Notes contained in the Offering Memorandum will not be deemed to adversely
affect the interests of the Holders;
(2) provide for the assumption by a successor corporation of the
obligations of the Company or any Subsidiary Guarantor under this Indenture;
(3) provide for uncertificated Notes in addition to or in place of
certificated Notes (provided, that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code);
(4) add Guarantees with respect to the Notes or release a Subsidiary
Guarantor in accordance with the terms of this Indenture or upon its designation
as an Unrestricted Subsidiary; provided, however, that the designation is in
accordance with the applicable provisions of this Indenture;
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(5) secure the Notes;
(6) evidence and provide for successor trustees;
(7) add to the covenants of the Company for the benefit of the Holders or
surrender any right or power conferred upon the Company;
(8) make any change that does not adversely affect the rights of any
Holder;
(9) comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA; or
(10) provide for the issuance of the Exchange Notes which shall have terms
substantially identical in all respects to the Notes (except that the transfer
restrictions contained in the Notes shall be modified or eliminated, as
appropriate) and which shall be treated, together with any outstanding Notes, as
a single class of securities.
After an amendment or supplement under this Section becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment or
supplement. The failure to give such notice to all Holders, or any defect
therein, shall not impair or affect the validity of an amendment or supplement
under this Section.
SECTION 9.2. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, a Subsidiary
Guarantee or the Notes without notice to any Holder but with the written consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes). Any past default
or compliance with any provision of this Indenture, a Subsidiary Guarantee or
the Notes may be waived with the written consent of the Holders of a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes). However, without the consent of each Holder affected, an
amendment, supplement or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(1) reduce the principal amount of Notes outstanding whose Holders
must consent to an amendment;
(2) reduce the stated rate of or extend the stated time for payment
of interest or additional interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any
Note;
(4) reduce the premium payable upon the redemption or repurchase of
any Note or change the time at which any Note may or shall be redeemed or
repurchased as described under Section 3.8, Section 3.10 or Article V or
any similar provision, whether through an amendment or waiver of Section
3.8, Section 3.10 or Article V, related definitions or otherwise;
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(5) make any Note payable in money other than that stated in the
Note;
(6) impair the right of any Holder to receive payment of, premium,
if any, principal of and interest on such Holder's Notes on or after the
due dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes;
(7) make any change to the amendment provisions which require each
Holder's consent or to the waiver provisions;
(8) modify the Subsidiary Guarantees in any manner adverse to the
Holders; or
(9) release any Subsidiary Guarantor, if any, from any of its
obligations under its Subsidiary Guarantee or this Indenture, except in
compliance with the terms thereof.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof. A consent to any
amendment or waiver under this Indenture by any Holder given in connection with
a tender of such Holder's Notes will not be rendered invalid by such tender.
After an amendment under this Section becomes effective, the Company shall mail
to Holders a notice briefly describing such amendment. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture, a Subsidiary Guarantee or the Notes shall comply
with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment, supplement or a waiver by a Holder of a Note shall bind
the Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder's Note, even if notation of the
consent or waiver is not made on the Note. Any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder's Note or portion of the Note
if the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective or otherwise in accordance with any
related solicitation documents. After an amendment, supplement or waiver becomes
effective, it shall bind every Holder unless it makes a change described in any
of clauses (1) through (10) of Section 9.2, in which case the amendment,
supplement, waiver or other action shall bind each Holder who has consented to
it and every subsequent Holder that evidences the same debt as the consenting
Holder's Notes. An amendment, supplement or waiver shall become effective upon
receipt by the Trustee of the requisite number of written consents under Section
9.1 or 9.2 as applicable.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give
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such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date. No such consent shall become valid or effective more than 120 days after
such record date.
SECTION 9.5. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder of the Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note regarding the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determine, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article IX if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing any amendment, supplement or waiver the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and to receive, and
(subject to Sections 7.1 and 7.2) shall be fully protected in relying upon an
Officers' Certificate and an Opinion of Counsel stating that such amendment,
supplement or waiver is authorized or permitted by this Indenture and that such
amendment, supplement or waiver is the legal, valid and binding obligation of
the Company and any Subsidiary Guarantors, enforceable against them in
accordance with its terms, subject to customary exceptions, and complies with
the provisions hereof (including Section 9.3).
ARTICLE X
Subsidiary Guarantees
SECTION 10.1. Guarantees. The Subsidiary Guarantors hereby
unconditionally guarantee, on a senior unsecured basis and as primary obligor
and not merely as surety, jointly and severally with each other Subsidiary
Guarantor, to each Holder and the Trustee the full and punctual payment when
due, whether at maturity, by acceleration, by redemption or otherwise, of the
principal of, premium, if any, and interest on the Notes and all other
obligations and liabilities of the Company under this Indenture (including
without limitation interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company or any Subsidiary Guarantor whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
(all the foregoing being hereinafter collectively called the "Obligations"). The
Obligations of Subsidiary Guarantors under the Subsidiary Guarantees shall rank
equally in right of payment with other Indebtedness of such Subsidiary
Guarantor, except to the extent such other Indebtedness is expressly subordinate
to the obligations arising under the Subsidiary Guarantee. Each Subsidiary
Guarantor further agrees (to the extent permitted by law) that the Obligations
may be extended or renewed, in whole or in part, without notice or further
assent from it, and that it shall remain bound under this Article X
notwithstanding any extension or renewal of any Obligation.
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Each Subsidiary Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Notes or the Obligations. The obligations of each Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder to
assert any claim or demand or to enforce any right or remedy against the Company
or any other person under this Indenture, the Notes or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes or any other agreement; (d) the release of any security
held by any Holder or the Trustee for the Obligations or any of them; (e) the
failure of any Holder to exercise any right or remedy against any other
Subsidiary Guarantor; or (f) any change in the ownership of the Company.
Each Subsidiary Guarantor further agrees that its Guarantee herein
constitutes a Guarantee of payment when due (and not a Guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Obligations.
The obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Obligations in full), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Subsidiary Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder to assert any claim or demand or
to enforce any remedy under this Indenture, the Notes or any other agreement, by
any waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of any Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor agrees that its Guarantee herein shall
remain in full force and effect until payment in full of all the Obligations or
such Subsidiary Guarantor is released from its Guarantee upon the merger or the
sale of all the Capital Stock or assets of the Subsidiary Guarantor in
compliance with Section 10.2 or otherwise in accordance with the terms of this
Indenture. Each Subsidiary Guarantor further agrees that its Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any of the
Obligations is rescinded or must otherwise be restored by any Holder upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Subsidiary Guarantor hereby promises to and shall,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid
amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).
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Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in this Indenture for the purposes of its Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby and (y) in the event of any such declaration
of acceleration of such Obligations, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantor for
the purposes of this Guarantee.
Each Subsidiary Guarantor also agrees to pay any and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or the Holders in enforcing any rights under this Section.
SECTION 10.2. Limitation on Liability; Termination, Release and
Discharge.
(a) The obligations of each Subsidiary Guarantor hereunder shall be
limited to the maximum amount as shall, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Revolving Credit Facility) and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law and not
otherwise being void or voidable under any similar laws affecting the rights of
creditors generally.
(b) In the event a Subsidiary Guarantor is sold or disposed of
(whether by merger, consolidation, the sale of its Capital Stock or the sale of
all or substantially all of its assets (other than by lease)) and whether or not
the Subsidiary Guarantor is the surviving corporation in such transaction to a
Person which is not the Company or a Restricted Subsidiary of the Company (other
than a Receivables Entity), such Subsidiary Guarantor shall be released (without
any further action on the part of any Person) from its obligations under this
Indenture, its Subsidiary Guarantee and the Registration Rights Agreement if:
(1) the sale or other disposition is in compliance with this Indenture,
including Section 3.8 (it being understood that only such portion of the Net
Available Cash as is required to be applied on or before the date of such sale
or other disposition in accordance with the terms of this Indenture needs to be
applied in accordance therewith at such time) and Section 3.14; and (2) all the
obligations of such Subsidiary Guarantor under all Credit Facilities and related
documentation and any other agreements relating to any other Indebtedness of the
Company or any Restricted Subsidiary terminate upon consummation of such
transaction.
(c) Each Subsidiary Guarantor shall be deemed released from all its
obligations under this Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement and such Subsidiary Guarantee shall terminate upon the legal
defeasance or covenant defeasance of the Notes pursuant to the provisions of
Article VIII hereof.
100
(d) A Subsidiary Guarantor shall be deemed released from all of its
obligations under this Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement and such Subsidiary Guarantee shall terminate if (1) such
Subsidiary Guarantor is released from its Guarantees of, and all pledges and
security interests granted in connection with, a Credit Facility and any other
Indebtedness of the Company or any Restricted Subsidiary or (2) the Company
designates such Subsidiary Guarantor as an Unrestricted Subsidiary and such
designation complies with the applicable provisions of this Indenture.
SECTION 10.3. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that any Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek
and receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. The
provisions of this Section 10.3 shall in no respect limit the obligations and
liabilities of each Subsidiary Guarantor to the Trustee and the Holders, and
each Subsidiary Guarantor shall remain liable to the Trustee and the Holders for
the full amount guaranteed by such Subsidiary Guarantor hereunder.
SECTION 10.4. No Subrogation. Notwithstanding any payment or
payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor
shall be entitled to be subrogated to any of the rights of the Trustee or any
Holder against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
any Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
SECTION 10.5. Execution and Delivery of Subsidiary Guarantee. To
evidence its Subsidiary Guarantee set forth in Section 10.1, each Subsidiary
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit C shall be endorsed by an Officer
of such Subsidiary Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Subsidiary
Guarantor by an Officer.
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 10.1 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
101
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
ARTICLE XI
Miscellaneous
SECTION 11.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 11.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Quiksilver, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 mailed to
the Holder at the Holder's address as it appears on the Note Register and shall
be sufficiently given if so mailed 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 in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.3. Communication by Holders with other Holders. Holders
may communicate pursuant to TIA Section 312(b) with other Holders with respect
to their rights under this
102
Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
SECTION 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, except upon the initial issuance of
Notes hereunder, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.
SECTION 11.6. When Notes Disregarded. In determining whether the
Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company or by any of its
Affiliates (except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Responsible Officer of the Trustee actually knows are so owned)
shall be so disregarded. Also, subject to the foregoing, only Notes outstanding
at the time shall be considered in any such determination.
103
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by, or a meeting of, Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.8. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City or Wilmington, Delaware. If a payment
date is a Legal Holiday, payment shall be made on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
If a regular record date is a Legal Holiday, the record date shall not be
affected.
SECTION 11.9. Governing Law. This Indenture, the Subsidiary
Guarantees and the Notes shall be governed by, and construed in accordance with,
the laws of the State of New York.
SECTION 11.10. No Recourse Against Others. An incorporator,
director, officer, employee, stockholder or controlling person, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Subsidiary Guarantees or this Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Holder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Notes.
SECTION 11.11. Successors. All agreements of the Company in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 11.13. Variable Provisions. The Company initially appoints
the Trustee as Paying Agent and Registrar and custodian with respect to any
Global Notes.
SECTION 11.14. Qualification of Indenture. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys' fees and expenses for the Company and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 11.15. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
QUIKSILVER, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: Executive Vice President, Business
& Legal Affairs, Secretary and
General Counsel
DC SHOES, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
FIDRA, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
HAWK DESIGNS, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
▇▇▇▇▇▇ MANUFACTURING, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
QS RETAIL, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
QS WHOLESALE, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
QUIKSILVER AMERICAS, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. Exon
Title: President
WILMINGTON TRUST COMPANY,
as Trustee
By:______________________________
Name:
Title:
EXHIBIT A
[FORM OF FACE OF SERIES A NOTE]
[Applicable Restricted Notes Legend]
[Depositary Legend, if applicable]
A-1
No. [_____] Principal Amount $[______________],
as revised by the Schedule of Increases
and Decreases in the Global Note attached hereto
CUSIP NO. _____________
QUIKSILVER, INC.
6-7/8% Senior Note, Series A, due 2015
Quiksilver, Inc., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of [__________________] Dollars,
as revised by the Schedule of Increases and Decreases in the Global Note
attached hereto, on April 15, 2015.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Note are set forth on the other side
of this Note.
QUIKSILVER, INC.
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
WILMINGTON TRUST COMPANY
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By_____________________________
Authorized Signatory
A-2
[FORM OF REVERSE SIDE OF SERIES A NOTE]
6-7/8% Senior Note, Series A, due 2015
1. Interest
Quiksilver, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Note at the rate per annum shown above.
The Company shall pay interest semiannually on April 15 and October
15 of each year. Interest on the Notes shall accrue from the most recent date to
which interest has been paid on the Notes or, if no interest has been paid, from
July 22, 2005. The Company shall pay interest on overdue principal or premium,
if any (plus interest on such interest to the extent lawful), at the rate borne
by the Notes to the extent lawful. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment
By no later than 10:00 a.m. (New York City time) on the date on
which any principal of (premium, if any) or interest on any Note is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company shall pay interest (except Defaulted Interest) to the Persons who
are registered Holders at the close of business on the April 1 and October 1
next preceding the interest payment date even if Notes are cancelled or
repurchased after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company shall 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. Payments in respect of Notes represented by a Global Note
(including principal, premium, if any, and interest) shall be made by the
transfer of immediately available funds to the accounts specified by the
Depositary. The Company shall make all payments in respect of a Definitive Note
(including principal, premium, if any, and interest) by mailing a check to the
registered address of each Holder thereof as such address shall appear on the
Note Register; provided, however, that payments on the Notes represented by
Definitive Notes may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Notes represented by Definitive Notes,
by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 15 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept).
3. Paying Agent and Registrar
Initially, Wilmington Trust Company, the trustee under the Indenture
("Trustee"), shall act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent or Registrar without notice to any Holder. The
Company or any Wholly Owned Subsidiary that is a Domestic Subsidiary may act as
Paying Agent or Registrar.
A-3
4. Indenture
The Company issued the Notes under an Indenture dated as of July 22,
2005 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect from time
to time (the "Act"). Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Act for a
statement of those terms.
The Notes are general unsecured senior obligations of the Company.
The aggregate principal amount of Notes which may be authenticated and delivered
under the Indenture is unlimited. This Note is one of the 6-7/8% Senior Notes,
Series A, due 2015 referred to in the Indenture. The Notes include (i)
$400,000,000 aggregate principal amount of the Company's 6-7/8% Senior Notes,
Series A, due 2015 issued under the Indenture on July 22, 2005 (herein called
"Initial Notes"), (ii) if and when issued, additional 6-7/8% Senior Notes,
Series A, due 2015 or 6-7/8% Senior Notes, Series B, due 2015 of the Company
that may be issued from time to time under the Indenture subsequent to July 22,
2005 (herein called "Additional Notes") and (iii) if and when issued, the
Company's 6-7/8% Senior Notes, Series B, due 2015 that may be issued from time
to time under the Indenture in exchange for Initial Notes or Additional Notes in
an offer registered under the Securities Act as provided in a Registration
Rights Agreement. The Initial Notes, Additional Notes and Exchange Notes are
treated as a single class of securities under the Indenture. The Indenture
imposes, among other things, certain limitations on the Incurrence of
Indebtedness by the Company and its Subsidiaries, the payment of dividends and
other distributions on the Capital Stock of the Company and its Subsidiaries,
the purchase or redemption of Capital Stock of the Company and Capital Stock of
such Subsidiaries, certain purchases or redemptions of Subordinated Obligations,
the sale or transfer of assets and Capital Stock of Subsidiaries, certain
Sale/Leaseback Transactions involving the Company or any Restricted Subsidiary,
the incurrence of certain Liens, transactions with Affiliates, mergers and
consolidations, payments for consent, the business activities and investments of
the Company and its Subsidiaries and the sale of Capital Stock of Restricted
Subsidiaries, provided, however, certain of such limitations shall no longer be
in effect if the Notes attain an Investment Grade Rating. In addition, the
Indenture limits the ability of the Company and its Subsidiaries to enter into
agreements that restrict distributions and dividends from Subsidiaries and
requires the Company to make available SEC information to the Holders as well as
requiring certain Restricted Subsidiaries to guarantee the obligations under the
Notes and the Indenture.
5. Redemption
Except as described below, the Notes are not redeemable until April
15, 2010. On and after April 15, 2010, the Company may redeem all or, from time
to time, a part of the Notes upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as a percentage of
principal amount) plus accrued and unpaid interest on the Notes, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the twelve-month period beginning on April 15 of the
years indicated below:
A-4
YEAR PERCENTAGE
---- ----------
2010................................ 103.438%
2011................................ 102.292%
2012................................ 101.146%
2013 and thereafter................. 100.000%
Prior to April 15, 2008, the Company may on any one or more
occasions redeem up to 35% of the original principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes and Exchange
Notes) with the Net Cash Proceeds of one or more Public Equity Offerings at a
redemption price of 106.875% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date); provided that:
(1) at least 65% of the original principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes
and Exchange Notes) remains outstanding after each such redemption;
and
(2) the redemption occurs within 60 days after the closing of such
Public Equity Offering.
If the optional Redemption Date is on or after a record date and on
or before the related interest payment date, the accrued and unpaid interest, if
any, shall be paid to the Person in whose name the Note is registered at the
close of business, on such record date, and no additional interest shall be
payable to Holders whose Notes shall be subject to redemption by the Company.
In the case of any partial redemption, selection of the Notes for
redemption shall be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed, then on a pro rata basis, by lot or by
such other method as the Trustee shall deem to be fair and appropriate, provided
that with respect to any Note, such redemption equals $100,000 or an integral
multiple of $1,000 in excess thereof. If any Note is to be redeemed in part
only, the notice of redemption relating to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount
equal to the unredeemed portion thereof shall be issued in the name of the
Holder thereof upon cancellation of the original Note.
The Company is not required to make mandatory redemption payments or
sinking fund payments with respect to the Notes. The Company may at any time and
from time to time purchase Notes through open market purchases, negotiated
purchases, tender offers or otherwise.
6. Put Provisions
Upon the occurrence of a Change of Control, any Holder shall have
the right to require the Company to repurchase all or any part of the Notes of
such Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to
A-5
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture. The Company
shall be required to make an Asset Disposition Offer in certain circumstances
described in the Indenture.
7. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations of
principal amount of $100,000 or an integral multiple of $1,000 in excess
thereof. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Notes for a period beginning (1) 15 Business
Days before the mailing of a notice of an offer to repurchase Notes and ending
at the close of business on the day of such mailing, or (2) 15 days before an
interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it
for all purposes.
9. Unclaimed Money
If money for the payment of the principal of or premium, if any, or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its written request unless an abandoned
property law designates another person. After any such payment, Holders entitled
to the money must look only to the Company and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the Notes
and the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
maturity.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, a Subsidiary Guarantee, and the Notes may be amended with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes) and
(ii) subject to certain exceptions, any past default (other than with respect to
nonpayment) or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes). Subject to certain
exceptions set forth in the Indenture, without the consent of any
A-6
Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency,
to comply with Article IV or Article X in respect of the assumption by a
Successor Company of an obligation of the Company or any Subsidiary Guarantor
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to add Guarantees with respect to the Notes or
release a Subsidiary Guarantor upon its designation as an Unrestricted
Subsidiary or otherwise in accordance with the Indenture, to secure the Notes,
to make any change that would provide any additional rights or benefits to the
Holders or that does not materially adversely affect the legal rights under the
Indenture of any such Holder; to comply with any requirement of the SEC in order
to effect or maintain the qualification of the Indenture under the TIA, or to
provide for the issuance of the Exchange Notes or to provide for successor
trustees.
12. Defaults and Remedies
Under the Indenture, Events of Default include (each of which are
more specifically described in the Indenture) (i) default for 30 days in payment
of interest or additional interest when due on the Notes; (ii) default in
payment of principal or premium, if any, on the Notes at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraph 5 hereof,
upon declaration or otherwise; (iii) the failure by the Company or any
Subsidiary Guarantor to comply with its obligations under Article IV of the
Indenture; (iv) failure by the Company to comply for 30 days after written
notice with any of their obligations under the covenants described under
Sections 3.2 through 3.14 inclusive of the Indenture (in each case, other than a
(A) failure to purchase Notes when required under the Indenture, which failure
shall constitute an Event of Default under clause (ii) above and (B) a failure
by the Company or any Subsidiary Guarantor to comply with its obligations under
Article IV, which failure shall constitute an Event of Default under clause
(iii) above); (v) the failure by the Company to comply for 60 days after written
notice with their other agreements contained in the Indenture or under the Notes
(other than those referred to in (i), (ii), (iii) or (iv) above); (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries or is recourse
to the Company or its Restricted Subsidiaries, by contract or operation of law),
other than Indebtedness owed to the Company or a Restricted Subsidiary, whether
such Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay at the final Stated
Maturity the stated principal amount or to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness ("payment default") or (b) results in the
acceleration of such Indebtedness prior to its final maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a payment default or the maturity of which has been
so accelerated, aggregates $20,000,000 or more; (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law (the "bankruptcy provisions");
(viii) failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated
A-7
financial statements for the Company and its Restricted Subsidiaries), would
constitute a Significant Subsidiary to pay final judgments aggregating in excess
of $20,000,000 (net of any amounts that a reputable and creditworthy insurance
company has acknowledged liability for in writing), which judgments are not
paid, discharged, waived or stayed for a period of 60 days (the "judgment
default provision"); or (ix) any Subsidiary Guarantee of a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee. However, a default under clauses (iv) and (v) will not
constitute an Event of Default until the Trustee or the Holders of at least 25%
in principal amount of the outstanding Notes notify the Company of the default
and the Company does not cure such default within the time specified in clauses
(iv) and (v) hereof after receipt of such notice.
If an Event of Default (other than an Event of Default described in
(vii) hereof) occurs and is continuing, the Trustee by notice to the Company or
the Holders of at least 25% in principal amount of the outstanding Notes may
declare all the Notes to be due and payable immediately. If an Event of Default
described in (vii) hereof occurs and is continuing, the principal of, premium,
if any, and accrued and unpaid interest on all the Notes will become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders.
Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives indemnity or security satisfactory to it. Subject
to certain limitations, Holders of a majority in principal amount of the Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or the Subsidiary Guarantee or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Holder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Notes.
A-8
15. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Note.
16. 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
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers placed thereon.
18. Defined Terms
As used in this Note, terms defined in the Indenture are used herein
as therein defined.
19. Governing Law
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York.
The Company shall furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture, which has in it the text
of this Note in larger type. Requests may be made to:
Quiksilver, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A-9
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
__________________________________________________________
(Print or type assignee's name, address and zip code)
_________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________ agent to transfer this Note on the books of
the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Notes evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Notes and the last date, if any,
on which such Notes were owned by the Company or any Affiliate of the Company,
the undersigned confirms that such Notes are being:
CHECK ONE BOX BELOW:
1 [ ] acquired for the undersigned's own account, without transfer; or
2 [ ] transferred to the Company; or
3 [ ] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"); or
4 [ ] transferred pursuant to an effective registration statement under
the Securities Act; or
5 [ ] transferred pursuant to and in compliance with Regulation S under
the Securities Act; or
A-10
6 [ ] transferred to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter appears as
Section 2.7 of the Indenture); or
7 [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee shall refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided, however, that if box (5), (6) or (7) is
checked, the Trustee or the Company may require, prior to registering any such
transfer of the Notes, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, such as the exemption provided by Rule 144
under such Act.
__________________________________
Signature
Signature Guarantee:
______________________________ __________________________________
(Signature must be guaranteed) Signature
______________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act,
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
A-11
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized signatory
Date of Principal Amount of Principal Amount of following such of Trustee or Notes
Exchange this Global Note this Global Note decrease or increase Custodian
-------- --------------------- --------------------- -------------------- --------------------
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.8 or 3.10 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.8 or 3.10 of the Indenture, state the amount in
principal amount (must be denominations of $100,000 or an integral multiple of
$1,000 in excess thereof): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side of
the Note)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-13
EXHIBIT B
[FORM OF FACE OF SERIES B NOTE]
[Depositary Legend, if applicable]
B-1
No.[_____]
Principal Amount $[____________],
as revised by the Schedule of Increases
and Decreases in the Global Note attached hereto
CUSIP NO. _____________
QUIKSILVER, INC.
6-7/8% Senior Note, Series B, due 2015
Quiksilver, Inc., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of [__________________] Dollars,
as revised by the Schedule of Increases and Decreases in the Global Note
attached hereto, on April 15, 2015.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Note are set forth on the other side
of this Note.
QUIKSILVER, INC.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
WILMINGTON TRUST COMPANY
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:___________________________________
Authorized Signatory
B-2
[FORM OF REVERSE SIDE OF SERIES B NOTE]
6-7/8% Senior Note, Series B, due 2015
1. Interest
Quiksilver, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Note at the rate per annum shown above.
The Company shall pay interest semiannually on April 15 and October
15of each year. Interest on the Notes shall accrue from the most recent date to
which interest has been paid on the Notes or, if no interest has been paid, from
July 22, 2005. The Company shall pay interest on overdue principal or premium,
if any (plus interest on such interest to the extent lawful), at the rate borne
by the Notes to the extent lawful. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment
By no later than 10:00 a.m. (New York City time) on the date on
which any principal of (premium, if any) or interest on any Note is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company shall pay interest (except Defaulted Interest) to the Persons who
are registered Holders at the close of business on the April 1 and October 1
next preceding the interest payment date even if Notes are cancelled or
repurchased after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company shall 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. Payments in respect of Notes represented by a Global Note
(including principal, premium, if any, and interest) shall be made by the
transfer of immediately available funds to the accounts specified by the
Depositary. The Company shall make all payments in respect of a Definitive Note
(including principal, premium, if any, and interest) by mailing a check to the
registered address of each Holder thereof as such address shall appear on the
Note Register; provided, however, that payments on the Notes represented by
Definitive Notes may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Notes represented by Definitive Notes,
by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 15 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept).
3. Paying Agent and Registrar
Initially, Wilmington Trust Company, the trustee under the Indenture
("Trustee"), shall act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent or Registrar without notice to any Holder. The
Company or any Wholly Owned Subsidiary that is a Domestic Subsidiary may act as
Paying Agent or Registrar.
B-3
4. Indenture
The Company issued the Notes under an Indenture dated as of July 22,
2005 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect from time
to time (the "Act"). Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Act for a
statement of those terms.
The Notes are general unsecured senior obligations of the Company.
The aggregate principal amount of Notes which may be authenticated and delivered
under the Indenture is unlimited. This Note is one of the 6-7/8% Senior Notes,
Series A, due 2015 referred to in the Indenture. The Notes include (i)
$400,000,000 aggregate principal amount of the Company's 6-7/8% Senior Notes,
Series A, due 2015 issued under the Indenture on July 22, 2005 (herein called
"Initial Notes"), (ii) if and when issued, additional 6-7/8% Senior Notes,
Series A, due 2015 or 6-7/8% Senior Notes, Series B, due 2015 of the Company
that may be issued from time to time under the Indenture subsequent to July 22,
2005 (herein called "Additional Notes") and (iii) if and when issued, the
Company's 6-7/8% Senior Notes, Series B, due 2015 that may be issued from time
to time under the Indenture in exchange for Initial Notes or Additional Notes in
an offer registered under the Securities Act as provided in a Registration
Rights Agreement. The Initial Notes, Additional Notes and Exchange Notes are
treated as a single class of securities under the Indenture. The Indenture
imposes, among other things, certain limitations on the Incurrence of
Indebtedness by the Company and its Subsidiaries, the payment of dividends and
other distributions on the Capital Stock of the Company and its Subsidiaries,
the purchase or redemption of Capital Stock of the Company and Capital Stock of
such Subsidiaries, certain purchases or redemptions of Subordinated Obligations,
the sale or transfer of assets and Capital Stock of Subsidiaries, certain
Sale/Leaseback Transactions involving the Company or any Restricted Subsidiary,
the incurrence of certain Liens, transactions with Affiliates, mergers and
consolidations, payments for consent, the business activities and investments of
the Company and its Subsidiaries and the sale of Capital Stock of Restricted
Subsidiaries, provided, however, certain of such limitations shall no longer be
in effect if the Notes attain an Investment Grade Rating. In addition, the
Indenture limits the ability of the Company and its Subsidiaries to enter into
agreements that restrict distributions and dividends from Subsidiaries and
requires the Company to make available SEC information to the Holders as well as
requiring certain Restricted Subsidiaries to guarantee the obligations under the
Notes and the Indenture.
5. Redemption
Except as described below, the Notes are not redeemable until April
15, 2010. On and after April 15, 2010, the Company may redeem all or, from time
to time, a part of the Notes upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as a percentage of
principal amount) plus accrued and unpaid interest on the Notes, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the twelve-month period beginning on April 15 of the
years indicated below:
B-4
YEAR PERCENTAGE
---- ----------
2010...................................... 103.438%
2011...................................... 102.292%
2012...................................... 101.146%
2013 and thereafter....................... 100.000%
Prior to April 15, 2008, the Company may on any one or more
occasions redeem up to 35% of the original principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes and Exchange
Notes) with the Net Cash Proceeds of one or more Public Equity Offerings at a
redemption price of 106.875% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date); provided that:
(1) at least 65% of the original principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes
and Exchange Notes) remains outstanding after each such redemption;
and
(2) the redemption occurs within 60 days after the closing of such
Public Equity Offering.
If the optional Redemption Date is on or after a record date and on
or before the related interest payment date, the accrued and unpaid interest, if
any, shall be paid to the Person in whose name the Note is registered at the
close of business, on such record date, and no additional interest shall be
payable to Holders whose Notes shall be subject to redemption by the Company.
In the case of any partial redemption, selection of the Notes for
redemption shall be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed, then on a pro rata basis, by lot or by
such other method as the Trustee shall deem to be fair and appropriate, provided
that with respect to any Note, such redemption equals $100,000 or an integral
multiple of $1,000 in excess thereof. If any Note is to be redeemed in part
only, the notice of redemption relating to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount
equal to the unredeemed portion thereof shall be issued in the name of the
Holder thereof upon cancellation of the original Note.
The Company is not required to make mandatory redemption payments or
sinking fund payments with respect to the Notes. The Company may at any time and
from time to time purchase Notes through open market purchases, negotiated
purchases, tender offers or otherwise.
6. Put Provisions
Upon the occurrence of a Change of Control, any Holder shall have
the right to require the Company to repurchase all or any part of the Notes of
such Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to
B-5
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture. The Company
shall be required to make an Asset Disposition Offer in certain circumstances
described in the Indenture.
7. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations of
principal amount of $100,000 or an integral multiple of $1,000 in excess
thereof. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Notes for a period beginning (1) 15 Business
Days before the mailing of a notice of an offer to repurchase Notes and ending
at the close of business on the day of such mailing, or (2) 15 days before an
interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it
for all purposes.
9. Unclaimed Money
If money for the payment of the principal of or premium, if any, or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its written request unless an abandoned
property law designates another person. After any such payment, Holders entitled
to the money must look only to the Company and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the Notes
and the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
maturity.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, a Subsidiary Guarantee, and the Notes may be amended with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes) and
(ii) subject to certain exceptions, any past default (other than with respect to
nonpayment) or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes). Subject to certain
exceptions set forth in the Indenture, without the consent of any
B-6
Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency,
to comply with Article IV or Article X in respect of the assumption by a
Successor Company of an obligation of the Company or any Subsidiary Guarantor
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to add Guarantees with respect to the Notes or
release a Subsidiary Guarantor upon its designation as an Unrestricted
Subsidiary or otherwise in accordance with the Indenture, to secure the Notes,
to make any change that would provide any additional rights or benefits to the
Holders or that does not materially adversely affect the legal rights under the
Indenture of any such Holder; to comply with any requirement of the SEC in order
to effect or maintain the qualification of the Indenture under the TIA, or to
provide for the issuance of the Exchange Notes or to provide for successor
trustees.
12. Defaults and Remedies
Under the Indenture, Events of Default include (each of which are
more specifically described in the Indenture) (i) default for 30 days in payment
of interest or additional interest when due on the Notes; (ii) default in
payment of principal or premium, if any, on the Notes at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraph 5 hereof,
upon declaration or otherwise; (iii) the failure by the Company or any
Subsidiary Guarantor to comply with its obligations under Article IV of the
Indenture; (iv) failure by the Company to comply for 30 days after written
notice with any of their obligations under the covenants described under
Sections 3.2 through 3.14 inclusive of the Indenture (in each case, other than a
(A) failure to purchase Notes when required under the Indenture, which failure
shall constitute an Event of Default under clause (ii) above and (B) a failure
by the Company or any Subsidiary Guarantor to comply with its obligations under
Article IV, which failure shall constitute an Event of Default under clause
(iii) above); (v) the failure by the Company to comply for 60 days after written
notice with their other agreements contained in the Indenture or under the Notes
(other than those referred to in (i), (ii), (iii) or (iv) above); (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries or is recourse
to the Company or its Restricted Subsidiaries, by contract or operation of law),
other than Indebtedness owed to the Company or a Restricted Subsidiary, whether
such Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay at the final Stated
Maturity the stated principal amount or to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness ("payment default") or (b) results in the
acceleration of such Indebtedness prior to its final maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a payment default or the maturity of which has been
so accelerated, aggregates $20,000,000 or more; (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law (the "bankruptcy provisions");
(viii) failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated
B-7
financial statements for the Company and its Restricted Subsidiaries), would
constitute a Significant Subsidiary to pay final judgments aggregating in excess
of $20,000,000 (net of any amounts that a reputable and creditworthy insurance
company has acknowledged liability for in writing), which judgments are not
paid, discharged, waived or stayed for a period of 60 days (the "judgment
default provision"); or (ix) any Subsidiary Guarantee of a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee. However, a default under clauses (iv) and (v) will not
constitute an Event of Default until the Trustee or the Holders of at least 25%
in principal amount of the outstanding Notes notify the Company of the default
and the Company does not cure such default within the time specified in clauses
(iv) and (v) hereof after receipt of such notice.
If an Event of Default (other than an Event of Default described in
(vii) hereof) occurs and is continuing, the Trustee by notice to the Company or
the Holders of at least 25% in principal amount of the outstanding Notes may
declare all the Notes to be due and payable immediately. If an Event of Default
described in (vii) hereof occurs and is continuing, the principal of, premium,
if any, and accrued and unpaid interest on all the Notes will become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders.
Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives indemnity or security satisfactory to it. Subject
to certain limitations, Holders of a majority in principal amount of the Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or the Subsidiary Guarantee or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Holder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Notes.
B-8
15. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Note.
16. 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
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers placed thereon.
18. Defined Terms
As used in this Note, terms defined in the Indenture are used herein
as therein defined.
19. Governing Law
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York.
The Company shall furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture, which has in it the text
of this Note in larger type. Requests may be made to:
Quiksilver, Inc.
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
B-9
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
___________________________________________________
(Print or type assignee's name, address and zip code)
___________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________ agent to transfer this Note on the books of
the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _______________ Your Signature: _________________________
Signature Guarantee: ____________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-10
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized signatory
Date of Principal Amount of Principal Amount of following such of Trustee or Notes
Exchange this Global Note this Global Note decrease or increase Custodian
B-11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.8 or 3.10 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.8 or 3.10 of the Indenture, state the amount in
principal amount (must be denominations of $100,000 or an integral multiple of
$1,000 in excess thereof): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side
of the Note)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-12
EXHIBIT C
FORM OF NOTATION OF GUARANTEE
For value received, each Subsidiary Guarantor (which term includes
any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of July 22, 2005 (the "Indenture")
among Quiksilver, Inc., the Subsidiary Guarantors listed on the signature pages
thereto and Wilmington Trust Company, as trustee (the "Trustee"), (a) the full
and punctual payment when due, whether at maturity, by acceleration, by
redemption or otherwise, of the principal of, premium, if any, and interest on
the Notes and all other obligations and liabilities of the Company to the
Holders or the Trustee under the Indenture (including without limitation
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceedings, relating to
the Company or any Subsidiary Guarantor whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding). The obligations of the
Subsidiary Guarantors to the Holders and to the Trustee pursuant to the
Subsidiary Guarantee and the Indenture are expressly set forth in Article X of
the Indenture and reference is hereby made to the Indenture for the precise
terms of the Guarantee, which terms are incorporated herein by reference.
[Guarantor]
By:____________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS TO
GUARANTEE NOTES
This Supplemental Indenture and Subsidiary Guarantee, dated as of
[_______ __], 20__ (this "Supplemental Indenture" or "Guarantee"), among [name
of future Subsidiary Guarantor] (the "Subsidiary Guarantor"), Quiksilver, Inc.
(together with its successors and assigns, the "Company"), each other then
existing Subsidiary Guarantor under the Indenture referred to below, and
Wilmington Trust Company, as Trustee under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
heretofore executed and delivered an Indenture, dated as of July 22, 2005 (as
amended, supplemented, waived or otherwise modified, the "Indenture"), providing
for the issuance of an unlimited aggregate principal amount of 6-7/8% Senior
Notes due 2015 of the Company (the "Notes");
WHEREAS, Section 3.11 of the Indenture provides that the Company is
required to cause each Domestic Subsidiary created or acquired by the Company or
one or more of its Restricted Subsidiaries that guarantees the payment of any
Indebtedness of the Company or any other Restricted Subsidiary or otherwise
becomes an obligor, including as a co-borrower, under a Credit Facility to
execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such
Subsidiary Guarantor shall unconditionally Guarantee, on a joint and several
basis, the full and prompt payment of the principal of, premium, if any and
interest on the Notes and all sums due and owing to the Trustee on a senior
basis; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and
the Company are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Subsidiary Guarantor, the Company and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders as follows:
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Supplemental Indenture,
terms defined in the Indenture or in the preamble or recital hereto are used
herein as therein defined,
D-1
except that the term "Holders" in this Guarantee shall refer to the term
"Holders" as defined in the Indenture and the Trustee acting on behalf or for
the benefit of such Holders. The words "herein," "hereof" and "hereby" and other
words of similar import used in this Supplemental Indenture refer to this
Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
Agreement to be Bound; Guarantee
SECTION 2.1 Agreement to be Bound. The Subsidiary Guarantor hereby
becomes a party to the Indenture as a Subsidiary Guarantor and as such shall
have all of the rights and be subject to all of the obligations and agreements
of a Subsidiary Guarantor under the Indenture. The Subsidiary Guarantor agrees
to be bound by all of the provisions of the Indenture applicable to a Subsidiary
Guarantor and to perform all of the obligations and agreements of a Subsidiary
Guarantor under the Indenture.
SECTION 2.2 Guarantee. The Subsidiary Guarantor hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
a surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder and the Trustee, the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the Obligations
pursuant to Article X of the Indenture.
ARTICLE III
Miscellaneous
SECTION 3.1 Notices. All notices and other communications to the
Subsidiary Guarantor shall be given as provided in the Indenture to the
Subsidiary Guarantor, at its address set forth below, with a copy to the Company
as provided in the Indenture for notices to the Company.
[Name of future Subsidiary Guarantor]
[ ]
[ ]
[Attention: ]
[Facsimile No.: ( ) - ]
SECTION 3.2 Parties. Nothing expressed or mentioned herein is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Supplemental Indenture or the Indenture or any
provision herein or therein contained.
D-2
SECTION 3.3 Governing Law. This Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 3.4 Severability Clause. In case any provision in this
Supplemental Indenture 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 and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
SECTION 3.5 Ratification of Indenture; Supplemental Indentures Part
of Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture shall
form a part of the Indenture for all purposes, and every Holder heretofore or
hereafter authenticated and delivered shall be bound hereby. The Trustee makes
no representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
SECTION 3.6 Counterparts. The parties hereto may sign one or more
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.
SECTION 3.7 Headings. The headings of the Articles and the sections
in this Guarantee are for convenience of reference only and shall not be deemed
to alter or affect the meaning or interpretation of any provisions hereof.
D-3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[SUBSIDIARY GUARANTOR],
as a Subsidiary Guarantor
By:_______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, as Trustee
By:_______________________________________
Name:
Title:
QUIKSILVER, INC.
By:_______________________________________
Name:
Title:
D-4
SCHEDULE 3.7(b)
PERMITTED ENCUMBRANCES
1. Encumbrances pursuant to the Indenture.
2. Encumbrances pursuant to the Revolving Credit Facility and the security
agreement, guarantees and other documents referenced in the Revolving Credit
Facility.
3. Encumbrances pursuant to the Rossignol Purchase Agreement, Cleveland
Shareholders' Agreement and the Holding Company shareholders' agreement (as
described in the Offering Memorandum).
4. Encumbrances pursuant to the Leasehold Improvement Loan.
5. Encumbrances pursuant to the following credit agreements existing on
the date hereof:
(a) NaPali SAS, Cariboo S.a ▇.▇., Emerald Coast SA, Omareef Europe SAS
and certain European banks including, but not limited to, Caisse Regionale de
Credit Agricole Mutuel Pyrenees Gascogne, BNP Paribas, BPSO, Natexis, Societe
General, CCF and Fortis Banque France.
(b) Ug Manufacturing Company Pty. Ltd. (Australia) and Westpac Banking
Corporation.
(c) Quiksilver Japan K.K. and the Bank of Tokyo-Misubishi, Ltd. and
Mizuho Bank Ltd. and guaranteed by Quiksilver, Inc.
6. Liens on QIPL's Trademark rights to the Company's name and logo and
related Intellectual Property Rights in the territories of Australia and New
Zealand, in favor of the former shareholders of QIPL, to secure the obligation
of QAPL to pay the final installment of the purchase price for the acquisition
of shares of QIPL by QAPL.
7. Encumbrances pursuant to the Intercreditor Agreement dated as of April
12, 2005 among Quiksilver Americas, Inc., JPMorgan Chase Bank, N.A., as
administrative agent, and Union Bank of California, N.A.
SCHEDULE 3.9(b)
TRANSACTIONS WITH AFFILIATES
None