EXHIBIT 4.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
DISCOVERY ZONE, INC.,
AS ISSUER,
AND
THE SUBSIDIARY GUARANTORS NAMED HEREIN
AND
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE
_____________________________________________
INDENTURE
DATED AS OF JULY 22, 1997
_____________________________________________
$85,000,000
13 1/2% SENIOR SECURED NOTES DUE 2002
AND
13 1/2% SENIOR SECURED NOTES DUE 2002, SERIES B
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE.................................. 1
SECTION 1.01. Definitions......................................... 1
SECTION 1.02. Other Definitions................................... 20
SECTION 1.03. Incorporation by Reference of TIA................... 21
SECTION 1.04. Rules of Construction............................... 22
ARTICLE TWO
THE NOTES................................................................... 22
SECTION 2.01. Form and Dating..................................... 22
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount. ........ 23
SECTION 2.03. Registrar and Paying Agent.......................... 24
SECTION 2.04. Paying Agent To Hold Assets in Trust................ 25
SECTION 2.05. Holder Lists........................................ 25
SECTION 2.06. Transfer and Exchange............................... 26
SECTION 2.07. Replacement Notes................................... 26
SECTION 2.08. Outstanding Notes................................... 27
SECTION 2.09. Treasury Notes...................................... 27
SECTION 2.10. Temporary Notes..................................... 28
SECTION 2.11. Cancellation........................................ 28
SECTION 2.12. CUSIP Number........................................ 28
SECTION 2.13. Deposit of Monies................................... 29
SECTION 2.14. Book-Entry Provisions for Global Note............... 29
SECTION 2.15. Special Transfer Provisions......................... 30
SECTION 2.16. Defaulted Interest.................................. 33
ARTICLE THREE
REDEMPTION.................................................................. 33
SECTION 3.01. Notices to Trustee.................................. 33
SECTION 3.02. Selection of Notes To Be Redeemed................... 34
SECTION 3.03. Optional Redemption................................. 34
SECTION 3.04. Notice of Redemption................................ 35
SECTION 3.05. Effect of Notice of Redemption...................... 36
SECTION 3.06. Deposit of Redemption Price ........................ 36
P-i
SECTION 3.07. Notes Redeemed in Part.............................. 36
ARTICLE FOUR
COVENANTS................................................................... 37
SECTION 4.01. Payment of Notes.................................... 37
SECTION 4.02. Maintenance of Office or Agency..................... 37
SECTION 4.03. Corporate Existence................................. 37
SECTION 4.04. Payment of Taxes and other Claims................... 38
SECTION 4.05. Maintenance of Properties and Insurance............. 38
SECTION 4.06. Compliance Certificate; Notice of Default........... 38
SECTION 4.07. Compliance with Laws................................ 39
SECTION 4.08. Reports............................................. 39
SECTION 4.09. Waiver of Stay, Extension or Usury Laws............. 40
SECTION 4.10. Limitation on Restricted Payments................... 40
SECTION 4.11. Limitation on Transactions with Affiliates.......... 42
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness and
Issuance of Preferred Stock......................... 43
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.............................. 43
SECTION 4.14. Limitation on Change of Control..................... 44
SECTION 4.15. Limitation on Asset Sales........................... 46
SECTION 4.16. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries........................................ 49
SECTION 4.17. Limitation on Liens................................. 49
SECTION 4.18. Conduct of Business................................. 49
SECTION 4.19. Payments For Consent................................ 49
SECTION 4.20. Registration Rights Agreement....................... 49
SECTION 4.21. Warrant Agreement................................... 50
SECTION 4.22. Impairment of Security Interest..................... 50
SECTION 4.23. Intercompany Indebtedness........................... 50
SECTION 4.24. Key Man Life Insurance.............................. 51
SECTION 4.25. Real Estate Mortgages and Filings................... 51
SECTION 4.26. Leasehold Mortgages and Filings..................... 52
SECTION 4.27. Rating of Notes..................................... 52
ARTICLE FIVE
SUCCESSOR CORPORATION....................................................... 52
SECTION 5.01. Merger, Consolidation and Sale of Assets............ 52
SECTION 5.02. Successor Corporation Substituted................... 54
P-ii
ARTICLE SIX
DEFAULT AND REMEDIES........................................................ 54
SECTION 6.01. Events of Default................................... 54
SECTION 6.02. Acceleration........................................ 56
SECTION 6.03. Other Remedies...................................... 56
SECTION 6.04. Waiver of Past Defaults............................. 57
SECTION 6.05. Control by Majority................................. 57
SECTION 6.06. Limitation on Suits................................. 57
SECTION 6.07. Rights of Holders To Receive Payment................ 58
SECTION 6.08. Collection Suit by Trustee.......................... 58
SECTION 6.09. Trustee May File Proofs of Claim.................... 58
SECTION 6.10. Priorities.......................................... 59
SECTION 6.11. Undertaking for Costs............................... 59
SECTION 6.12. Restoration of Rights and Remedies.................. 60
SECTION 6.13. Rights and Remedies Cumulative...................... 60
SECTION 6.14. Delay or Omission Not Waiver........................ 60
ARTICLE SEVEN
TRUSTEE..................................................................... 60
SECTION 7.01. Duties of Trustee................................... 60
SECTION 7.02. Rights of Trustee................................... 62
SECTION 7.03. Individual Rights of Trustee........................ 63
SECTION 7.04. Trustee's Disclaimer................................ 63
SECTION 7.05. Notice of Default................................... 63
SECTION 7.06. Reports by Trustee to Holders....................... 63
SECTION 7.07. Compensation and Indemnity.......................... 64
SECTION 7.08. Replacement of Trustee.............................. 65
SECTION 7.09. Successor Trustee by Merger, Etc.................... 66
SECTION 7.10. Eligibility; Disqualification....................... 66
SECTION 7.11. Preferential Collection of Claims Against Company... 66
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE..................................... 67
SECTION 8.01. Legal Defeasance and Covenant Defeasance............ 67
SECTION 8.02. Satisfaction and Discharge.......................... 69
SECTION 8.03. Survival of Certain Obligations..................... 70
SECTION 8.04. Acknowledgment of Discharge by Trustee.............. 70
SECTION 8.05. Application of Trust Monies......................... 70
SECTION 8.06. Repayment to the Company; Unclaimed Money........... 71
SECTION 8.07. Reinstatement....................................... 71
P-iii
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS......................................... 72
SECTION 9.01. Without Consent of Holders.......................... 72
SECTION 9.02. With Consent of Holders............................. 73
SECTION 9.03. Compliance with TIA................................. 74
SECTION 9.04. Revocation and Effect of Consents................... 74
SECTION 9.05. Notation on or Exchange of Notes.................... 75
SECTION 9.06. Trustee To Sign Amendments, Etc..................... 75
ARTICLE TEN
SECURITY.................................................................... 75
SECTION 10.01. Grant of Security Interest.......................... 75
SECTION 10.02. Execution of Intercreditor Agreement................ 76
SECTION 10.03. Recording and Opinions.............................. 77
SECTION 10.04. Release of Collateral............................... 78
SECTION 10.05. Specified Releases of Collateral.................... 79
SECTION 10.06. Form and Sufficiency of Release..................... 80
SECTION 10.07. Purchaser Protected................................. 80
SECTION 10.08. Authorization of Actions To Be Taken by the Trustee
Under the Collateral Agreements..................... 81
SECTION 10.09. Authorization of Receipt of Funds by the Trustee Under
the Collateral Agreements........................... 81
SECTION 10.10. Escrowed Interest Account........................... 81
ARTICLE ELEVEN
GUARANTEE................................................................... 84
SECTION 11.01. Unconditional Guarantee............................. 84
SECTION 11.02 Limitations on Subsidiary Guarantees................ 85
SECTION 11.03. Evidence of Execution and Delivery of
Subsidiary Guarantee................................ 85
SECTION 11.04. Release of a Subsidiary Guarantor................... 86
SECTION 11.05. Waiver of Subrogation............................... 87
SECTION 11.06. Immediate Payment................................... 87
SECTION 11.07. No Set-Off.......................................... 88
SECTION 11.08. Obligations Absolute................................ 88
SECTION 11.09. Obligations Continuing.............................. 88
SECTION 11.10. Obligations Not Reduced............................. 89
SECTION 11.11. Obligations Reinstated.............................. 89
SECTION 11.12. Obligations Not Affected............................ 89
SECTION 11.13. Waiver.............................................. 90
P-iv
SECTION 11.14. No Obligation To Take Action Against the Company.... 91
SECTION 11.15. Dealing with the Company and Others................. 91
SECTION 11.16. Default and Enforcement............................. 91
SECTION 11.17. Certain Bankruptcy Events........................... 92
SECTION 11.18. Amendment, Etc...................................... 92
SECTION 11.19. Acknowledgment...................................... 92
SECTION 11.20. Costs and Expenses.................................. 92
SECTION 11.21. No Merger or Waiver; Cumulative Remedies............ 92
SECTION 11.22. Survival of Obligations............................. 93
SECTION 11.23. Subsidiary Guarantee in Addition to Other
Obligations........................................ 93
SECTION 11.24. Severability........................................ 93
SECTION 11.25. Successors and Assigns.............................. 93
ARTICLE TWELVE
AGREEMENT TO SUBORDINATE SECURITY INTEREST.................................. 94
SECTION 12.01. Subordination of Security Interest.................. 94
SECTION 12.02. Authorization of Trustee and Collateral Agent....... 94
ARTICLE THIRTEEN
MISCELLANEOUS............................................................... 94
SECTION 13.01. TIA Controls........................................ 94
SECTION 13.02. Notices............................................. 95
SECTION 13.03. Communications by Holders with Other Holders........ 96
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.. 96
SECTION 13.05. Statements Required in Certificate or Opinion....... 96
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar........... 97
SECTION 13.07. Legal Holidays...................................... 97
SECTION 13.08. Governing Law; Jurisdiction; Submission to Venue.... 97
SECTION 13.09. No Adverse Interpretation of other Agreements....... 98
SECTION 13.10. No Recourse Against Others.......................... 98
SECTION 13.11. Successors.......................................... 98
SECTION 13.12. Duplicate Originals................................. 98
SECTION 13.13. Severability........................................ 99
SECTION 13.14. Independence of Covenants........................... 99
SECTION 13.15 Table of Contents, Headings, Etc.................... 99
SIGNATURES..................................................................100
P-v
INDENTURE, dated as of July 22, 1997, among Discovery Zone, Inc., a
Delaware corporation (the "Company"), the Subsidiary Guarantors referred to
below and State Street Bank and Trust Company, as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 13 1/2%
Senior Secured Notes due August 1, 2002 (the "Initial Notes"), and 13 1/2%
Senior Secured Notes due August 1, 2002, Series B to be issued in exchange
for the Initial Notes pursuant to the Registration Rights Agreement (as
defined) (the "Exchange Notes" and, together with the Private Exchange Notes
(as defined) and the Initial Notes, the "Notes") and, to provide therefor,
the Company has duly authorized the execution and delivery of this Indenture.
The Notes will be secured by a first priority lien and security interest in
the Escrowed Interest Account (as defined) maintained with the Collateral
Agent (as defined) pursuant to the terms of the Escrow Agreement (as
defined). The Notes will also be secured by a first priority lien and
security interest in the Collateral (as defined) pursuant to the terms of the
Security Agreement (as defined), subject to the subordination of such lien as
provided herein, and by a pledge of all of the outstanding capital stock of
all Subsidiary Guarantors (as defined), pursuant to the terms of the Pledge
Agreement (as defined) and the Subsidiary Pledge Agreements (as defined).
The Notes will be jointly and severally guaranteed, on an unconditional
senior secured basis, by the Subsidiary Guarantors (as defined). All things
necessary to make the Notes, when duly issued and executed by the Company,
and authenticated and delivered hereunder, the valid obligations of the
Company and the Subsidiary Guarantors, and to make this Indenture a valid and
binding agreement of the Company and the Subsidiary Guarantors, have been
done.
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders (as defined), without
preference of one series of the Notes over the other.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, excluding
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"ADDITIONAL INTEREST" has the meaning set forth in the Registration
Rights Agreement.
-1-
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any specified Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management of policies of such specified Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED, HOWEVER, that beneficial ownership of 10% or more of the aggregate
voting power of the voting securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent, Collateral Agent,
Authenticating Agent or co-Registrar.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly-Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company; or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; PROVIDED, HOWEVER, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000 and (ii) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Company as permitted under Section
5.01 hereof.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"BLOCK PARTY" means a Subsidiary of the Company to be formed prior to
the Issue Date that will be the owner of certain family entertainment centers.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution delivered to the Trustee and certified by the secretary or an
assistant secretary of such Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on the date of such
certification.
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
-2-
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and any and all warrants, options and rights with respect
thereto, including, without limitation, each class of common stock and preferred
stock, partnership interests and other indicia of ownership of such Person.
"CASH EQUIVALENTS" means: (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America; (ii) commercial paper rated the highest
grade by ▇▇▇▇▇'▇ Investors Service, Inc. and Standard & Poor's Ratings Group and
maturing not more than one year from the date of creation thereof; (iii) time
deposits with, and certificates of deposit and banker's acceptances issued by,
any bank having capital surplus and undivided profits aggregating at least $500
million and maturing not more than one year from the date of creation thereof;
(iv) repurchase agreements that are secured by a perfected security interest in
an obligation described in clause (i) and are with any bank described in clause
(iii); (v) money market accounts with any bank having capital surplus and
undivided profits aggregating at least $500 million; (vi) readily marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Ratings Group; and (vii) money market funds investing only in U.S. Government
Obligations.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events:
(i) the Permitted Holder ceases to be the direct or indirect
beneficial owner (as defined below) of Voting Stock of the Company
representing an amount of such Voting Stock greater than the amount
beneficially owned by any other Person or Group (as defined below);
(ii) the Permitted Holder ceases to be the direct or indirect
beneficial owner of interests or participations in, or measured by the
profits of, the Company representing an amount of such interests or
participations greater than the amount beneficially owned by any other
Person or Group;
(iii) any sale, lease, exchange or other transfer (in one
transaction or in a series of related transactions) of all or substantially
all of the assets of the Company to any Person or Group, together with any
Affiliates thereof (whether or not otherwise in compliance with the
provisions of this Indenture) that is not beneficially owned or controlled,
directly or indirectly, by the Permitted Holder; or
(iv) the Permitted Holder ceases to have the right or ability, by
voting power, control, contract or otherwise, to control a majority of the
Board of Directors of the Company.
-3-
The terms "beneficially own", "beneficial owner" and "Group" shall
have the meanings ascribed to such terms in Sections 13(d) and 14(d) of the
Exchange Act; PROVIDED, HOWEVER, that, for the purposes of this definition of
"Change of Control" only, any Person or Group other than the Permitted Holder
shall be deemed to be the current beneficial owner of any shares of Voting Stock
of the Company, or any interests or participations in, or measured by the
profits of, the Company, that are issuable upon the exercise of any option,
warrant or similar right, or upon the conversion any convertible security, in
either case owned by such Person or Group without regard to whether such option,
warrant or convertible security is currently exercisable or convertible or will
become convertible or exercisable within 60 days if the exercise or conversion
price thereof at the time of grant was lower than the fair market value of the
underlying security at the time of grant.
"COLLATERAL" shall have the meaning assigned to such term in the
Security Agreement.
"COLLATERAL AGENT" shall have the meaning assigned to such term in the
Security Agreement.
"COLLATERAL AGREEMENTS" means, collectively, the Escrow Agreement, the
Pledge Agreement, the Subsidiary Pledge Agreements, the Security Agreement, the
Subsidiary Security Agreements, the Trademark Assignment and the Mortgages, in
each case, as the same may be in force from time to time.
"COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"COMPANY" means the party named as such above, until a successor
replaces such Person in accordance with the terms of this Indenture, and
thereafter means such successor.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (without
duplication) (a) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses were
deducted in computing Consolidated Net Income), (b) provision for taxes based on
income or profits to the extent such provision for taxes was included in
computing Consolidated Net Income, (c) consolidated interest expense of such
Person for such period, whether paid or accrued (including deferred financing
costs, non-cash interest payments and the interest component of capital lease
obligations), to the extent such expense was deducted in computing Consolidated
Net Income, (d) accretion of deferred rent expense under the McDonald's Rent
Deferral Secured Notes, to the extent such expense was deducted in computing
Consolidated Net Income, and (e) depreciation and amortization (including
amortization of goodwill and other intangibles) for such period to the extent
such
-4-
deprecation or amortization were deducted in computing Consolidated Net Income,
in each case, on a consolidated basis and determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED, that: (i) the Net Income of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly-Owned Subsidiary thereof, (ii) the Net Income of any Person
that is a Subsidiary (other than a Subsidiary of which at least 80% of the
Capital Stock having ordinary voting power for the election of directors or
other governing body of such Subsidiary is owned by the referent Person directly
or indirectly through one or more Subsidiaries) shall be included only to the
extent of the amount of dividends or distributions paid to the referent Person
or a Wholly-Owned Subsidiary thereof; (iii) for the purpose of determining
whether the Company may make a Restricted Payment under clause (c) of Section
4.10 hereof only, the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded; and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person, the sum of
(i) the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
Person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of (a) any cash received by such Person upon issuance of such preferred
stock and (b) the fair market value of any non-cash consideration received by
such Person upon issuance of such preferred stock PROVIDED that such value has
been determined in good faith by a nationally recognized investment bank, less
(x) all write-ups, subsequent to the date of this Indenture, in the book value
of assets owned by such Person or a consolidated Subsidiary of such Person,
other than (a) write-ups resulting from foreign currency translations and (b)
write-ups upon the acquisition of assets acquired in a transaction to be
accounted for by purchase accounting under GAAP, (y) all investments in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, a Permitted Investment), and (z) all unamortized debt discount and
expense and unamortized deferred financing charges (except such amounts arising
from the issuance of the Notes), all of the foregoing determined in accordance
with GAAP.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means any event known to the Company or which should have
been known to the Company after due inquiry that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
-5-
"DEPOSITORY" means The Depository Trust Company, its nominees and
successors.
"DISQUALIFIED STOCK" means any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the
Maturity Date.
"DTC" means The Depository Trust Company, a New York corporation.
"ELIGIBLE CREDIT FACILITY" means a credit facility (and any permitted
refinancing or replacement thereof) between the Company and a Lender, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time as permitted herein,
which credit facility (and any permitted refinancing or replacement thereof) (i)
has terms and conditions (including with respect to applicable interest rates
and fees) customary for similar facilities extended to borrowers comparable to
the Company, (ii) does not permit the Company to incur Indebtedness thereunder
at any time outstanding in excess of $10,000,000 in principal amount, and (iii)
may be secured by certain assets of the Company, subject to the terms and
conditions of an Intercreditor Agreement.
"EQUITY INTERESTS" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ESCROW AGREEMENT" means the Escrow and Security Agreement, dated as
of even date herewith, between the Company and the Trustee, substantially in the
form of Exhibit F attached hereto, as amended and supplemented from time to time
in accordance with its terms.
"ESCROW FUNDS" means the proceeds from the sale of Units to be
deposited in the Escrowed Interest Account in an aggregate amount specified in
the Escrow Agreement to, among other things, pay interest on the Notes that
accrues and is unpaid from the Issue Date through and including the Interest
Payment Date on August 1, 1999.
"ESCROWED INTEREST ACCOUNT" means one or more accounts established
with the Trustee pursuant to the terms of the Escrow Agreement for the deposit
of the Escrow Funds and the Pledged Securities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"EXCHANGE NOTES" has the meaning provided in the Preamble to this
Indenture.
-6-
"EXCHANGE OFFER" means the offer that may be made by the Company,
pursuant to the Registration Rights Agreement, to exchange for any and all the
Initial Notes a like aggregate principal amount of Exchange Notes.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Unless
otherwise provided herein, fair market value shall be determined by the Board of
Directors of the Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the Company
delivered to the Trustee.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, guarantees, repays,
repurchases or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems Preferred Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the event for which the calculation of the Fixed Charge Coverage Ratio is
made, then the Fixed Charge Coverage Ratio (both the numerator and the
denominator therein) shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, repayment, repurchase or redemption of
Indebtedness, or such issuance or redemption of Preferred Stock, as if the same
had occurred at the beginning of the applicable period; PROVIDED that pro forma
effect shall be given to repayments, repurchases or redemptions of Indebtedness
or Preferred Stock only to the extent such Indebtedness or Preferred Stock is
permanently retired (and, in the case of the Notes, surrendered to the Trustee
for cancellation). For purposes of making the computation referred to above, in
the event that acquisitions, divestitures, mergers or consolidations have been
made by the Company or any of its Subsidiaries subsequent to the commencement of
the four-quarter period over which the Fixed Charge Coverage Ratio is being
calculated, but prior to the event for which the calculation of the Fixed Charge
Ratio is being made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such acquisitions, divestitures, mergers and
consolidations as if such transactions had occurred at the beginning of the
applicable period.
"FIXED CHARGES" means, with respect to any Person for any period, the
sum of (a) consolidated interest expense of such Person for such period, whether
paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of non-cash interest payments
and the interest component of capital leases but excluding amortization of
deferred financing fees) and (b) the product of (i) all dividend payments,
whether paid in cash, assets, securities or otherwise, in the case of a Person
that is a Subsidiary of the Company, on any series of preferred stock of such
Person, and all dividend payments in respect of any series of preferred stock of
the Company, whether paid in cash, assets, securities or otherwise (other than
dividends payable in additional shares of the preferred stock on which such
dividends are paid), times (ii) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal,
-7-
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the date of this Indenture.
"HOLDER" OR "HOLDER" means the Person in whose name a Note is
registered on the Registrar's books.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases) or representing any Interest Swap Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing Indebtedness (other than Interest Swap
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, and also includes, to the extent not otherwise
included, the guarantee (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, by such
Person in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any of the
items which would be included within this definition.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INDEPENDENT FINANCIAL ADVISOR" means an investment banking firm (i)
which does not, and whose directors, officers and employees or Affiliates do
not, have a direct or indirect financial interest in the Company or any of its
Subsidiaries and (ii) which, in the judgment of the Board of Directors of the
Company, is otherwise independent and qualified to perform the task for which it
is to be engaged.
"INITIAL NOTES" has the meaning provided in the Preamble to this
Indenture.
"INITIAL PURCHASER" means ▇▇▇▇▇▇▇▇▇ & Company, Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"INTERCREDITOR AGREEMENT" means an agreement between the Trustee and a
Lender, substantially in the form of Exhibit G attached hereto, to be entered
into after the Issue Date, if the Company and such Lender enter into an Eligible
Credit Facility.
-8-
"INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Notes.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans
(including direct or indirect guarantees), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"ISSUE DATE" means the date of original issuance of the Initial Notes
under this Indenture.
"LENDER" means a Person that is not an Affiliate of the Company and is
a lender in an Eligible Credit Facility.
"LIEN" means, with respect to any asset, mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction,
excluding true lease and consignment filings).
"LIMITED INVESTMENT SUBSIDIARY" means, with respect to the Company or
any subsidiary of the Company, any corporation, partnership, joint venture,
association or other business entity in which the Company or any Subsidiary of
the Company (i) has at any time made an Investment permitted by clause (viii) of
the definition of "Permitted Investment" and (ii) has not at any time made any
other Investment.
"MATURITY DATE" means August 1, 2002.
"MCDONALD'S" means the ▇▇▇▇▇▇▇▇'▇ Corporation, a Delaware corporation,
and its successors and assigns.
-9-
"MCDONALD'S COLLATERAL" means those certain fourteen parcels of real
property and related fixtures, including, without limitation, any proceeds
thereof and subject to McDonald's Senior Liens (as hereinafter defined).
"MCDONALD'S DOCUMENTS" means the agreement to indemnify as set forth
in Section 10.3(f) and Section 11.2(a)(iii) of that certain Agreement and Plan
of Merger, dated as of August 30, 1994, by and among Discovery Zone, Inc.,
Discovery Zone International, Inc., Leaps & Bounds, Inc. and McDonald's; the
McDonald's Secured Note (as hereinafter defined); and the McDonald's Rent
Deferral Secured Notes (as hereinafter defined).
"MCDONALD'S RENT DEFERRAL SECURED NOTES" means secured promissory
notes to be issued on the Issue Date by the Company in favor of McDonald's
pursuant to the Plan of Reorganization, which notes represent restructuring of
rent deferrals which McDonald's granted to the Company during bankruptcy
proceedings of the Company in an estimated aggregate principal amount of to
$265,000, which rent deferrals will continue to accrue after the Issue Date and
increase the principal amount owing under such notes and the interest on which
notes will be capitalized and payable on maturity.
"MCDONALD'S SECURED NOTE" means a secured promissory note to be issued
on the Issue Date by the Company in favor of McDonald's pursuant to the Plan of
Reorganization, which note represents restructured secured claims against the
Company in an estimated aggregate principal amount of up to $4,600,000.
"MCDONALD'S SENIOR LIENS" shall mean the first priority liens of
McDonald's on the McDonald's Collateral, as set forth in the first mortgages,
deeds of trust and/or deeds to secure debt, which McDonald's Senior Liens
secure, among other things, the payment of the McDonald's Secured Note, the
McDonald's Rent Deferral Secured Notes and any obligations of the Debtors (as
defined in the Plan of Reorganization) or the Company or any of the other
Reorganized Debtors (as defined in the Plan of Reorganization) that may arise
under (i) the agreement to indemnify as set forth in Section 10.3(f) and
Section 11.2(a)(iii) of the Agreement and Plan of Merger, dated as of August 30,
1994, by and among Discovery Zone, Inc., Discovery Zone International, Inc.,
Leaps & Bounds, Inc. and ▇▇▇▇▇▇▇▇'▇ Corporation and (ii) the Stipulation and
Order Between Debtors and ▇▇▇▇▇▇▇▇'▇ Corporation Providing for the Resolution,
Settlement and Compromise of Disputes and for Rent Deferrals and Allowance of
Certain Claims, entered by the United States Bankruptcy Court for the District
of Delaware on November 18, 1996, which liens are senior to the subordinate
liens on the McDonald's Properties granted by the Company to the Collateral
Agent as set forth in the Subordination Agreement (as hereinafter defined).
"MORTGAGES" means the mortgages, deeds of trust, deeds to secure debt
or other similar documents securing liens on the Premises and/or the Leased
Premises, as well as the other collateral secured by and described in the
mortgages, deeds of trust, deeds to secure debt or other similar documents.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment
-10-
obligations when received in the form of cash or Cash Equivalents (other than
the portion of any such deferred payment constituting interest) received by the
Company or any of its Subsidiaries from such Asset Sale net of (a) reasonable
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by the Company or any Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provisions for taxes on such extraordinary gain (but not loss).
"NON-U.S. PERSON" means a Person who is not a U.S. Person, as defined
in Regulation S.
"NOTES" has the meaning provided in the Preamble to this Indenture and
means the Initial Notes, the Exchange Notes, and the Private Exchange Notes, if
any, treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.
"OBLIGATIONS" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING CIRCULAR" means as of any time referred to in this
Indenture, the most recent offering memorandum (whether the preliminary
Confidential Offering Circular, dated June 23, 1997, as amended by the final
Confidential Offering Circular, dated July 15, 1997, or any amendment or
supplement thereto), in each case relating to the offering of the Initial Notes.
"OFFICER" means, with respect to any Person, the chief executive
officer, the president, any vice president, the chief financial officer, the
treasurer, the controller, or the secretary or assistant secretary of such
Person, or any other officer designated by the Board of Directors to serve in a
similar capacity.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an assistant
treasurer or an assistant secretary of
-11-
such Person and otherwise complying with the requirements of Sections 13.04 and
13.05, as they relate to the making of an Officers' Certificate.
"OPINION OF COUNSEL" means a written opinion from legal counsel, who
may be counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 13.04 and 13.05, as they relate to
the giving of an Opinion of Counsel.
"PERMITTED HOLDER" means Birch Acquisition L.L.C. so long as such
entity is directly or indirectly controlled by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or, in the event
of his death, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"PERMITTED INDEBTEDNESS" means each of the following:
(a) Indebtedness incurred by the Company or its Subsidiaries in
connection with or arising out of Sale and Leaseback Transactions, Capital
Lease Obligations or Purchase Money Obligations; PROVIDED that the
aggregate principal amount at any one time outstanding of all such Sale and
Leaseback Transactions, Capital Lease Obligations and Purchase Money
Obligations does not exceed $5 million;
(b) Indebtedness of the Company represented by the Notes (whether
incurred on the Issue Date or in connection with the Exchange Offer);
(c) Indebtedness owed by the Company to any of its Wholly-Owned
Subsidiaries for so long as such Indebtedness is held by a Wholly-Owned
Subsidiary of the Company, in each case subject to no Lien; PROVIDED that
(i) any such Indebtedness of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under this
Indenture and the Notes and (ii) if as of any date any Person other than a
Wholly-Owned Subsidiary of the Company owns or holds any such Indebtedness
or any such Person holds a Lien in respect of such Indebtedness, such date
shall be deemed the date of incurrence of Indebtedness not constituting
Permitted Indebtedness of the Company;
(d) Indebtedness of a Wholly-Owned Subsidiary of the Company to the
Company or to a Wholly-Owned Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Wholly-Owned Subsidiary of the
Company and, if such Indebtedness from the Company to any Subsidiary
exceeds $500,000 in aggregate principal amount, evidenced by a written
promissory note or other instrument in form and substance reasonably
satisfactory to the Trustee, in each case subject to no Lien held by a
Person other than the Company or a Wholly-Owned Subsidiary of the Company;
PROVIDED that if, as of any date any Person other than the Company or a
Wholly-Owned Subsidiary of the Company owns or holds such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be deemed the
date of incurrence of Indebtedness not constituting Permitted Indebtedness
by the issuer of such Indebtedness;
-12-
(e) the incurrence by the Company and its Subsidiaries of
Indebtedness issued in exchange for, or the proceeds of which are
contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") Permitted Indebtedness referred to in clauses
(a), (b) and (c) above and outstanding Indebtedness incurred in accordance
with Section 4.12 hereof (other than pursuant to this definition of
Permitted Indebtedness except to the extent provided in clauses (a), (b)
and (c) thereof) (the "Refinancing Indebtedness"); PROVIDED, HOWEVER, that
(i) the principal amount of such Refinancing Indebtedness shall not exceed
the principal amount of Indebtedness so refinanced (plus the amount of
reasonable expenses incurred in connection therewith); (ii) the Refinancing
Indebtedness shall rank in right of payment no more senior (and at least as
subordinated) to the Notes than did the Indebtedness being refinanced;
(iii) if the Indebtedness being refinanced is Indebtedness of the Company,
then such Refinancing Indebtedness shall be Indebtedness solely of the
Company; (iv) such Refinancing Indebtedness shall have a Weighted Average
Life longer, and a stated maturity which is later than, that of the
Indebtedness being refinanced; and (v) the Indebtedness so refinanced is
permanently retired (and, in case of the Notes, surrendered to the Trustee
for cancellation);
(f) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Subsidiaries and Interest Swap Obligations of any
Subsidiary covering Indebtedness of such Subsidiary; PROVIDED, HOWEVER,
that such Interest Swap Obligations are entered into to protect the Company
and its Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(g) Indebtedness of the Company outstanding on the Issue Date
pursuant to the McDonald's Secured Note, the McDonald's Rent Deferral
Secured Notes (including Indebtedness resulting from future rent deferrals
to the extent and in the manner contemplated by the McDonald's Rent
Deferral Secured Notes as in effect on the Issue Date) and the Pre-petition
Tax Payables, as reduced by the amount of any prepayments permitted by this
Indenture or scheduled amortization payments when actually paid or by any
permanent reductions thereof; and
(h) other Indebtedness of the Company in an aggregate amount not to
exceed $10 million at any one time outstanding, which Indebtedness may
include Indebtedness evidenced by an Eligible Credit Facility.
"PERMITTED INVESTMENTS" means: (i) Investments by the Company or any
of its Subsidiaries in any Person that is or will become immediately after such
Investment a Wholly-Owned Subsidiary of the Company or that will merge or
consolidate into the Company or a Wholly-Owned Subsidiary of the Company, (ii)
Investments in the Company by any Subsidiary of the Company; PROVIDED that any
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement, to the Company's obligations under the Notes and this
Indenture; (iii) investments in cash and Cash
-13-
Equivalents; (iv) Interest Swap Obligations entered into in the ordinary course
of the Company's or its Subsidiaries' businesses and otherwise in compliance
with this Indenture; (v) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers solely in
exchange for a claim against any such trade creditor or customer; (vi)
Investments in the Notes; (vii) Investments made by the Company or its
Subsidiaries as a result of an Asset Sale made in compliance with Section 4.15
hereof; and (viii) other Investments in joint ventures, corporations, limited
liability companies or partnerships formed by the Company, which joint ventures,
corporations, limited liability companies or partnerships engage in businesses
which are the same as, or similar or related to, the business of the Company as
contemplated by the Offering Circular; PROVIDED, HOWEVER, that the amount which
may be invested pursuant to this clause (viii) shall not exceed, in the twelve-
month period commencing on the Issue Date, $500,000 and in any successive
twelve-month period commencing on the Issue Date thereafter, $500,000 plus any
cumulative, unutilized portion of such amounts which could have been invested
pursuant to this clause (viii) during any of the prior twelve-month periods.
"PERMITTED LIENS" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
-14-
(vi) any interest or title of a lessor under any Capital Lease
Obligation; PROVIDED that such Liens do not extend to any property or
assets which are not leased property subject to such Capital Lease
Obligation;
(vii) Purchase Money Liens of the Company or any Subsidiary of the
Company acquired in the ordinary course of business; PROVIDED, HOWEVER,
that (A) the related Purchase Money Obligation shall not exceed the cost of
such property or assets and shall not be secured by any property or assets
of the Company or any Subsidiary of the Company other than the property and
assets so acquired and (B) the Lien securing such Indebtedness shall be
created within 90 days of such acquisition;
(viii) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumbered documents and other property
relating to such letters of credit and products and proceeds thereof;
(ix) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Subsidiaries, including rights of offset and set-off;
(x) Liens securing Interest Swap Obligations, which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xi) Liens securing Acquired Debt incurred in accordance with
Section 4.12 hereof; PROVIDED that (A) such Liens secured such Acquired
Debt at the time of and prior to the incurrence of such Acquired Debt by
the Company or a Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Indebtedness
by the Company or a Subsidiary of the Company and (B) such Liens do not
extend to or cover any property or assets of the Company or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Debt prior to the time such Indebtedness became Acquired Debt of the
Company or a Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Debt prior to the incurrence
of such Acquired Debt by the Company or a Subsidiary of the Company;
(xii) Liens existing on the Issue Date but only to the extent such
Liens are in effect on the Issue Date, including, without limitation the
McDonald's Senior Liens;
(xiii) Liens securing Indebtedness of the Company under an Eligible
Credit Facility;
(xiv) Liens in favor of the Company or a Wholly-Owned Subsidiary of
the Company on assets of any Subsidiary of the Company; and
(xv) Liens securing Refinancing Indebtedness which is incurred to
refinance any Indebtedness which has been secured by a Lien permitted under
this Indenture and which has been incurred in accordance with the
provisions of this Indenture;
-15-
PROVIDED, HOWEVER, that such Liens (a) are no less favorable to the Holders
and are not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being refinanced and (b) do
not extend to or cover any property or assets of the Company or any of its
Subsidiaries not securing the Indebtedness so refinanced.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLAN OF REORGANIZATION" means the Third Amended Joint Plan of
Reorganization of Discovery Zone, Inc., dated March 11, 1997, as amended.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of even date
herewith, between the Company and the Trustee, substantially in the form of
Exhibit H attached hereto, as amended or supplemented from time to time in
accordance with its terms.
"PLEDGED COLLATERAL" shall have the meaning assigned to such term in
the Pledge Agreement.
"PLEDGED SECURITIES" means the U.S. Government Obligations to be
purchased by the Company and held in the Escrowed Interest Account in accordance
with the Escrow Agreement.
"PLEDGED SUBSIDIARY COLLATERAL" shall have the meaning ascribed to
such term in the Subsidiary Pledge Agreements.
"PREFERRED STOCK" means, with respect to any Person, any Capital Stock
of such Person or its Subsidiaries in respect of which a holder thereof is
entitled to receive payment upon dissolution or otherwise before any payment may
be made with respect to any other Capital Stock of such Person or its
Subsidiaries.
"PRE-PETITION TAX PAYABLES" means pre-petition tax claims restructured
pursuant to the Plan of Reorganization as pre-petition tax payables having an
estimated aggregate maximum principal amount of up to $5,000,000, which claims
have maturities of up to six years from the original date of assessment, require
principal payments in equal installments and accrue simple interest at 10% per
annum from the Issue Date.
"PRIMARY OFFERING" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement filed with and
declared effective by the SEC pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
under any employee benefit plans) or pursuant to an exemption from the
registration requirements thereof.
"PRIVATE EXCHANGE NOTES" shall have the meaning assigned to such term
in the Registration Rights Agreement.
-16-
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Notes in the form set forth in Exhibit A attached hereto.
"PRO FORMA" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article Eleven of Regulation S-X under the Securities Act, as determined by
the Board of Directors of the Company in consultation with its independent
public accountants.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated July 15,
1997, relating to the purchase and sale of the Units, entered into between the
Company and the Initial Purchaser.
"PURCHASE MONEY LIENS" means (i) Liens to secure or securing Purchase
Money Obligations permitted to be incurred under this Indenture and (ii) Liens
to secure Refinancing Indebtedness incurred solely to refinance Purchase Money
Obligations, PROVIDED that such Refinancing Indebtedness is incurred no later
than six (6) months after the satisfaction of such Purchase Money Obligations
and such Lien extends to or covers only the asset or property securing the
Purchase Money Obligations being refinanced.
"PURCHASE MONEY OBLIGATIONS" means Indebtedness representing, or
incurred to finance, the cost of acquiring any assets (including Purchase Money
Obligations of any other Person at the time such other Person is merged with or
into or is otherwise acquired by the Company or any of its wholly-owned
Subsidiaries); PROVIDED that (i) the principal amount of such Indebtedness does
not exceed 100% of such cost, (ii) any Lien securing such Indebtedness does not
extend to or cover any other asset or property other than the asset or property
being so acquired and (iii) such Indebtedness is incurred, and any Liens with
respect thereto are granted, within 90 days of the acquisition of such property
or asset.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"RECORD DATE" means any of the Record Dates specified in the Notes,
whether or not a Legal Holiday.
"REFINANCING INDEBTEDNESS" has the meaning provided in clause (e) of
the definition of "Permitted Indebtedness" in this Section 1.01.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of even date herewith, between the Company and the Initial
Purchaser, as the same may be amended or modified from time to time in
accordance with the terms thereof.
"REGULATION S" means Regulation S under the Securities Act, as such
regulation may be amended from time to time.
-17-
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SECURITY" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; PROVIDED that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"RULE 144A" means Rule 144A under the Securities Act.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing to the Company or a Subsidiary of the Company of any property,
whether owned by the Company or any Subsidiary of the Company at the Issue Date
or later acquired, which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SECURITY AGREEMENT" means the Security Agreement, dated as of even
date herewith, between the Company and the Trustee, as amended or supplemented
from time to time in accordance with its terms, substantially in the form of
Exhibit I attached hereto.
"SECURITY INTERESTS" means the Liens on the Collateral created by this
Indenture and the Collateral Agreements in favor of the Collateral Agent for the
benefit of the Collateral Agent and the Holders.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which would be a
"significant subsidiary" as defined in Article One, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"SUBORDINATION AGREEMENT" means that certain Subordination Agreement,
dated on or after the Issue Date, substantially in the form of Exhibit P
attached hereto, by and between ▇▇▇▇▇▇▇▇'▇ Corporation and the Collateral Agent.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; PROVIDED, HOWEVER, that with respect to the Company or any of its
-18-
Subsidiaries, the term Subsidiary shall not include Block Party or any Limited
Investment Subsidiary.
"SUBSIDIARY COLLATERAL" shall have the meaning assigned to such term
in the Subsidiary Security Agreements.
"SUBSIDIARY GUARANTEES" means, individually, the guarantee and,
collectively, the guarantees given by the Subsidiary Guarantors pursuant hereto
or pursuant to supplemental indentures executed by Subsidiaries formed after the
Issue Date pursuant to which such Subsidiaries agree to be bound by the terms of
this Indenture.
"SUBSIDIARY GUARANTOR" means each of Discovery Zone Limited, Discovery
Zone (Puerto Rico), Inc., Discovery Zone Licensing, Inc. and all future
Subsidiaries of the Company other than (a) any Limited Investment Subsidiary or
(b) Block Party.
"SUBSIDIARY PLEDGE AGREEMENTS" means the Subsidiary Pledge Agreements
to be entered into between each Subsidiary Guarantor and the Trustee, each
substantially in the form of Exhibit L attached hereto, as amended or
supplemented from time to time in accordance with its terms.
"SUBSIDIARY SECURITY AGREEMENTS" means, individually, the subsidiary
security agreement and, collectively, the subsidiary security agreements, each
substantially in the form of Exhibit M attached hereto, executed by each
Subsidiary Guarantor on the Issue Date in favor of the Trustee, pursuant to
which such Subsidiary Guarantor grants a security interest in and lien on its
properties and assets as collateral security for the debts, liabilities and
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee, as the
same may be amended or modified from time to time in accordance with its terms.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, until
such time as this Indenture is qualified under the TIA, and thereafter as in
effect on the date of such qualification, except as otherwise provided in
Section 9.03.
"TRADEMARK ASSIGNMENT" means the Collateral Assignment of Trademarks
(Security Agreement), dated as of even date herewith, by the Company in favor of
the Trustee, substantially in the form of Exhibit K attached hereto, as amended
and supplemented from time to time in accordance with its terms.
"TRUST OFFICER" means any officer of the Trustee assigned by the
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"TRUSTEE" means the party named as such in the Preamble to this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
-19-
"UNITS" means units consisting of Initial Notes and Warrants sold to
the Initial Purchaser on the Issue Date pursuant to a private offering conducted
by the Company and as described in the Offering Circular.
"U.S. GOVERNMENT OBLIGATIONS" means non-callable direct obligations
of, and non-callable obligations guaranteed by, the United States of America for
the payment of which the full faith and credit of the United States of America
is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"VOTING STOCK" means, with respect to any Person, one or more classes
of the Capital Stock of such Person having general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of such Person (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"WARRANT AGREEMENT" means the Warrant Agreement, dated as of even date
herewith, between the Company and the Trustee, as Warrant Agent, pursuant to
which the Warrants are issued, as amended and supplemented from time to time in
accordance with its terms.
"WARRANTS" means warrants to purchase shares of the Company's common
stock, par value $0.01 per share, comprising the Units and issued by the Company
contemporaneously with the Initial Notes pursuant to the terms and conditions of
the Warrant Agreement.
"WEIGHTED AVERAGE LIFE" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the date
of each successive scheduled principal payment of such Indebtedness multiplied
by the amount of such principal payment by (ii) the sum of all such principal
payments.
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person of which all of the voting Capital Stock (other than
directors' qualifying shares, if any) is owned by such Person or any
Wholly-Owned Subsidiary of such Person.
SECTION 1.02. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
"Acceleration Notice"..........................................6.02(a)
"Affiliate Transaction"........................................4.11
-20-
"Agent Members"................................................2.14
"Authenticating Agent".........................................2.02
"Change of Control Offer"......................................4.14
"Change of Control Payment"....................................4.14
"Change of Control Payment Date"...............................4.14
"Covenant Defeasance"..........................................8.01
"Default Interest Payment Date"................................2.16
"Event of Default".............................................6.01
"Global Note"..................................................2.01
"Lease"........................................................4.26
"Leased Premises"..............................................4.26
"Legal Defeasance".............................................8.01
"Legal Holiday"...............................................13.07
"Net Proceeds Offer"...........................................4.15
"Net Proceeds Offer Amount"....................................4.15
"Net Proceeds Offer Payment Date"..............................4.15
"Net Proceeds Offer Trigger Date"..............................4.15
"Paying Agent".................................................2.03
"Physical Notes"...............................................2.01
"Premises".....................................................4.25
"Proceeds Purchase Date".......................................4.15
"Registrar"....................................................2.03
"Released Interests" .....................................10.05
"Replacement Assets"...........................................4.15
"Restricted Payments"..........................................4.10
"Separability Date"............................................2.15(f)
"Valuation Date"..............................................10.05
SECTION 1.03. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture or any Exhibit hereto refers to a provision of
the TIA, such provision is incorporated by reference in, and made a part of,
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the
Subsidiary Guarantors or any other obligor on the Notes.
-21-
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.04. 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) words in the singular include the plural, and words in the plural
include the singular;
(4) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision;
(5) any reference to a statute, law or regulation means that statute,
law or regulation as amended and in effect from time to time and includes any
successor statute, law or regulation; PROVIDED, HOWEVER, that any reference to
the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the relevant
case;
(6) provisions apply to successive events and transactions; and
(7) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING.
The Initial Notes, the Exchange Notes and the Trustee's respective
certificates of authentication relating thereto shall be substantially in the
forms of Exhibits A and B attached hereto. The Private Exchange Notes, if
required, and the Trustee's certificate of authentication relating thereto shall
be substantially in the form of Exhibit B attached hereto, but shall bear the
Private Placement Legend. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or depository rule or usage. The Company
and the Trustee shall approve the forms of the Notes and any notation, legend or
-22-
endorsement on them. Each Note shall be dated the date of its issuance and
shall show the date of its authentication.
The terms and provisions contained in the Notes annexed hereto as
Exhibits A and B shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Initial Notes offered and sold in reliance on Rule 144A and Notes
offered and sold in off-shore transactions in reliance on Regulation S shall be
issued initially in the form of one or more permanent global notes in registered
form, substantially in the form set forth in Exhibit A attached hereto (each
such Note, a "Global Note"), deposited with the Trustee, as custodian for the
Depository, and shall bear the legend set forth in Exhibit C attached hereto,
and be duly executed by the Company and authenticated by the Trustee as
hereinafter provided. Exchange Notes shall be issued initially in the form of
one or more permanent Global Notes, substantially in the form set forth in
Exhibit B attached hereto, deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Exhibit C attached
hereto. The aggregate principal amount of a Global Note may from time to time
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
Notes issued in exchange for an interest in a Global Note pursuant to
Section 2.14 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A attached hereto
(each such Note, a "Physical Note"). Initial Notes offered and sold to
Institutional Accredited Investors and Private Exchange Notes shall be issued in
the form of Physical Notes in substantially the form set forth in Exhibits A and
B, respectively, attached hereto and shall bear the Private Placement Legend.
SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE
PRINCIPAL AMOUNT.
Two Officers, or an Officer and an assistant secretary of the Company,
shall sign, or one Officer shall sign and one Officer or an assistant secretary
of the Company (each of whom shall, in each case, have been duly authorized by
all requisite corporate actions) shall attest to, the Notes for the Company by
manual or facsimile signature. The corporate seal of the Company shall be
affixed to each Note or reproduced thereon.
If an Officer or assistant secretary of the Company, whose signature
is on a Note was an Officer or assistant secretary of the Company at the time of
such execution but no longer holds that office or position at the time the
Trustee authenticates the Note, the Note shall nevertheless be valid.
-23-
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $85,000,000, (ii) Private Exchange
Notes from time to time, and (iii) Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes, in each case upon
written orders of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of Notes to be authenticated and
the date on which the Notes are to be authenticated, whether the Notes are to be
Initial Notes, Private Exchange Notes or Exchange Notes, and shall further
specify the amount of such Notes to be issued as the Global Notes or Physical
Notes. The aggregate principal amount of Notes outstanding at any time may not
exceed $85,000,000, except as provided in Section 2.07. In addition, with
respect to authentication pursuant to clause (ii) of the first sentence of this
paragraph, the first such written order from the Company shall be accompanied by
an Opinion of Counsel of the Company in a form reasonably satisfactory to the
Trustee stating that the issuance of the Exchange Notes or Private Exchange
Notes, as the case may be, does not give rise to an Event of Default, complies
with this Indenture and has been duly authorized by the Company.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York), which
shall initially be State Street Bank and Trust Company, N.A., having a principal
office at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, where (a) Notes may be
presented or surrendered for registration of transfer or for exchange, (b) Notes
may be presented or surrendered for payment and (c) notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served (the
"New York Presenting Agent"), in addition to the Corporate Trust Office. In
addition, the Company shall maintain an office or agency to maintain the Note
register, for purposes of registration of record ownership of the Notes
("Registrar") and one or more paying agents ("Paying Agent") for payment of the
Notes. The Company hereby initially appoints the Trustee as Registrar and
Paying Agent. The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company, upon prior written notice to the Trustee,
may have one or more co-Registrars and
-24-
one or more additional Paying Agents reasonably acceptable to the Trustee.
Neither the Company nor any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such (PROVIDED, HOWEVER, that such requirement shall not be construed to
obligate the Trustee to maintain an office in New York).
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. The
Paying Agent or Registrar may resign upon 30 days notice to the Company.
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing to hold in trust for the benefit of the Holders or the Trustee
all assets held by the Paying Agent for the payment of principal of, premium, if
any, or interest on, the Notes (whether such assets have been distributed to it
by the Company, a Subsidiary Guarantor or any other obligor on the Notes), and
the Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed, and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish or cause the Registrar to
furnish to the Trustee at least seven Business Days before each Record Date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders, including the aggregate principal amount thereof,
which list may be conclusively relied upon by the Trustee.
-25-
SECTION 2.06. TRANSFER AND EXCHANGE.
Subject to the provisions of Sections 2.14 and 2.15, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met, including an Opinion of Counsel with respect to
whether (i) such Note constitutes a Restricted Security and (ii) the
requirements for transfer of such Note have been satisfied, including the
requirements provided for in Section 2.15; PROVIDED, HOWEVER, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's or co-Registrar's request.
No service charge shall be made for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.07, 4.14, 4.15 or 9.05, in which event
the Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Note (i) during a period commencing at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 and ending at the close of business on such day of selection,
and (ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Note being redeemed in part.
Any Holder of the 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 the Depository, and that
ownership of a beneficial interest in the Note shall be required to be reflected
in a book entry.
SECTION 2.07. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide an affidavit of lost certificate and an indemnity bond or
other indemnity, sufficient in the judgment of both the Company and the Trustee,
to protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Note, including any tax or
governmental charge that may be imposed in relation thereto and reasonable fees
and expenses of its counsel and of the Trustee and its counsel. Every
replacement Note shall
-26-
constitute an additional obligation of the Company and shall be entitled to all
the benefits of this Indenture equally and proportionately with all other Notes
duly issued hereunder.
In case any such mutilated, lost, destroyed or wrongfully taken 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.
SECTION 2.08. OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a redemption date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes (to the extent of the
principal amount redeemed, in the case of a partial redemption) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company or any of its Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Company shall notify the Trustee, in writing (which notice
shall constitute actual notice for purposes of the foregoing sentence), when it
or any of its Affiliates repurchases or otherwise acquires Notes, of the
aggregate principal amount of such Notes so repurchased or otherwise acquired
and such other information as the Trustee may reasonably request and the Trustee
shall be entitled to rely thereon.
-27-
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and so indicates in
the Officers' Certificate. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate upon receipt of a written order of
the Company pursuant to Section 2.02 definitive Notes of authorized
denominations and in like principal amount as the temporary Notes for which they
are being exchanged in exchange for the temporary Notes, upon surrender of the
temporary Notes at the office or agency of the Company designated for such
purpose pursuant to Section 4.02, without charge to the Holder. Until so
exchanged, the temporary Notes shall be entitled to the same benefits under this
Indenture as definitive Notes.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, shall
dispose, in its customary manner, of all Notes surrendered for transfer,
exchange, payment or cancellation, and deliver a certificate of destruction to
the Company. Subject to Section 2.07, the Company may not issue new Notes to
replace Notes that it has paid or delivered to the Trustee for cancellation. If
the Company shall acquire any of the Notes, such acquisition shall not operate
as a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12. CUSIP NUMBER.
The Company in issuing the Notes of each series may use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED; HOWEVER, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly, upon its becoming aware of any change in
CUSIP numbers, notify the Trustee of any change in the CUSIP number.
-28-
SECTION 2.13. DEPOSIT OF MONIES.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, redemption date, Change of Control Payment Date and Net Proceeds
Offer Payment Date, the Company shall have deposited with the Paying Agent in
immediately available funds U.S. Legal Tender sufficient to make cash payments,
if any, due on such Interest Payment Date, Maturity Date, redemption date,
Change of Control Payment Date and Net Proceeds Offer Payment Date, as the case
may be, in a timely manner which permits the Paying Agent to remit payment to
the Holders on such Interest Payment Date, Maturity Date, redemption date,
Change of Control Payment Date and Net Proceeds Offer Payment Date, as the case
may be. At the option and direction of the Company, payment of interest on
Physical Notes may be made by the Paying Agent by check mailed to the Holders on
or before the relevant Interest Payment Date. Payments to Holders to be made by
wire transfer of immediately available funds shall require prior receipt by the
Paying Agent of appropriate wire transfer instructions.
SECTION 2.14. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.
(a) The Global Note initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C attached hereto.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee, any
agent of the Company, or the Trustee as the absolute owner of the 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
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in the Global Note
may be transferred or exchanged for Physical Notes in accordance with the rules
and procedures of the Depository and the provisions of Section 2.15. In
addition, Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note (in each case
directed by the Depository) if (i) the Depository notifies the Company that it
is unwilling or unable to continue as Depository for the Global Note or the
Depository ceases to be a "Clearing Agency" registered under the Exchange Act
and a successor depositary is not appointed by the Company within 90 days of
such notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Physical Notes.
-29-
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the 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
Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the 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 Depository in exchange for its beneficial interest in the
Global Note, an equal aggregate principal amount of Physical Notes of authorized
denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.15, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Exhibit A attached hereto.
(f) The Holder of the 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.
(g) Neither the Trustee nor the Paying Agent shall have any
responsibility or liability for the accuracy of the records of the Depository or
its Agent Members, or for any actions or omissions of the Depository or its
Agent Members.
SECTION 2.15. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS AND
NON-U.S. PERSONS. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after August 1,
1999; PROVIDED, HOWEVER, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note or portion thereof,
at any time on or prior to August 1, 1999 (as certified to the Trustee by
an Officers' Certificate of the Company), or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit D attached
hereto or (2) in the case of a transfer
-30-
to a Non-U.S. Person, the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit E attached
hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
customary procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and amount to
that amount of the beneficial interest in the Global Note to be transferred.
(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding 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; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of written instructions given in accordance with the Depository's and the
Registrar's customary procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the Global
Note in an amount equal to the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of
-31-
Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless (i) the circumstance
contemplated by paragraph (a)(i)(x) of this Section 2.15 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes, each Holder agrees by
its acceptance of the Notes to furnish the Registrar of the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; PROVIDED that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
(e) TRANSFERS OF NOTES HELD BY AFFILIATES. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of the Company
within two years after the Issue Date, as evidenced by a notation on the
assignment form for such transfer or in the representation letter delivered in
respect thereof or (ii) evidencing a Note that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a chain of
transactions not involving any public offering, shall, until two years after the
last date on which the Company or any Affiliate of the Company was as owner of
such Note, in each case, bear a Private Placement Legend in substantially the
form set forth in this Section 2.15 hereof, unless otherwise agreed by the
Company (with written notice thereof to the Trustee).
(f) NO SEPARATE TRANSFERS PRIOR TO SEPARABILITY DATE.
Notwithstanding any other provision of this Article Two, no Note may be
transferred separately from the Warrants until the date which is the earlier of
(i) the date that is 45 days after the Issue Date or (ii) such earlier date as
the Initial Purchaser may, in its sole discretion, determine, as such date is
specified to the Company and the Trustee in writing (the "Separability Date").
The Company shall promptly notify the Registrar of the occurrence of the
Separability Date.
The Registrar shall retain copies of all letters, notices and other
written communications received by it pursuant to Section 2.14 or this Section
2.15 for so long as this Indenture remains in effect. 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.
-32-
SECTION 2.16. DEFAULTED INTEREST.
The Company shall pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Notes. The Company shall,
to the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default 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 on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; PROVIDED, HOWEVER, that in no event shall the Company deposit
monies proposed to be paid in respect of defaulted interest later than 11:00
a.m. New York City time of the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Company shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Company,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 10-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, 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.
ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Paragraph 5 of the
Notes, it shall deliver to the Trustee and the Paying Agent, at least 30 days
but not more than 60 days before a redemption date, a notice complying with the
provisions of Section 13.02
-33-
setting forth (i) the redemption date, (ii) the principal amount of the Notes to
be redeemed and that, after the redemption date, upon cancellation of the
original Note, a new Note or Notes in principal amount equal to the unredeemed
portion shall be issued, (iii) the redemption price, and (iv) the paragraph of
the Notes and/or the section of this Indenture pursuant to which the Notes
called for redemption are being redeemed.
The Company shall give each notice provided for in this Section 3.01,
at its expense, at least 30 days before the applicable redemption date (unless a
shorter notice period shall be satisfactory to the Trustee, as evidenced in a
writing signed on behalf of the Trustee), together with an Officers' Certificate
stating that such redemption shall comply with the conditions contained herein
and in the Notes.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If fewer than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance with
the requirements of the national securities exchange, if any, on which the Notes
are listed or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee deems to be fair and appropriate. The Trustee shall
make the selection from the Notes outstanding and not previously called for
redemption and shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes in denominations
of $1,000 or less may not be redeemed in part. The Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption.
SECTION 3.03. OPTIONAL REDEMPTION.
At any time, prior to August 1, 1999, the Company may, at its option,
use all or a portion of the net proceeds of a Primary Offering to redeem Notes
with a value up to 35% of the principal amount of Initial Notes issued on the
Issue Date, at a redemption price equal to 115% of the principal amount thereof
on the redemption date, plus accrued and unpaid interest, if any, thereon to the
redemption date; PROVIDED, HOWEVER, that (i) such Primary Offering results in
net proceeds to the Company of at least $20,000,000 and (ii) such redemption
shall occur within 30 days of the date of the closing of such Primary Offering.
The Notes also will be redeemable, at the Company's option, in whole
or in part at the times and at the prices set forth in the Notes.
-34-
SECTION 3.04. NOTICE OF REDEMPTION.
At least 15 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder at each Holder's registered address
whose Notes are to be redeemed, with a copy to the Trustee and any Paying Agent.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. The Company
shall provide such notices of redemption to the Trustee at least fifteen days
before the intended mailing date.
Each notice for redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that any Physical Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price plus accrued interest,
if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes (or applicable portions thereof) called for
redemption ceases to accrue on and after the redemption date, and the only
remaining right of the Holders of such Notes is to receive payment of the
redemption price plus accrued interest, if any, as of the redemption date
upon surrender to the Paying Agent of the Notes redeemed;
(7) that if any Physical Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and that, after the
redemption date, and upon surrender, and subsequent cancellation of such
Note, a new Note or Notes in the aggregate principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder; and
(8) that, if fewer than all the Notes are to be redeemed, the
identification of the particular Physical Notes (or portion thereof) to be
redeemed, as well as the principal amount of Notes to be redeemed and the
principal amount of Notes to be outstanding after such partial redemption.
-35-
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.04,
Notes called for redemption become due and payable on the applicable redemption
date and at the applicable redemption price plus accrued interest, if any. Upon
surrender to the Trustee or Paying Agent, such Notes called for redemption shall
be paid at the redemption price (which shall include accrued and unpaid interest
thereon to the redemption date), but installments of interest, the maturity of
which is on or prior to the redemption date, shall be payable to Holders of
record at the close of business on the applicable Record Dates referred to in
the Notes.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the redemption price plus
accrued interest to but excluding the redemption date, if any, of all Notes to
be redeemed on that date. The Paying Agent shall promptly return to the Company
any U.S. Legal Tender so deposited which is not required for that purpose,
except with respect to monies owed as obligations to the Trustee pursuant to
Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such redemption price plus accrued interest,
if any, to but excluding the redemption date, interest on the Notes to be
redeemed will cease to accrue, on and after the applicable redemption date,
whether or not such Notes are presented for payment.
SECTION 3.07. NOTES REDEEMED IN PART.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
-36-
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
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 from principal or interest payments
hereunder.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time 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 address of the
Trustee set forth in Section 13.02.
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 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 4.03. CORPORATE EXISTENCE.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries in accordance with the respective
organizational documents of each such Subsidiary and the material rights
(charter and statutory) and franchises of the Company and each such Subsidiary.
-37-
SECTION 4.04. 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 (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its properties or any of its Subsidiaries' properties and (ii) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon its properties or any of its Subsidiaries' properties;
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 or shall be contested in good faith
by appropriate proceedings properly instituted and diligently conducted for
which adequate reserves, to the extent required under GAAP, have been taken.
SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain its properties used or held in the conduct of its business or the
business of any of its Subsidiaries in good working order and condition in all
material respects (subject to ordinary wear and tear) and make all necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
necessary or desirable to actively conduct and carry on its business.
(b) The Company shall, and shall cause each of its Subsidiaries to,
maintain insurance (including appropriate self-insurance) against loss or damage
of the kinds that, in the good faith judgment of the Company, are adequate and
appropriate for the conduct of the business of the Company and its Subsidiaries
in a prudent manner, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as are adequate for the
conduct of its business and the value of its material properties and shall be
customary, in the good faith judgment of the Company, for companies similarly
situated within the industry of the Company.
SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, an Officers' Certificate stating that a
review of its activities during the preceding fiscal year has been made under
the supervision of the signing officers with a view to determining whether it
has kept, observed, performed and fulfilled its obligations under this Indenture
and further stating, as to each such Officer signing such certificate, that, to
the best of such Officer's knowledge, after due inquiry, the Company during such
preceding fiscal year has kept, observed, performed and fulfilled each and every
such covenant under this Indenture, and that no Default or Event of Default
occurred during
-38-
such year, and at the date of such certificate there is no Default or Event of
Default that has occurred and is continuing or, if such signers do know of such
Default or Event of Default, the certificate shall describe the Default or Event
of Default and its status with particularity. The Officers' Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable hereunder directly or indirectly to any Person
for any failure to obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 13.02 hereof,
by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action within five Business Days of its
becoming aware of such occurrence.
SECTION 4.07. COMPLIANCE WITH LAWS.
The Company shall, and shall cause each of its 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 department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of its
businesses and the ownership of its properties, except for such noncompliances
as are not in the aggregate reasonably likely to have a material adverse effect
on the financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
SECTION 4.08. REPORTS.
(a) The Company shall deliver to the Trustee and mail to each Holder,
within 15 days after the filing of the same with the SEC, copies of its
quarterly and annual reports and of the information, documents and other
reports, if any, which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. The Company shall also comply with the
other provisions of Section 314(a) of the TIA.
-39-
(b) If at any time the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC, to
the extent permitted, and distribute to the Trustee and to each Holder copies of
the quarterly and annual financial information that would have been required to
be contained in a filing with the SEC on Forms 10-Q and 10-K and all current
reports that would be required to be filed with the SEC on Form 8-K had the
Company been subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act. All such financial information shall include consolidated
financial statements (including footnotes) prepared in accordance with GAAP.
Such annual financial information shall also include an opinion thereon
expressed by an independent accounting firm of established national reputation.
All such consolidated financial statements shall be accompanied by a
"Management's Discussion and Analysis of Financial Condition and Results of
Operation." The financial and other information to be distributed to Holders
shall be filed with the Trustee and mailed to the Holders at their respective
addresses appearing in the register of the Notes maintained by the Registrar,
within 120 days after the end of the Company's fiscal year and within 60 days
after the end of each of the first three quarters of each such fiscal year.
Such information shall be made available to securities analysts and prospective
investors upon request. In addition, the Company shall furnish to the Holders
and to securities analysts and to prospective purchasers upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act for so long as is required for an offer or sale of the Notes
under Rule 144A. From and after the date of effectiveness of any registration
statement filed with the SEC with respect to the Notes, the Company will file
with the SEC such Forms 10-Q and 10-K and any other information required to be
filed by it. The Company will provide a copy of this Indenture, the
Registration Rights Agreement and the Warrant Agreement to prospective
purchasers upon request.
SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any distribution
on account of the Company's or any of its Subsidiaries' Equity Interests (other
than dividends or distributions
-40-
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly-Owned Subsidiary
of the Company); (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any
Wholly-Owned Subsidiary of the Company); (iii) voluntarily purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is PARI
PASSU with or subordinated to the Notes; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments") unless, at the time of
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) immediately after giving effect to such transaction, on a pro
forma basis as if such transaction had occurred at the beginning of the
applicable four-quarter period, the Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.12
hereof; and
(c) the amount of such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and
its Subsidiaries after the Issue Date, is less than the sum of (x) 25% of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first quarter next succeeding
the quarter ended June 30, 1998 to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, 100% of such deficit), plus (y) 100% of the
aggregate net cash proceeds received by the Company from the issuance or
sale of Equity Interests of the Company (other than Equity Interests sold
to a Subsidiary of the Company and other than Disqualified Stock) since the
Issue Date, plus (z) 100% of the Net Cash Proceeds received by the Company
from the issuance or sale, other than to a Subsidiary of the Company, of
any debt security of the Company that has been converted into Equity
Interests of the Company (other than Disqualified Stock) since the Issue
Date. For purposes of this clause (c) the amount of any Restricted Payment
paid in property other than cash shall be the fair market value of such
property as determined reasonably and in good faith by the Board of
Directors of the Company.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (i) if no Default or Event of Default shall
have occurred and be continuing, the payment of any dividend within 60 days
after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this Indenture; (ii) if no
Default or Event of Default shall have occurred and be continuing, the
redemption, repurchase, retirement or other acquisition of any Indebtedness or
Equity Interests of the Company in exchange for, or solely out of the proceeds
of, the substantially
-41-
concurrent sale (other than to a Subsidiary of the Company) of other Equity
Interests of the Company (other than any Disqualified Stock); (iii) if no
Default or Event of Default shall have occurred and be continuing, the
redemption, repurchase or payoff of Purchase Money Obligations; (iv) if no
Default or Event of Default shall have occurred and be continuing, the
redemption, repurchase or payoff of any Indebtedness with proceeds of any
Refinancing Indebtedness permitted to be incurred under Section 4.12 hereof; (v)
if no Default or Event of Default shall have occurred and be continuing, the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company held by any officer or employee of the Company
or its Subsidiaries; PROVIDED, HOWEVER, that the aggregate amount of all such
repurchases, redemptions and other acquisitions and retirements under this
clause (v) on or after the date of this Indenture shall not exceed $1,000,000;
(vi) if no Default or Event of Default shall have occurred and be continuing,
the voluntary purchase, redemption, defeasance or other acquisition or
retirement of all or any portion of the Indebtedness represented by the
McDonald's Documents with the Net Cash Proceeds of an Asset Sale that (A) is
permitted under Section 4.15 of this Indenture and (B) relates solely to
collateral for the obligations owed to McDonald's under the McDonald's Documents
in the form of undeveloped real estate not used or, in the reasonable judgment
of the Board of Directors, useful in the Company's business; (vii) if no Default
or Event of Default shall have occurred and be continuing, the purchase,
redemption, defeasance or other acquisition or retirement of Warrants required
by the terms of the Warrant Agreement; (viii) distributions required under the
Plan of Reorganization, but only in the manner and to the extent contemplated
thereby; and (ix) if no Default or Event of Default shall have occurred and be
continuing, payments or distributions to dissenting stockholders (it being
understood that such dissenting stockholders shall not include any Class 14
Interests (as defined in the Plan of Reorganization) required by applicable law
pursuant to or in connection with a consolidation, merger or Asset Sale that
complies with all applicable provisions of this Indenture.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 4.10 were computed, which calculations may be based
upon the Company's latest available quarterly financial statements.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction or
series of related transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any services) with,
or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"),
other than (x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's length basis from a Person that is not an Affiliate of the Company or
such Subsidiary. All Affiliate Transactions (and each series of related
Affiliate Transactions
-42-
which are similar or part of a common plan) involving aggregate payments or
other property with a fair market value in excess of $2,000,000 shall be
approved by a majority of the disinterested members of the Board of Directors of
the Company, such approval to be evidenced by a Board Resolution stating that
such Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Company or any such Subsidiary enters into an
Affiliate Transaction (or a series of related Affiliate Transactions which are
similar or part of a common plan) that involves an aggregate fair market value
of more than $5,000,000, the Company or such Subsidiary as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to the Company
from a financial point of view from an Independent Financial Advisor and deliver
such opinion to the Trustee.
(b) The restrictions set forth in clause (a) above shall not apply
to: (i) reasonable fees and compensation paid to, and indemnity provided on
behalf of, Officers, directors, employees or consultants of the Company or any
Subsidiary as determined in good faith by the Company's Board of Directors or
senior management; (ii) transactions exclusively between or among the Company
and any of its Wholly-Owned Subsidiaries or exclusively between or among such
Wholly-Owned Subsidiaries, PROVIDED such transactions are not otherwise
prohibited by this Indenture; and (iii) Restricted Payments not prohibited by
this Indenture.
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND
ISSUANCE OF PREFERRED STOCK.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness), and the Company will not issue
any Disqualified Stock and will not permit any of its Subsidiaries to issue any
shares of Preferred Stock; PROVIDED, HOWEVER, that the Company may incur
Indebtedness or issue shares of Disqualified Stock, if (i) no Default or Event
of Default shall have occurred and be continuing or would occur as a consequence
thereof and (ii) the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least equal
to 3.0:1, determined on a pro forma basis as if the additional Indebtedness had
been incurred, or the Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
SECTION 4.13. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrances or restrictions on the ability of any such Subsidiary
to (i) pay dividends or
-43-
make any other distributions to the Company or any of its Subsidiaries (A) on
such Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or measured by, its profits, or pay any Indebtedness owed to
the Company or any of its Subsidiaries; (ii) make loans or advances to the
Company or any of its Subsidiaries; or (iii) transfer any of its properties or
assets to the Company or any of its Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) applicable law, (b) this
Indenture and Notes, (c) customary non-assignment provisions of any contract or
any lease governing a leasehold interest of any Subsidiary of the Company, (d)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date, or (e) an agreement governing
Indebtedness incurred to refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in the immediately preceding clauses (b) or
(d) above; PROVIDED, HOWEVER, that the provisions relating to such encumbrance
or restriction contained in any such Indebtedness are no less favorable to the
Company in any material respect as determined by the Board of Directors of the
Company in their reasonable and good faith judgment than the provisions relating
to such encumbrance or restriction contained in agreements referred to in such
clauses (b) or (d).
SECTION 4.14. LIMITATION ON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company will be
required to notify the Trustee in writing thereof and to offer to repurchase all
or any part (equal to $1,000 of principal at maturity or an integral multiple
thereof) of each Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at a purchase price equal to 101% of the principal
amount thereof on the date of purchase, plus accrued interest thereon, if any,
through the date of purchase (the "Change of Control Payment").
(b) Within 40 days following the date on which the Change of Control
occurred, the Company shall mail a notice to each Holder, with a copy to the
Trustee, which notice shall govern the terms of the Change of Control Offer.
The notice to the Holders shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Change of Control Offer.
Such notice shall state: (1) that the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered and not withdrawn will
be accepted for payment; (2) the purchase price (including the amount of any
accrued interest) and the purchase date, which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed, other than as may be
required by law (the "Change of Control Payment Date"); (3) that any Note not
tendered will continue to accrue interest; (4) that, unless the Company defaults
in the payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest on and
after the Change of Control Payment Date; (5) that Holders electing to have any
Physical Notes purchased pursuant to a Change of Control Offer will be required
to surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the
-44-
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (7) that Holders whose Physical Notes
are being purchased only in part will be issued new Physical Notes equal in
principal amount to the unpurchased portion of the Physical Notes surrendered;
PROVIDED, that each Physical Note purchased and each new Physical Note issued
shall be in a principal amount $1,000 or an integral multiple thereof. On the
Business Day immediately preceding the Change of Control Payment Date, the
Trustee shall notify the Company in writing of the Holders who have so elected
to have their Physical Notes purchased pursuant to the Change of Control Offer
(and who have not withdrawn such election pursuant to clause (5) above).
On or before the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S.
Legal Tender sufficient to pay the purchase price plus accrued interest, if any,
of all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the amount of the Notes or portions thereof being tendered
to the Company. The Paying Agent shall promptly mail to the Holders of the
Notes so accepted payment in an amount equal to the purchase price for such
Notes plus accrued interest, if any, to the Change of Control Payment Date, and
the Trustee shall promptly authenticate and mail to such Holders new Notes equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
PROVIDED, HOWEVER, that each such new Note shall be in a principal amount of
$1,000 or an integral multiple thereof. Any Notes not so accepted shall be
promptly mailed by the Company to the Holder thereof. For purposes of this
Section 4.14, the Trustee shall act as the Paying Agent.
Any amounts deposited with the Paying Agent and remaining after the
purchase of Notes pursuant to a Change of Control Offer shall be returned by the
Paying Agent to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder, in each
case, to the extent such laws and regulations are applicable in connection with
the repurchase of Notes pursuant to a Change of Control Offer. To the extent
provisions of any securities laws or regulations conflict with this Section 4.14
of this Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.14 by virtue thereof.
The Company will announce publicly the results of the Change of
Control Offer on as soon as practicable after the Change of Control Date.
Neither the Board of Directors of the Company nor the Trustee may
waive the provisions of this Section 4.14 relating to the Company's obligation
to make a Change of Control Offer under this Section 4.14.
-45-
SECTION 4.15. LIMITATION ON ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets sold or
otherwise disposed of (as determined in good faith by the Company's Board of
Directors), (ii) at least 85% of the consideration received by the Company or
the Subsidiary, as the case may be, from such Asset Sale shall be in the form of
cash or Cash Equivalents and is received at the time of such disposition; and
(iii) upon the consummation of an Asset Sale, the Company either (A) shall
apply, or cause such Subsidiary to apply, the Net Cash Proceeds relating to such
Asset Sale within 180 days of such Asset Sale either (1) to repay any
Indebtedness secured by the assets involved in such Asset Sale together with a
concomitant permanent reduction in the amount of such Indebtedness (including a
permanent reduction in the committed amounts therefor in the case of any
revolving credit facility so repaid), (2) to make an investment in properties
and assets that replace the properties and assets that were the subject of such
Asset Sale or in properties and assets that will be used in the business of the
Company and its Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets"), or (3) a combination of
repayment and investment permitted by the foregoing clauses (iii)(A)(1) and
(iii)(A)(2) or (B) shall (1) within 150 days of such Asset Sale enter into a
definitive written agreement committing it, subject to no material conditions
other than conditions customary in such agreements, to make an investment in
Replacement Assets within 270 days of such Asset Sale and (2) apply, or cause
such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale
within 270 days of such Asset Sale to an investment in Replacement Assets. On
(i) the 181st day after an Asset Sale, or (ii) such earlier date as the Board of
Directors of the Company or of such Subsidiary determines to apply the Net Cash
Proceeds relating to such Asset Sale as set forth in clauses (iii)(A)(1),
(iii)(A)(2) and (iii)(A)(3) of the immediately preceding sentence, or (iii) if a
definitive written agreement relating to an investment in Replacement Assets was
entered into within 150 days of such Asset Sale, on the 271st day after such
Asset Sale or such earlier date on which such definitive written agreement is
for any reason terminated (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which has not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A) or
(iii)(B) of the immediately preceding sentence (each a "Net Proceeds Offer
Amount") shall be applied by the Company or such Subsidiary to make an offer to
purchase (the "Net Proceeds Offer"), on a date (the "Net Proceeds Offer Payment
Date") not less than 30 nor more than 60 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a PRO RATA basis that amount of
Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the
aggregate principal amount of the Notes to be purchased, plus accrued and unpaid
interest thereon, if any, to the date of purchase; PROVIDED, HOWEVER, that if at
any time any non-cash consideration received by the Company or any Subsidiary of
the Company, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder, and the Net
Cash Proceeds thereof shall be applied in accordance with this Section 4.15.
The Company may defer the Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer
-46-
Amount equal to or in excess of $5,000,000 resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $5,000,000, shall be applied as required pursuant
to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Subsidiaries as an entirety to a
Person in a transaction permitted under Section 5.01, the successor corporation
shall be deemed to have sold the properties and assets of the Company and its
Subsidiaries not so transferred for purposes of this covenant, and shall comply
with the provisions of this covenant with respect to such deemed sale as if it
were an Asset Sale. In addition, the fair market value of such properties and
assets of the Company or its Subsidiaries deemed to be sold shall be deemed to
be Net Cash Proceeds for purposes of this covenant.
(b) Subject to the deferral of the Net Proceeds Offer Trigger Date
contained in subsection (a) above, each notice of a Net Proceeds Offer pursuant
to this Section 4.15 shall be mailed or caused to be mailed, by first class
mail, by the Company within 25 days after the Net Proceeds Offer Trigger Date to
all Holders at their last registered addresses as of a date within 15 days of
the mailing of such notice, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Net Proceeds Offer and shall state the following
terms:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn, in whole or in
part, in integral multiples of $1,000 will be accepted for payment;
PROVIDED, HOWEVER, that if the aggregate principal amount of Notes tendered
in a Net Proceeds Offer plus accrued interest at the expiration of such
offer exceeds the aggregate amount of the Net Proceeds Offer, the Company
shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000 or multiples thereof shall be purchased);
(2) the purchase price (including the amount of any accrued interest)
and the purchase date (which shall be 20 Business Days from the date of
mailing of notice of such Net Proceeds Offer, or such longer period as
required by law) (the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to accrue interest on
and after the Proceeds Purchase Date;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds offer shall cease to
accrue interest on and after the Proceeds Purchase Date;
(5) that Holders electing to have a Physical Note purchased pursuant
to a Net Proceeds Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the
-47-
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Proceeds Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
(7) that Holders whose Physical Notes are purchased only in part will
be issued new Physical Notes in a principal amount equal to the unpurchased
portion of the Physical Notes surrendered; PROVIDED that each Physical Note
purchased and each new Physical Note issued shall be in principal amount of
$1,000 or integral multiples thereof;
On the second Business Day immediately preceding the Proceeds Purchase
Date, the Trustee shall notify the Company in writing of the Holders who have so
elected to have their Physical Note purchased pursuant to such Net Proceeds
Offer (and who have not withdrawn such election, as provided above). On or
before the Proceeds Purchase Date, the Company shall (i) accept for payment
Notes or portions thereof tendered pursuant to the Net Proceeds Offer which are
to be purchased in accordance with item (b)(1) above, (ii) deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes to be purchased and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders so accepted payment in an amount equal to the
purchase price for such Notes plus accrued interest, if any, to the Proceeds
Purchase Date. For purposes of this Section 4.15, the Trustee shall act as the
Paying Agent.
Any amounts deposited with the Paying Agent and remaining after the
purchase of Notes pursuant to a Net Proceeds Offer shall be returned by the
Paying Agent to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder, in each
case, to the extent such laws and regulations are applicable in connection with
the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
-48-
SECTION 4.16. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
SUBSIDIARIES.
The Company will not cause or permit any of its Subsidiaries to issue
or sell any Capital Stock (other than to the Company or to a Wholly-Owned
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary of the Company) to own or hold any Capital Stock of any
Subsidiary of the Company or any Lien or security interest therein; PROVIDED,
HOWEVER, such covenant shall not prohibit the disposition (by sale, merger or
otherwise) of all of the Capital Stock of a Subsidiary of the Company; PROVIDED
any Net Cash Proceeds therefrom are applied in accordance with Section 4.15 of
this Indenture.
SECTION 4.17. LIMITATION ON LIENS.
Other than Permitted Liens, the Company shall not, and shall not cause
or permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Subsidiaries whether owned on
the Issue Date or acquired after the Issue Date, or any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom.
SECTION 4.18. CONDUCT OF BUSINESS.
Neither the Company nor any of its Subsidiaries will engage in any
business other than the business of operating family entertainment centers or
any activity related or ancillary thereto.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of the Company's Subsidiaries (including,
for this purpose only, Block Party and all Permitted Investment Subsidiaries)
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder for, or as
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 agreed to be paid to all Holders of Notes then outstanding that consent,
waive or agree to amend any of such terms or provisions in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.20. REGISTRATION RIGHTS AGREEMENT.
The Company will comply with all of the terms and provisions of the
Registration Rights Agreement, including, without limitation, its obligation to
pay Additional
-49-
Interest to the Holders, as set forth in Section 4 of therein (which provision
is hereby incorporated in its entirety by reference herein) and to notify the
Trustee immediately of the occurrence of any Registration Default (as defined in
the Registration Rights Agreement) thereunder.
SECTION 4.21. WARRANT AGREEMENT.
The Company will comply with all of the terms and provisions of the
Warrant Agreement and on or prior to the Separability Date shall notify the
Trustee immediately of the occurrence of any default or event of default
thereunder.
SECTION 4.22. IMPAIRMENT OF SECURITY INTEREST.
Subject to the Intercreditor Agreement and the Subordination
Agreement, neither the Company nor any of its Subsidiaries will take or omit to
take any action which would adversely affect or impair the Security Interests in
favor of the Trustee, on behalf of itself and the Holders, with respect to the
Collateral, and neither the Company nor any of its Subsidiaries shall grant to
any Person, or permit any Person (other than the Company) to have (other than to
the Trustee on behalf of the Trustee and the Holders) any interest whatsoever in
the Collateral, the Subsidiary Collateral, the Pledged Collateral or the Pledged
Subsidiary Collateral. Neither the Company nor any of its Subsidiaries will
enter into any agreement that requires the proceeds received from any sale of
Collateral, Subsidiary Collateral, Pledged Collateral or Pledged Subsidiary
Collateral to be applied to repay, redeem, defease or otherwise acquire or
retire any Indebtedness of any Person, other than pursuant to this Indenture,
the Notes, the Intercreditor Agreement, the Subordination Agreement, the
McDonald's Documents and the Collateral Agreements.
SECTION 4.23. INTERCOMPANY INDEBTEDNESS.
The Company shall evidence, or cause to be evidenced, any Indebtedness
of a Subsidiary of the Company to the Company or any Subsidiary of the Company,
if such Indebtedness of such Subsidiary exceeds $500,000 in aggregate principal
amount, by a written promissory note or other instrument from such Subsidiary,
in form and substance reasonably satisfactory to the Trustee, which promissory
note or other instrument shall be pledged to the Trustee and the Holders
pursuant to a note pledge agreement, in form and substance reasonably
satisfactory to the Trustee, and delivered with the appropriate endorsement in
blank to the Trustee. Any such Indebtedness shall be subordinate to the
Obligations of the Company and the Subsidiary Guarantors, and the promissory
note or other instrument evidencing such Indebtedness shall contain language
giving effect to such subordination, in form and substance reasonably
satisfactory to the Trustee.
-50-
SECTION 4.24. KEY MAN LIFE INSURANCE.
The Company shall, not later than 60 days after the Issue Date and for
so long as the Notes are outstanding, maintain life insurance upon the life of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the Company's Chief Executive Officer, and any successor
chief executive officer of the Company or other senior executive officer of the
Company performing similar functions, with the death benefit thereunder payable
to the Company in an amount not less than $10,000,000. The Company shall at all
times retain all the incidents of ownership of such insurance and shall not
borrow upon or otherwise impair its right to receive the proceeds of such
insurance.
SECTION 4.25. REAL ESTATE MORTGAGES AND FILINGS.
On or prior to the date which is seven (7) days after the Issue Date
and at no cost or expense to the Trustee or the Holders:
(a) the Trustee shall have received fully-executed counterparts of
Mortgages in form and substance reasonably acceptable to the Initial Purchaser
and its counsel for all real property owned in fee by the Company listed on
Schedule 4.25(a) attached hereto and made a part hereof and on which ▇▇▇▇▇▇▇▇'▇
Corporation may have a prior lien (individually and collectively, the
"Premises");
(b) the Trustee shall have received commitments for Mortgage Title
Insurance Policies from a company, and in form and substance reasonably
acceptable to the Initial Purchaser and its counsel, insuring the Liens of the
Mortgages as valid and enforceable Liens on the real estate collateral described
in the Mortgages and related to each of the Premises;
(c) The Trustee shall have received, with respect to each of the
Premises, surveys, local counsel opinions and fixture filings, in each case in
form and substance reasonably acceptable to the Initial Purchaser and its
counsel, along with such other documents, instruments, certificates and
agreements as the Initial Purchaser and its counsel may reasonably request; and
(d) The Company shall have taken, or caused to be taken, all action
in order to create and perfect the lien of the Mortgages in all jurisdictions
designated by the Trustee.
The Trustee and Collateral Agent shall be authorized to enter into a
Subordination Agreement with respect to any Premises designated in writing by
the Company.
-51-
SECTION 4.26. LEASEHOLD MORTGAGES AND FILINGS.
The Company and each of its Subsidiaries shall use commercially
reasonable efforts to deliver Mortgages, substantially in the form of Exhibit N
attached hereto, with respect to the Company's leasehold interests in the
premises (the "Leased Premises") occupied by the Company pursuant to leases of
new store properties entered into after the Issue Date (collectively, the
"Leases", and individually, a "Lease"). Prior to the effective date of any
Lease, the Company and such Subsidiaries shall provide to the Trustee all of the
items described in Section 4.25 and in addition shall provide an agreement,
substantially in the form of Exhibit O attached hereto, and executed by the
lessor of the Lease, whereby the lessor consents to the Mortgage (and which
shall be entered into by the Trustee, as "Mortgagee" thereunder. The Company
and such Subsidiaries shall perform all of its obligations required hereunder at
its sole cost and expense.
SECTION 4.27. RATING OF NOTES.
The Company shall cooperate with the Initial Purchaser at any time or
from time to time for a period of 18 months after the Issue Date to obtain a
rating for the Notes from at least one nationally recognized rating agency and
to keep a rating with respect to the Notes continuously in effect through the
Maturity Date.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS.
(a) The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets to,
another corporation, Person or entity unless: (i) the Company is the surviving
corporation, or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made assumes all the obligations of the Company under the
Collateral Agreements, the Registration Rights Agreement, the Warrant Agreement,
the Intercreditor Agreement and all Obligations of the Company under the Notes
and this Indenture, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction (including
giving effect to any Indebtedness and Acquired Debt incurred or expected to be
incurred in connection with or in
-52-
respect of such transaction and to any assumption required by clause (ii) above)
no Default or Event of Default exists; (iv) the Company or any corporation
formed by or surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease conveyance or other disposition will have been made
(A) will have Consolidated Net Worth (immediately after the transaction but
prior to any purchase accounting adjustments resulting from the transaction)
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving PRO FORMA effect thereto as if such transaction had occurred at the
beginning of the applicable four quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to Section 4.12 of this Indenture and
will have a Fixed Charge Coverage Ratio, determined on a PRO FORMA basis,
greater than or equal to the Fixed Charge Coverage Ratio of the Company
immediately prior to the transaction; and (v) the Company or the entity or
Person formed by or surviving any such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and any
supplemental indenture required in connection with such transaction comply with
the applicable provisions of this Indenture and that all conditions precedent in
this Indenture relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(c) Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Subsidiary Guarantee is to be released in accordance with the terms of
such Subsidiary Guarantee and this Indenture in connection with any transaction
made in compliance with the provisions of Section 4.15) will not, and the
Company will not cause or permit any Subsidiary Guarantor to, consolidate with
or merge with or into any Person, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets, unless: (i) the
entity formed by or surviving any such consolidation or merger (if other than
the Subsidiary Guarantor), or to which such disposition shall have been made, is
a corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) such entity assumes by
supplemental indenture all of the obligations of the Subsidiary Guarantor on the
Subsidiary Guarantee; (iii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing, and (iv)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a pro forma basis, the Company could satisfy the
provisions of clause (iv) of paragraph (a) of this Section 5.01; PROVIDED,
HOWEVER, that any merger or consolidation of a Subsidiary Guarantor with and
into the Company (with the Company being the surviving entity) or another
Subsidiary Guarantor need only comply with clause (iv) of paragraph (a) of this
Section 5.01.
-53-
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes, the Collateral Agreements, the Registration Rights
Agreement, the Warrant Agreement and the Intercreditor Agreement with the same
effect as if such surviving entity had been named as such, and thereafter
(except in the case of a lease) the predecessor corporation will be relieved of
all further obligations and covenants hereunder and thereunder.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) (i) for any Interest Payment Date occurring on or prior to
August 1, 1999, the Company fails to pay interest on any Notes when the
same become due and payable, and (ii) for any Interest Payment Date
occurring after August 1, 1999, the Company fails to pay interest on any
Notes when the same becomes due and payable and the Default continues for a
period of 10 days;
(b) the Company fails to pay the principal (or premium, if any) on
any Notes, when such principal becomes due and payable, at maturity, by
acceleration, upon redemption or otherwise (including the failure to make a
payment to purchase Notes tendered pursuant to a Change of Control Offer or
a Net Proceeds Offer);
(c) the Company or any of its Subsidiaries (in each case, to the
extent a party to the Collateral Agreements) defaults in the observance or
performance of any other covenant, provision or agreement contained in this
Indenture, the Notes or any of the Collateral Agreements (to the extent
such default, directly or indirectly, adversely affects (or with respect to
any such Subsidiary, materially adversely affects) the Security Interests
in the Collateral or the rights and benefits of the Holders under this
Indenture or the Notes), which default continues for a period of 30 days
after the Company receives written notice specifying the default (and
demanding that such default be remedied) from the Trustee or the Holders of
at least 25% of the outstanding principal amount of the Notes (except in
the case of a default under Section 5.01 of this Indenture, which default
will constitute an Event of Default with such notice requirement but
without such passage of time requirement);
-54-
(d) a default (after giving effect to any applicable grace periods or
any extension of any maturity date) under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness of the Company or of any Subsidiary of the
Company (or the payment of which is guaranteed by the Company or any
Subsidiary of the Company), whether such Indebtedness now exists or is
created after the Issue Date, if (a) either (A) such default results from
the failure to pay principal of or interest on such Indebtedness or (B) as
a result of such default the maturity of such Indebtedness may be
accelerated, and (b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness with respect to
which a default (after the expiration of any applicable grace period or any
extension of the maturity date) has occurred, or the maturity of which may
be so accelerated, exceeds $2,000,000 in the aggregate, and the default
continues for a period of 10 days after the Company has received written
notice specifying the default from the Trustee or the Holders of at least
25% of the outstanding principal amount of the Notes;
(e) one or more judgments in an aggregate amount in excess of
$2,000,000 (other than any judgment as to which a reputable insurance
company has accepted full liability in writing) shall have been rendered
against the Company or any of its Subsidiaries and such judgments remain
undischarged, unpaid or unstayed for a period of 60 days after such
judgment or judgments become final and non-appealable;
(f) the Company, any Subsidiary Guarantor or any Subsidiary (A)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for
substantially all of its property or assets, (D) consents to or acquiesces
in the institution of a bankruptcy or an insolvency proceeding against it,
(E) makes a general assignment for the benefit of its creditors, (F) shall
generally not pay its debts when such debts become due or shall admit in
writing its inability to pay its debts generally or (G) takes any action to
authorize or effect any of the foregoing;
(g) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company, any Subsidiary Guarantor or any
Subsidiary in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company, any Subsidiary Guarantor or any Subsidiary, (B) appoint a
Custodian of the Company, any Subsidiary Guarantor or any Subsidiary or for
substantially all of its property or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect or a period of 60 consecutive days; or
(h) any Subsidiary Guarantee for any reason ceases to be in full
force and effect or becomes or is declared to be null and void,
unenforceable or invalid or any Subsidiary Guarantor denies or disaffirms
its obligations under its Subsidiary
-55-
Guarantee (other than by reason of release of a Subsidiary Guarantor in
accordance with the terms of this Indenture).
SECTION 6.02. ACCELERATION.
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(f) or (g) with respect to the Company or any of its Significant
Subsidiaries) occurs and is continuing and has not been waived pursuant to
Section 6.04, then the Trustee or the Holders of at least 25% in principal
amount of outstanding Notes may declare the principal of, premium, if any, and
accrued interest on all the Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Event of Default and that
it is a "notice of acceleration" (the "Acceleration Notice"), and the same shall
become immediately due and payable.
(b) If an Event of Default specified in Section 6.01(f) or (g) with
respect to the Company or any of its Significant Subsidiaries occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and
unpaid interest on all of the outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with Section 6.02(a), the Holders of a majority in
principal amount of the Notes may, by written notice to the Trustee, (i) waive
any existing Default or Event of Default and its consequences, except a
continuing Default or Event of Default under Section 6.01(a) or (b) hereof, and
(ii) rescind and cancel such declaration of acceleration and its consequences if
(A) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, and (B) all existing Events of Default have been cured
or waived (except any such Event of Default arising from the nonpayment of
principal or interest on the Notes that has become due solely because of the
acceleration).
SECTION 6.03. 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, premium, if any, or interest on the Notes or to enforce
the performance of any provision of the Notes, this Indenture or the Collateral
Agreements.
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 arising
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative to the extent permitted
by law.
-56-
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
principal amount of the outstanding Notes by written notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
continuing Default or Event of Default in the payment of principal of or
interest on any Note as specified in clauses (a) and (b) of Section 6.01. When a
Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. CONTROL BY MAJORITY.
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Notes may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, including, without limitation, any
remedies provided for in Section 6.03. Subject to Section 7.01, however, the
Trustee may refuse to follow any direction (i) that the Trustee reasonably
believes conflicts with any law or this Indenture or the Notes, (ii) that the
Trustee determines may be unduly prejudicial to the rights of another Holder or
(iii) that may involve the Trustee in personal liability; PROVIDED, further,
however, that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction or this Indenture.
SECTION 6.06. LIMITATION ON SUITS.
No Holder will have any right to institute any proceeding, judicial or
otherwise, or pursue any remedy under this Indenture or the Notes unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
outstanding Notes have made a written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
under this Indenture;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, losses,
liabilities or expenses to be incurred in compliance with such request;
(4) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute such proceeding;
and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a majority
in principal amount of the outstanding Notes.
-57-
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal and premium, if any, or
interest on such Note on or after the respective due dates set forth in such
Note (including upon acceleration thereof) or the institution of any proceeding
with respect to this Indenture or any remedy hereunder, including without
limitation, acceleration, by the Holders of a majority in principal amount of
outstanding Notes; PROVIDED that upon institution of any proceeding or exercise
of any remedy, such Holder provides the Trustee with prompt notice thereof.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, premium, if any, and interest on
a Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
is absolute and unconditional and shall not be impaired or affected without the
written consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal or interest specified
in clause (a) or (b) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal of,
premium, if any, and accrued interest remaining unpaid, together with interest
on overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest at the rate set forth in Section
2.16 and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents, counsel, accountants and
experts) and the Holders allowed in any judicial proceedings relating to the
Company or Subsidiaries or any other obligor upon the Notes, any of their
respective creditors or any of their respective property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
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
-58-
to the Trustee any amount due to it for the reasonable compensation, expenses,
taxes, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07. 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
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: 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
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
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, 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes, or a suit by a Holder or Holders for
the enforcement of the payment of the principal of, premium, if any, or interest
on the Notes, on or after the due dates expressed in the Notes.
-59-
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Note and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case, the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or wrongfully taken Notes in Section 2.07,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy arising upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article Six or by law to the Trustee or to the Holders may be exercised from
time to time, and as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
The duties and responsibilities of the Trustee shall be as provided by
the TIA and as set forth herein.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the
-60-
same degree of care and skill in its exercise thereof as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) the Trustee need perform only those duties as are specifically
set forth in this Indenture, and no covenants or obligations shall be
implied in 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; PROVIDED,
HOWEVER, that the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(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 6.02, 6.04 or 6.05 of this Indenture.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02 of this Indenture.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
-61-
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document reasonably believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
or both, which shall conform to Sections 13.04 and 13.05 of this Indenture. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers under this Indenture.
(e) 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, debenture, or other
paper or document, but the Trustee, in its discretion, 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, upon reasonable notice to the Company, to examine the books,
records, and premises of the Company, personally or by agent or attorney and to
consult with the officers and representatives of the Company, including the
Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities which may be incurred by it in compliance with such request, order
or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(h) Any permissive right or power available to the Trustee under this
Indenture shall not be construed to be a mandatory duty or obligation.
-62-
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates,with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11 of this
Indenture, and the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to the Company and each Holder
in the manner and to the extent provided in TIA Section 313(c) notice of the
Default or Event of Default within 45 days after such Default or Event of
Default occurs, unless such Default or Event of Default has been cured. Except
in the case of a Default or an Event of Default in payment of principal of, or
interest on, any Note, including an accelerated payment and the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on the Net Proceeds Offer Payment Date pursuant to a Net Proceeds
Offer, the Trustee may withhold the notice of a Default or an Event of Default
if and so long as its Board of Directors, the executive committee of its Board
of Directors or a committee of its directors and/or officers charged with such
responsibility in good faith determines that withholding the notice is in the
interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each November 1, beginning with November 1, 1997,
the Trustee shall, to the extent that any of the events described in Section
313(a) of the TIA occurred within the previous twelve months, but not otherwise,
mail to each Holder a brief report dated as of such date that complies with
Section 313(a) of the TIA. The Trustee also shall comply with Sections 313(b)
and (c) of the TIA.
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange or market,
if any, on which the Notes are listed or quoted.
-63-
The Company shall promptly notify the Trustee if the Notes become
listed or quoted on any stock exchange or market and the Trustee shall comply
with Section 313(d) of the TIA.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
this Indenture, except any such expense as may arise from its negligence, bad
faith or willful misconduct. Such expenses shall include but not be limited to
the reasonable fees and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders and directors and officers for,
and hold them harmless against, any loss, liability, damage, claim or expense
(including reasonable fees and expenses of counsel), including taxes (other than
taxes based on the income of the Trustee) incurred by them except for such
actions to the extent caused by any negligence, bad faith or willful misconduct
on their part, arising out of or in connection with the administration of this
trust including the reasonable costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending themselves
against any claim or liability in connection with the exercise or performance of
any of their rights, powers or duties hereunder. The Trustee shall notify the
Company promptly of any claim asserted against the Trustee for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. At the Trustee's sole discretion, the
Company shall defend the claim and the Trustee shall cooperate and may
participate in the defense; PROVIDED that any settlement of a claim shall be
approved in writing by the Trustee. Alternatively, the Trustee may at its
option have separate counsel of its own choosing and the Company shall pay the
reasonable fees and expenses of such counsel; PROVIDED that the Company will not
be required to pay such fees and expenses if it assumes the Trustee's defense
and there is no conflict of interest between the Company and the Trustee in
connection with such defense as reasonably determined by the Trustee. The
Company need not pay for any settlement made without its written consent, which
consent shall not be unreasonably withheld. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a claim prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) of this Indenture occurs, such
expenses and the
-64-
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment, as provided in this Section 7.08.
The Trustee may resign by so notifying the Company in writing at least
30 days prior to the date of the proposed resignation. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may 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 becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Company and the successor Trustee shall mail notice of the
successor Trustee's succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
-65-
If the Trustee is no longer eligible under or otherwise fails to
comply with Section 7.10, any Holder who satisfies the requirements of TIA
Section 310(b) may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
corporate trust office.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 of this
Indenture shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
Person the resulting, surviving or transferee Person without any further act
shall, if such resulting, surviving or transferee Person is otherwise eligible
hereunder, be the successor Trustee; PROVIDED, HOWEVER, that such Person shall
be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the
case of a corporation included in a bank holding company system, the related
bank holding company) shall have combined capital and surplus of at least
$150,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Company and its Subsidiaries, as obligor of the
Notes.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST 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
therein. The provisions of TIA Section 311(a) shall apply to the Company and
its Subsidiaries, as obligor on the Notes.
-66-
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) The Company may, at its option and at any time, elect to have
either paragraph (b) or paragraph (c) below be applied to the outstanding Notes
upon compliance with the applicable conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company and the Subsidiary Guarantors
shall be deemed to have been released and discharged from their respective
obligations with respect to the outstanding Notes on the date the applicable
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of the Sections and matters under this Indenture referred to in (i) and
(ii) below, and to have satisfied all its other obligations under such Notes and
this Indenture insofar as such Notes are concerned, except for the following
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Notes to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal, premium, if any, and interest on such
Notes when such payments are due and (ii) obligations listed in Section 8.03,
subject to compliance with this Section 8.01. The Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Notes.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company and the Subsidiary Guarantors
shall be released and discharged from their respective obligations under any
covenant contained in Article Five, Sections 4.05 and 4.08, and Sections 4.10
through 4.19 with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed to be not "outstanding" for the purpose
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, the Company and any Subsidiary Guarantor may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01(c), but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under
-67-
paragraph (a) hereof of the option applicable to this paragraph (c), subject to
the satisfaction of the conditions set forth in Section 8.03 hereof, Sections
6.01(d), 6.01(e) and 6.01(h) shall not constitute Events of Default.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(1) The Company shall have irrevocably deposited in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in form
and substance reasonably satisfactory to the Trustee, U.S. Legal Tender or
U.S. Government Obligations or a combination thereof in such amounts and at
such times as are sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Notes to maturity or redemption;
PROVIDED, HOWEVER, that the Trustee (or other qualifying trustee) shall
have received an irrevocable written order from the Company instructing the
Trustee (or other qualifying trustee) to apply such U.S. Legal Tender or
the proceeds of such U.S. Government Obligations to said payments with
respect to the Notes to maturity or redemption;
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness, all or a
portion of which will be used to defease the Notes concurrently with such
incurrence);
(3) Such deposit and the defeasance contemplated hereby will not
result in a Default under, or a breach or violation of, this Indenture or
any other material instrument or agreement to which the Company or any of
its Subsidiaries is a party or by which it or their property or assets is
bound;
(4) (i) In the event the Company elects paragraph (b) hereof, the
Company shall deliver to the Trustee an Opinion of Counsel in the United
States, in form and substance reasonably satisfactory to the Trustee, to
the effect that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall state that, Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and the defeasance
contemplated hereby and will be subject to federal income tax in the same
amounts and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred or (ii) in the event
the Company elects paragraph (c) hereof, the Company shall deliver to the
Trustee an Opinion of Counsel in the United States, in form and substance
reasonably satisfactory to the Trustee, to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such deposit and the defeasance contemplated hereby and will be subject
to
-68-
federal income tax in the same amounts and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred;
(5) The Company shall have delivered to the Trustee an Officers'
Certificate, stating that the deposit under clause (1) was not made by the
Company with the intent of preferring the Holders over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others;
(6) The Company shall have delivered to the Trustee an Opinion of
Counsel, reasonably satisfactory to the Trustee, to the effect that, (A)
the trust funds will not be subject to the rights of holders of
Indebtedness of the Company other than the Notes and as otherwise permitted
herein 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 will not be subject to any applicable bankruptcy,
insolvency, reorganization or similar law affecting creditors' rights
generally; and
(7) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with; PROVIDED, HOWEVER, that such counsel
may rely, as to matters of fact, on Officers' Certificates of the Company.
In the event all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements reasonably
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.
SECTION 8.02. SATISFACTION AND DISCHARGE.
In addition to the Company's rights under Section 8.01, the Company
may terminate all of its obligations under this Indenture (subject to Section
8.03), when:
(1) all Notes theretofore authenticated and delivered (other than
Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.07 and Notes for whose payment
money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged
from such trust) have been delivered to the Trustee for cancellation or all
such Notes not theretofore delivered to the Trustee for cancellation have
become due and payable, and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for that
purpose an amount of money sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest;
-69-
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company has delivered irrevocable instructions to the Trustee
to apply the deposited money toward the payment of the Notes at maturity or
redemption, as the case may be; and
(4) the Company has delivered to the Trustee 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; PROVIDED, HOWEVER, that such counsel may rely, as to
matters of fact, on Officers' Certificates of the Company.
SECTION 8.03. SURVIVAL OF CERTAIN OBLIGATIONS.
Notwithstanding the satisfaction and discharge of this Indenture and
of the Notes referred to in Section 8.01 or 8.02, the respective obligations of
the Company and the Trustee under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.10, 2.13, 2.14, 2.16, 4.01, 4.02, 4.09, 4.20, 4.21, 4.22, 4.24, 6.07, Article
Seven, 8.05, 8.06, 8.07, 11.02 and 11.04 of this Indenture shall survive until
the Notes are no longer outstanding, and thereafter the obligations of the
Company and the Trustee under Sections 7.07, 7.08, 8.05, 8.06 and 8.07 of this
Indenture shall survive. Nothing contained in this Article Eight shall abrogate
any of the obligations or duties of the Trustee under this Indenture.
SECTION 8.04. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
Subject to Section 8.07, after (i) the conditions of Section 8.01 or
8.02 of this Indenture have been satisfied, (ii) the Company has paid or caused
to be paid all other sums payable hereunder by the Company and (iii) the Company
has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent referred to in clause (i) above
relating to the satisfaction and discharge of this Indenture have been complied
with, the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Section 8.03.
SECTION 8.05. APPLICATION OF TRUST MONIES.
The Trustee or Paying Agent shall hold any U.S. Legal Tender or U.S.
Government Obligations deposited with it in the irrevocable trust established
pursuant to Section 8.01 of this Indenture. The Trustee shall apply the
deposited U.S. Legal Tender or the U.S. Government Obligations, together with
earnings thereon, through the Paying Agent, in accordance with this Indenture
and the terms of the irrevocable trust agreement established pursuant to Section
8.01, to the payment of principal of and interest on the Notes. Anything
-70-
in this Article Eight to the contrary notwithstanding, the Trustee shall deliver
or pay to the Company from time to time upon the Company's request any U.S.
Legal Tender or U.S. Government Obligations held by it as provided in Section
8.01(d) hereof 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 that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.06. REPAYMENT TO THE COMPANY; UNCLAIMED MONEY.
Subject to Sections 7.07, 8.01 and 8.02 of this Indenture, the Trustee
and the Paying Agent shall promptly pay to the Company upon request any excess
U.S. Legal Tender or U.S. Government Obligations held by them at any time. The
Trustee and the Paying Agent will pay to the Company upon receipt by the Trustee
or the Paying Agent, as the case may be, of an Officers' Certificate, any money
held by it for the payment of principal or interest that remains unclaimed for
two years after payment to the Holders is required; PROVIDED, HOWEVER, that the
Trustee and the Paying Agent before being required to make any payment may, but
need not, at the expense of the Company cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to
money must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designated another Person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government obligations in accordance with Section 8.01 or 8.02 of
this Indenture by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 or 8.02 of this Indenture until such time as
the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.01 or 8.02 of this
Indenture; PROVIDED, HOWEVER, that if the Company has made any payment of
interest on or principal of
-71-
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 NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; PROVIDED that
such amendment or supplement does not adversely affect the rights of any
Holder;
(2) to provide for the assumption of the Company's obligations to
Holders in the case of a merger, consolidation or similar transaction and
otherwise to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture and the Collateral Agreements
under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the legal rights
hereunder of any Holder; or
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities;
PROVIDED that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.01.
-72-
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07 of this Indenture, the Company, when
authorized by a Board Resolution, and the Trustee, together, with the written
consent of the Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Notes, may amend or supplement this Indenture or the
Notes and may waive compliance by the Company with any provision of this
Indenture or the Notes. Notwithstanding the foregoing, no amendment, supplement
or waiver, including a waiver pursuant to Section 6.04 of this Indenture, shall,
without the consent of each Holder of each Note affected thereby:
(1) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver of any provision of this Indenture or
the Notes;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including default interest, on any Notes;
(3) reduce the principal of, or the premium on, or change or have the
effect of changing the fixed maturity of any Notes, or alter the provisions
with respect to the redemption of the Notes, or alter the provisions with
respect to repurchases or redemptions of the Notes with Net Cash Proceeds
from Asset Sales or upon a Change of Control;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on any Note (other than a Default in the
payment of an amount due as a result of an acceleration, where such
acceleration is rescinded pursuant hereto);
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or interest on the Notes;
(7) waive a redemption payment with respect to any Note; or
(8) modify or change any provision of this Indenture affecting the
ranking of the Notes in a manner which adversely affects the Holders.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or
-73-
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same Indebtedness as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of 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 revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date, unless consents from Holders of the requisite percentage in
principal amount of outstanding Notes required hereunder for the effectiveness
of such consents shall have also been given and not revoked within such 90-day
period.
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 (8) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder who has consented to it and every subsequent Holder
of a Note or portion of a Note that evidences the same Indebtedness as the
consenting Holder's Note; PROVIDED, HOWEVER, that any such waiver shall not
impair or affect the right of any Holder to receive payment of principal,
premium, if any, and interest on a Note, on or after the respective due dates
expressed in such Note, or to bring suit for the enforcement of any such payment
on or after such respective dates without the consent of such Holder.
-74-
SECTION 9.05. 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 the Note to the Trustee.
The Trustee at the written direction of the Company may place an appropriate
notation on the Note about the changed terms and return it to the Holder, and
the Trustee may place an appropriate notation on any Note thereafter
authenticated. Alternatively, if the Company or the Trustee so determines, 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 issue a new Note, shall not affect the validity and effect of such
amendment, supplement or waiver. Any such notation or exchange shall be made at
the sole cost and expense of the Company.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; PROVIDED, HOWEVER, that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture; PROVIDED, that the legal counsel delivering such Opinion of Counsel
may rely as to matters of fact on one or more Officers' Certificates of the
Company. Such Opinion of Counsel shall not be an expense of the Trustee or the
Holders.
ARTICLE TEN
SECURITY
SECTION 10.01. GRANT OF SECURITY INTEREST.
To secure the due and punctual payment of the principal of, premium,
if any, and interest on the Notes when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity, by acceleration, purchase,
repurchase, redemption or otherwise, and interest on the overdue principal of,
premium, if any, and interest (to the extent permitted by law), if any, on the
Notes and the performance of all other Obligations of the Company to the Holders
or the Trustee under this Indenture and the Notes, the Company hereby covenants
to cause the Collateral Agreements to be executed and delivered concurrently
with this Indenture. The Collateral Agreements shall grant to the Collateral
Agent first priority Security Interests in the Collateral and shall be deemed
hereby incorporated by reference herein to the same extent and as fully as if
set forth in their entirety at this place, and reference is made hereby to each
Collateral Agreement for a more
-75-
complete description of the terms and provisions thereof, subject to the
McDonald's Senior Liens.
Each Holder, by its acceptance of a Note, consents and agrees to the
terms of each Collateral Agreement, as the same may be in effect or may be
amended from time to time in accordance with its terms, and authorizes and
directs the Trustee and the Collateral Agent to enter into the Collateral
Agreements and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall, and shall cause each of its
Subsidiaries to, do or cause to be done all such actions and things as may be
necessary or proper, or as may be required by the provisions of the Collateral
Agreements, to assure and confirm to the Trustee and the Collateral Agent the
Security Interests in the Collateral contemplated hereby and by the Collateral
Agreements, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes secured hereby,
according to the interest and purpose herein and therein expressed. The Company
shall, and shall cause each of its Subsidiaries to, take, upon request of the
Trustee or the Collateral Agent, any and all actions required to cause the
Collateral Agreements to create and maintain, as security for the Obligations
contained in this Indenture and the Notes, valid and enforceable, perfected
(except as expressly provided herein, therein or in an Intercreditor Agreement)
first priority Security Interests in and on all the Collateral, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons, and
subject to no other Liens, in each case, except as expressly provided herein,
therein, in an Intercreditor Agreement, in the Subordination Agreement or in the
McDonald's Documents.
SECTION 10.02. EXECUTION OF INTERCREDITOR AGREEMENT.
Subject to the provisions of Article Twelve and other applicable
provisions of this Indenture, the Company is permitted to enter into an Eligible
Credit Facility at any time on or after the Issue Date; PROVIDED that (i)
entering into the Eligible Credit Facility is not prohibited by Section 4.12 and
(ii) the Liens upon any property or assets of the Company securing Indebtedness
under the Eligible Credit Facility are Permitted Liens, in each case, as
evidenced to the Trustee in an Officers' Certificate delivered to the Trustee
concurrently with the entering into an Eligible Credit Facility. As a condition
precedent to the Company's ability to enter into such Eligible Credit Facility,
the Company and any Lenders party thereto shall execute and deliver to the
Trustee an Intercreditor Agreement, substantially in the form of Exhibit G
attached hereto, providing, among other things, that (i) such Lenders' security
interest in certain of the assets of the Company shall be senior to the
Collateral Agent's security interest in such assets, (ii) during any insolvency
proceedings, the Lenders and the Collateral Agent will coordinate their efforts
to give effect to the relative priority of their security interests in such
properties and assets, and (iii) following an Event of Default, all decisions
with respect to such properties and assets, including the time and method of any
disposition thereof, will be made in accordance with the terms of such
Intercreditor Agreement, in each case, subject to the terms and provisions of
this Indenture and the Collateral Agreements.
-76-
SECTION 10.03. RECORDING AND OPINIONS.
(a) The Company shall take or cause to be taken all action required
to perfect, maintain, preserve and protect the Security Interests in the
Collateral and the Escrow Funds and the Pledged Securities in the Escrowed
Interest Account granted by the Collateral Agreements, including, without
limitation, (i) the filing of financing statements, continuation statements,
collateral assignments and any instruments of further assurance, in such manner
and in such places as may be required by law to preserve and protect fully the
rights of the Holders, the Trustee and the Collateral Agent under this Indenture
and the Collateral Agreements to all property comprising the Collateral, and
(ii) the delivery of the certificates evidencing the securities pledged under
the Pledge Agreement, the Subsidiary Pledge Agreements and the Escrow Agreement,
duly endorsed in blank. The Company shall from time to time promptly pay all
financing and continuation statement recording and/or filing fees, charges and
taxes relating to this Indenture, the Collateral Agreements, the Intercreditor
Agreement and any amendments hereto or thereto and any other instruments of
further assurance required pursuant hereto or thereto.
(b) The Company shall furnish to the Trustee and the Collateral Agent
(if other than the Trustee), on the Closing Date, at such time as required by
Section 314(b) of the TIA, and promptly after the execution and delivery of any
other instrument of further assurance or amendment granting, perfecting,
protecting, preserving or making effective a security interest pursuant to any
Collateral Agreement, an Opinion of Counsel either (i) stating that, in the
opinion of such counsel, this Indenture and the Collateral Agreements, financing
statements and fixture filings then executed and delivered, as applicable, and
all other instruments of further assurance or amendment then executed and
delivered have been properly recorded, registered and filed, and all
certificates evidencing Pledged Securities pledged to the Trustee and the
Holders under the Escrow Agreement and the securities pledged to the Trustee and
the Holders under the Pledge Agreement and the Subsidiary Pledge Agreements have
been delivered and duly endorsed in blank, to the extent necessary to perfect
the Security Interests created by this Indenture and the Collateral Agreements
and reciting the details of such action or referring to prior Opinions of
Counsel in which such details are given, and stating that as to such Collateral
Agreements and such other instruments, such recording, registering, filing and
delivery are the only recordings, registerings, filings and deliveries necessary
to perfect such security interest and that no re-recordings, re-registerings,
re-filings or re-deliveries are necessary to maintain such perfection, and
further stating that all financing statements and continuation statements have
been executed and filed, and all such certificates have been delivered, that are
necessary fully to preserve and protect the rights of and perfect such security
interests of the Holders, the Trustee and the Collateral Agent hereunder and
under the Collateral Agreements or (ii) stating that, in the Opinion of such
Counsel, no such action is necessary to perfect any Security Interest created
under this Indenture, the Notes or any of the Collateral Agreements as intended
by this Indenture, the Notes and such Collateral Agreements.
(c) Annually, within 30 days after January 1 and beginning with the
year 1998, the Company shall furnish to the Trustee and the Collateral Agent (if
other than the Trustee), an Opinion of Counsel, dated as of such date, either
(i) stating that: (A) in the
-77-
opinion of such counsel, action has been taken with respect to the registering,
recording, filing, re-recording, re-registering and refiling of this Indenture,
and all supplemental indentures, financing statements, continuation statements
and other documents, and delivery of all certificates, as are then necessary to
perfect or continue the perfection of the Security Interests created by the
Collateral Agreements and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given; and (B) based on
relevant laws as in effect on the date of such Opinion of Counsel, all financing
statements, continuation statements and other documents have been executed and
filed that are necessary as of such date and during the succeeding 24 months
fully to maintain, perfect or continue the perfection of such Security Interests
under the Collateral Agreements with respect to the Collateral and to maintain,
preserve, and protect the rights of the Holders and the Trustee hereunder and
under the Collateral Agreements or (ii) stating that, in the opinion of such
counsel, no such action is then necessary to perfect or continue the perfection
of such Security Interests.
SECTION 10.04. RELEASE OF COLLATERAL.
(a) Neither the Collateral Agent nor the Trustee, in its capacity as
Collateral Agent under the Collateral Agreements, shall at any time release
Collateral from the Security Interests created by this Indenture and the
Collateral Agreements unless such release is in accordance with the provisions
of this Indenture and the applicable Collateral Agreements.
(b) At any time when a Default or an Event of Default shall have
occurred and be continuing, no release of Collateral pursuant to the provisions
of this Indenture and the Collateral Agreements shall be effective as against
the Holders.
(c) The release of any Collateral from the terms of the Collateral
Agreements shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Collateral Agreements. To the
extent applicable, the Company shall cause TIA Section 314(d) relating to the
release of property from the Security Interests created by this Indenture and
the Collateral Agreements to be complied with. Any certificate or opinion
required by TIA 314(d) may be made by an Officer of the Company, except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care. A Person is "independent" if such Person (a) is in fact independent, (b)
does not have any direct financial interest or any material indirect financial
interest in the Company or in any Affiliate of the Company and (c) is not an
officer, employee, promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the Company. The
Trustee shall be entitled to receive and rely upon a certificate provided by any
such Person confirming that such Person is independent within the foregoing
definition.
-78-
SECTION 10.05. SPECIFIED RELEASES OF COLLATERAL.
(a) The Company shall be entitled to obtain a full release of items
of Collateral (the "Released Interests") from the Security Interests created by
this Indenture, the Notes and the Collateral Agreements upon compliance with the
conditions precedent set forth in Sections 4.15, 8.01 and 8.02 of this Indenture
and the applicable Collateral Agreements. So long as no Default or Event of
Default exists, upon the request of the Company and the furnishing of each of
the items required by Section 10.05(b), the Collateral Agent upon the direction
of the Trustee (or the Trustee if acting as Collateral Agent) shall forthwith
take all necessary action (at the request of and the expense of the Company,
without recourse or warranty) to release and reconvey to the Company all of the
Released Interests, and shall deliver such Released Interests in its possession
to the Company and its applicable Subsidiary Guarantors.
(b) So long as no Default or Event of Default exists, the Company
shall be entitled to obtain a release of, and the Collateral Agent and the
Trustee shall release, the Released Interests upon compliance with the condition
precedent that the Company shall have satisfied all applicable conditions
precedent to any such release set forth in this Indenture and the applicable
Collateral Agreements and shall have delivered to the Trustee and the Collateral
Agent the following, as applicable; PROVIDED, HOWEVER, that any release pursuant
to the Escrow Agreement shall be made in accordance with Section 10.10 hereof
and the terms and provisions of the Escrow Agreement:
(i) in connection with release of Collateral resulting from an
Asset Sale under Section 4.15, notice from the Company requesting the
release of Released Interests: (A) describing the proposed Released
Interests; (B) specifying the value of such Released Interests on a date
within 60 days of such notice (the "Valuation Date"); (C) stating that the
release of such Released Interests will not be expected to interfere with
the Collateral Agent's ability to realize the value of the remaining
Collateral and will not impair the maintenance and operation of the
remaining Collateral; and (D) certifying that such Asset Sale complies with
the terms and conditions of this Indenture and the applicable Collateral
Agreements with respect thereto;
(ii) in connection with release of Collateral resulting from an
Asset Sale under Section 4.15, an Officers' Certificate of the Company
stating that (A) such Asset Sale covers only the Released Interests and
complies with the terms and conditions of this Indenture with respect to
Asset Sales; (B) all Net Cash Proceeds from the sale of any of the Released
Interests will be applied pursuant to the provisions of this Indenture in
respect of Asset Sales; (C) there is no Default or Event of Default in
effect or continuing on the date thereof, the Valuation Date or the date of
such Asset Sale; (D) the release of the Collateral will not result in a
Default or Event of Default under this Indenture; and (E) all conditions
precedent in this Indenture relating to the release in question have been
or will be complied with;
-79-
(iii) in connection with release of Collateral resulting from
an Asset Sale under Section 4.15, the Net Cash Proceeds and other non-cash
consideration from the Asset Sale required to be delivered to the
Collateral Agent pursuant to this Indenture;
(iv) to the extent required by the TIA, an Officers' Certificate
of the Company and an Opinion of Counsel certifying that all conditions
precedent to the release of the Released Interests have been met and that
such release complies with the terms and conditions of this Indenture and
the applicable Collateral Agreements; and
(v) all applicable certificates, opinions and other
documentation required by the TIA or this Indenture, if any.
Upon compliance by the Company with the conditions precedent set forth
above, the Trustee shall cause to be released and reconveyed to the Company, the
Released Interests.
Notwithstanding anything to the contrary in this Article Ten, nothing
herein shall prevent, impede, compromise or limit in any manner whatsoever, the
full release of the McDonald's Collateral pursuant to the terms of the
McDonald's Documents, the Subordination Agreement and any Mortgages securing the
Company's obligations to McDonald's under the McDonald's Documents.
SECTION 10.06. FORM AND SUFFICIENCY OF RELEASE.
In the event that the Company has sold, exchanged, or otherwise
disposed of or proposes to sell, exchange or otherwise dispose of any portion of
the Collateral that may be sold, exchanged or otherwise disposed of by the
Company, and the Company requests the Trustee or the Collateral Agent to furnish
a written disclaimer, release or quit-claim of any interest in such property
under this Indenture and the Collateral Agreements, the Collateral Agent and the
Trustee, in its capacity as Collateral Agent under the Collateral Agreements,
shall execute, acknowledge and deliver to the Company (in proper form) such an
instrument promptly after satisfaction of the conditions set forth herein for
delivery of any such release. Notwithstanding the preceding sentence, all
purchasers and grantees of any property or rights purporting to be released
herefrom shall be entitled to rely upon any release executed by the Trustee
hereunder as sufficient for the purpose of this Indenture and as constituting a
good and valid release of the property therein described from the Lien of this
Indenture or of the Collateral Agreements.
SECTION 10.07. PURCHASER PROTECTED.
No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee or
the Collateral Agent to
-80-
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Company be under any obligation to ascertain or
inquire into the authority of the Company to make such sale or other
disposition.
SECTION 10.08. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE COLLATERAL AGREEMENTS.
Subject to the provisions of the applicable Collateral Agreements, the
Subordination Agreement and an Intercreditor Agreement, (a) the Trustee and the
Collateral Agent may, in their sole discretion and without the consent of the
Holders, take all actions they deem necessary or appropriate in order to
(i) enforce any of the terms of the Collateral Agreements and (ii) collect and
receive any and all amounts payable in respect of the Obligations of the Company
hereunder, and (b) the Trustee and the Collateral Agent shall have power to
institute and to maintain such suits and proceedings as they may deem expedient
to prevent any impairment of the Collateral by any act that may be unlawful or
in violation of the Collateral Agreements or this Indenture, and suits and
proceedings as the Trustee and the Collateral Agent may deem expedient to
preserve or protect their interests and the interests of the Holders in the
Collateral (including the power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest thereunder or be prejudicial to the interests
of the Holders, the Trustee or the Collateral Agent).
SECTION 10.09. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE COLLATERAL AGREEMENTS.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Collateral Agreements, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Section 6.10 and the other provisions of this Indenture.
SECTION 10.10. ESCROWED INTEREST ACCOUNT.
(a) On the Issue Date, the Company shall execute and deliver the
Escrow Agreement and comply with the terms and provisions thereof, including,
without limitation, depositing or causing to be deposited the Escrow Funds in
the Escrowed Interest Account or any related account pursuant to the terms of
the Escrow Agreement. The Trustee shall establish and maintain the Escrowed
Interest Account in accordance with the terms and provisions of this Indenture
and the Escrow Agreement, and the Trustee shall hold the Escrow Funds and
Pledged Securities for the equal and ratable benefit of the Holders without
-81-
preference, priority or distinction of any thereof over any other by reason of
difference in time of issuance, sale or otherwise, as security for the Company's
obligations to (i) provide for payment in full of the scheduled interest
payments due on the Notes through and including August 1, 1999 and (ii) secure
repayment of the principal, premium, if any, and interest on the Notes in the
event that the Notes become due and payable prior to the payment in full of all
scheduled interest payments due and payable under this Indenture and the Notes
through and including August 1, 1999.
(b) The Trustee shall have sole dominion and control over the
Escrowed Interest Account and the funds and securities from time to time on
deposit therein, and such funds and securities may be withdrawn or transferred
from the Escrowed Interest Account only in accordance with the provisions of
this Indenture and the Escrow Agreement. Subject to certain limitations set
forth in the Escrow Agreement, the Company may direct the Trustee to release
from the Escrowed Interest Account certain Escrow Funds or Pledged Securities
upon an optional redemption of the Notes with the net proceeds of a Primary
Offering. Additionally, after disbursing each of the scheduled interest
payments on the Notes through and including August 1, 1999 and compliance with
the provisions of Section 10.10(e), any remaining Escrow Funds and Pledged
Securities will be released and disbursed from the Escrowed Interest Account and
paid to the Company to such accounts as may be designated by the Company in
written instructions delivered to the Trustee.
(c) The Escrow Funds shall be invested by the Trustee in Pledged
Securities, pursuant to specific, written directions of the Company, as soon as
practicable after the Issue Date. Interest and other earnings on the Pledged
Securities will be added to the Escrowed Interest Account and will secure the
repayment of the principal, premium, if any, and interest on the Notes.
(d) Each Holder, by its acceptance of a Note, consents and agrees to
the terms of the Escrow Agreement (including, without limitation, the provisions
providing for foreclosure and release of the Pledged Securities and other assets
held in connection therewith) as the same may be in effect or may be amended
from time to time in accordance with its terms, and authorizes and directs the
Trustee to enter into the Escrow Agreement and to perform its respective
obligations and exercise its respective rights thereunder in accordance
therewith. The Company shall take, or shall cause to be taken, any and all
actions as may be necessary or proper, or as may be required hereunder or under
the Escrow Agreement (and any action requested by the Trustee) to cause the
Escrow Agreement, subject to the provisions therein and of this Indenture,
(A) to create and maintain, as security for certain of the Obligations of the
Company under this Indenture and the Notes, valid and enforceable first priority
Liens in and on the Escrowed Interest Account, the Escrow Funds and the Pledged
Securities, in favor of the Trustee, superior to and prior to the rights of
third Persons and subject to no other Liens, and (B) to assure and confirm to
the Trustee such Liens in the Escrowed Interest Account, the Escrow Funds and
the Pledged Securities so as to render the same available for the security and
benefit of this Indenture and of the Notes secured hereby, according to the
intent and purposes herein expressed.
-82-
(e) The Trustee shall release from the Escrowed Interest Account any
Escrow Funds or Pledged Securities held in the Escrowed Interest Account upon
the delivery by the Company to the Trustee of the following:
(i) a notice from the Company requesting the release of such
Escrow Funds or Pledged Securities and certifying that release of such
Escrow Funds or Pledged Securities complies with the terms and
conditions of this Indenture and the Escrow Agreement with respect
thereto;
(ii) an Officers' Certificate of the Company stating that (A)
there is no Default or Event of Default in effect or continuing on the
date thereof, (B) the release of such Escrow Funds or Pledged
Securities will not result in a Default or Event of Default under this
Indenture, (C) all payments contemplated by and under the Escrow
Agreement, including, without limitation, each of the scheduled
interest payments to be made hereunder and in accordance with the
Notes through and including August 1, 1999 (except in the case of an
optional redemption of the Notes with the net proceeds of a Primary
Offering), have been paid in full without any claim, setoff, or
defense, and (D) all conditions precedent in this Indenture and the
Escrow Agreement relating to the release of the Escrow Funds or
Pledged Securities in question have been complied with; and
(iii) all other documentation required by the TIA and this
Indenture, if any.
The release of any Escrow Funds or Pledged Securities from the
Escrowed Interest Account pursuant to the Escrow Agreement will not be deemed to
impair the security under this Indenture in contravention of the provisions
hereof if and to the extent the Escrow Funds or Pledged Securities are released
pursuant to this Indenture, including, without limitation, this Article Ten, the
Escrow Agreement and the other Collateral Agreements.
(f) The Trustee, in its sole discretion and without the consent of
the Holders, may, and at the request of the Holders of at least 25% in aggregate
principal amount of Notes then outstanding shall, on behalf of the Holders, take
all actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Escrow Agreement and (ii) collect and receive any and all amounts
payable in respect of the obligations of the Company thereunder (subject, in
each case, to Article Seven hereof). The Trustee shall have power to institute
and to maintain such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Escrowed Interest Account, the Escrow Funds and the Pledged Securities
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interests thereunder or be prejudicial to the interests of
the Holders or of the Trustee).
-83-
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. UNCONDITIONAL GUARANTEE.
(a) In consideration of the promises contained herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, each of the Subsidiary Guarantors hereby, jointly and severally,
irrevocably and unconditionally guarantees and agrees to be liable on a senior
secured basis to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Notes or the Obligations of
the Company or any other Subsidiary Guarantor under this Indenture or the Notes,
that: (a) the principal of, premium, if any, and interest on the Notes (and any
Additional Interest payable thereon) shall be duly and punctually paid in full
when due, whether at maturity, upon redemption (whether upon a Change of Control
or pursuant to a Net Proceeds Offer or otherwise), by acceleration or otherwise,
and interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Notes and all other Obligations of the Company or the
Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.07 hereof), shall be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other Obligations of the Company, the same shall be promptly paid in
full when due or performed in accordance with the terms of extension or renewal,
whether at maturity, upon redemption, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed, or failing performance of any
other Obligation of the Company to the Holders or the Trustee under this
Indenture or under the Notes, for whatever reason, each Subsidiary Guarantor
shall be obligated to pay, or to perform or cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under each such Subsidiary Guarantee, and shall
entitle the Holders or Trustee to accelerate the Obligations of the Subsidiary
Guarantors under the Subsidiary Guarantees in the same manner and to the same
extent as the Obligations of the Company hereunder or under the Notes.
(b) Each of the Subsidiary Guarantors hereby agrees that its
Obligations under its Subsidiary Guarantee shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions thereof, any release of any
other Subsidiary Guarantor, the recovery of any judgment against the Company,
any action to enforce the same, whether or not a Subsidiary Guarantee is affixed
to any particular Note, or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each of
the Subsidiary Guarantors hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee shall not be discharged except by complete
-84-
performance of the Obligations contained in the Notes, this Indenture and its
Subsidiary Guarantee. Each Subsidiary Guarantee shall be a guarantee of payment
and not of collection. If any Holder or the Trustee is required by any court or
otherwise to return to the Company or to any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or such Subsidiary Guarantor, any amount paid by the Company or such
Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor shall further agree that, as between it, on the one
hand, and the Holders and the Trustee, on the other hand, (a) subject to this
Article Eleven, the maturity of the Obligations guaranteed may be accelerated as
provided in Article Six hereof for the purposes of its Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed thereby, and (b) in the
event of any acceleration of such Obligations as provided in Article Six hereof,
such Obligations (whether or not due and payable) shall forthwith become due and
payable jointly and severally by each Subsidiary Guarantor for the purpose of
its Subsidiary Guarantee.
(c) The Obligations of each Subsidiary Guarantor hereunder are
secured by and under the respective Subsidiary Security Agreements executed and
delivered in connection herewith, pursuant to which each Subsidiary Guarantor
has granted, and each future Subsidiary that becomes a Subsidiary Guarantor
shall grant, a first priority perfected security interest in and lien on the
assets and properties of each such Subsidiary Guarantor. The Company agrees to
cause each Person that shall become a Subsidiary (other than Block Party or any
Limited Investment Subsidiary) after the date of this Indenture to become a
Subsidiary Guarantor and execute and deliver a supplement to this Indenture,
pursuant to which such Person will guarantee the Obligations of the Company on
the same terms and conditions as contained in this Article Eleven.
SECTION 11.02 LIMITATIONS ON SUBSIDIARY GUARANTEES.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee will be limited to the maximum amount which, after giving effect to
all other contingent and fixed liabilities of such Subsidiary Guarantor 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 Subsidiary
Guarantor under its Subsidiary Guarantee or pursuant to its contribution
Obligations under this Indenture, will result in the Obligations of such
Subsidiary Guarantor under the applicable Subsidiary Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law.
SECTION 11.03. EVIDENCE OF EXECUTION AND DELIVERY OF
SUBSIDIARY GUARANTEE.
(a) To further evidence each Subsidiary Guarantee referred to in
Section 11.01 hereby, each Subsidiary Guarantor shall agree that a notation of
such
-85-
Subsidiary Guarantee, substantially in the form of Exhibit J herein, shall be
endorsed on each Note authenticated and delivered by the Trustee. Each such
endorsement shall be executed on behalf of each Subsidiary Guarantor by either
manual or facsimile signature of two Officers of each Subsidiary Guarantor, each
of whom, in each case, shall have been duly authorized to so execute by all
requisite corporate action. The validity and enforceability of any Subsidiary
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
(b) Each of the Subsidiary Guarantors hereby agrees that its
Subsidiary Guarantee set forth in Section 11.01 hereby shall remain in full
force and effect notwithstanding any failure to so endorse on each Note a
notation of such Subsidiary Guarantee.
(c) If an Officer of a Subsidiary Guarantor whose signature is on a
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Subsidiary Guarantee is endorsed or at any
time thereafter, such Subsidiary Guarantor's Subsidiary Guarantee of such Note
shall be valid nevertheless.
(d) The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Subsidiary Guarantee set
forth in this Indenture on behalf of each Subsidiary Guarantor.
SECTION 11.04. RELEASE OF A SUBSIDIARY GUARANTOR.
(a) If no Default or Event of Default exists or would exist under
this Indenture upon the sale or disposition of all of the Capital Stock of a
Subsidiary Guarantor by the Company or a Subsidiary of the Company in a
transaction constituting an Asset Sale, the Net Cash Proceeds of which are
applied in accordance with Section 4.15, or upon the consolidation or merger of
a Subsidiary Guarantor with or into any Person in compliance with Article Five
(in each case, other than to the Company or an Affiliate of the Company or a
Subsidiary), such Subsidiary Guarantor and each Subsidiary of such Subsidiary
Guarantor that is also a Subsidiary Guarantor shall be deemed released from all
Obligations under this Article Eleven and its Subsidiary Guarantee without any
further action required on the part of the Trustee or any Holder; PROVIDED,
HOWEVER, that each Subsidiary Guarantor is sold or disposed of in accordance
with this Indenture and, PROVIDED, further, that any such release shall occur
only to the extent that all Obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee, and under any Subsidiary Security Agreement shall also
terminate or be released upon such sale or transfer. Any Subsidiary Guarantor
not so released or the entity surviving such Subsidiary Guarantor, as
applicable, shall remain or be liable under its Subsidiary Guarantee and any
Subsidiary Security Agreement as provided in this Indenture.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Subsidiary Guarantor upon receipt of a request by the Company
or such Subsidiary Guarantor accompanied by an Officers' Certificate and an
Opinion of Counsel certifying as to the compliance with this Section 11.04,
PROVIDED the legal counsel delivering
-86-
such Opinion of Counsel may rely as to matters of fact on one or more Officers'
Certificates of the Company.
(c) The Trustee shall execute any documents reasonably requested by
the Company or a Subsidiary Guarantor in order to evidence the release of such
Subsidiary Guarantor from its obligations under its Subsidiary Guarantee,
whether or not endorsed on the Notes, any Subsidiary Security Agreement and
under this Article Eleven.
Except as set forth in Articles Four and Five of this Indenture and
this Section 11.04, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
the Company or another Subsidiary Guarantor or shall prevent any sale or
conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary Guarantor.
SECTION 11.05. WAIVER OF SUBROGATION.
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor shall irrevocably waive and agree
not to exercise any claim or other rights which it may hereafter acquire against
the Company that arise from the existence, payment, performance or enforcement
of the Obligations of the Company under the Notes or this Indenture and such
Subsidiary Guarantor's Obligations under its Subsidiary Guarantee, Subsidiary
Security Agreement and this Indenture, in any such instance, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, and any right to participate in any claim, remedy or right
arises in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding sentence
and any amounts owing to the Trustee or the Holders under the Notes, this
Indenture, or any other document or instrument delivered under or in connection
with such agreements or instruments, shall not have been paid in full, such
amount shall have been deemed to have been paid to such Subsidiary Guarantor for
the benefit of, and held in trust for the benefit of, the Trustee or the Holders
and shall forthwith be paid to the Trustee for the benefit of itself or such
Holders to be credited against and applied to the Obligations of the Company,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Subsidiary Guarantor hereby acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 11.05 is knowingly made in
contemplation of such benefits.
SECTION 11.06. IMMEDIATE PAYMENT.
Each Subsidiary Guarantor shall agree to make immediate payment to the
Trustee on behalf of the Holders of all Obligations of the Company and such
Subsidiary
-87-
Guarantor owing or payable to the respective Holders upon receipt of a demand
for payment therefor by the Trustee to such Subsidiary Guarantor in writing.
Each of the Subsidiary Guarantors agrees that neither the Trustee nor the
Holders need attempt to collect any amounts guaranteed hereunder from the
Company, any other Subsidiary Guarantor or any other Person or to realize upon
any Collateral, but may require any one of the Subsidiary Guarantors to make
immediate payment of all of such guaranteed amounts to the Holders when due,
whether by maturity, acceleration, redemption or otherwise, or at any time
thereafter.
SECTION 11.07. NO SET-OFF.
Each payment to be made by a Subsidiary Guarantor hereunder in respect
of the Obligations under its Subsidiary Guarantee shall be payable in the
currency or currencies in which such Obligations are denominated, and shall be
made without set-off, counterclaim, reduction or diminution of any kind or
nature.
SECTION 11.08. OBLIGATIONS ABSOLUTE.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall be absolute and unconditional and any monies or amounts
expressed to be owing or payable by each Subsidiary Guarantor which may not be
recoverable from such Subsidiary Guarantor on the basis of a Subsidiary
Guarantee shall be recoverable from such Subsidiary Guarantor as a primary
obligor and principal debtor in respect thereof.
SECTION 11.09. OBLIGATIONS CONTINUING.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall be continuing and shall remain in full force and effect until
all the Obligations hereunder have been paid and satisfied in full. Each
Subsidiary Guarantor hereby agrees with the Trustee that it will from time to
time deliver to the Trustee suitable acknowledgments of this continued liability
hereunder and under any other instrument or instruments in such form as counsel
to the Trustee may advise and as will prevent any action brought against it in
respect of any default hereunder being barred by any statute of limitations now
or hereafter in force and, in the event of the failure of a Subsidiary Guarantor
so to do, it shall irrevocable appoint the Trustee, the attorney and agent of
such Subsidiary Guarantor to make, execute and deliver such written
acknowledgment or acknowledgments or other instruments as may from time to time
become necessary or advisable, in the judgment of the Trustee on the advice of
counsel, to fully maintain and keep in force the liability of such Subsidiary
Guarantor under its Subsidiary Guarantee.
-88-
SECTION 11.10. OBLIGATIONS NOT REDUCED.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall not be satisfied, reduced or discharged solely by the payment of
such principal, premium, if any, interest, fees and other monies or amounts as
may at any time prior to discharge of this Indenture pursuant to Article Eight
be or become owing or payable under or by virtue of or otherwise in connection
with the Notes of this Indenture.
SECTION 11.11. OBLIGATIONS REINSTATED.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall continue to be effective or shall be reinstated, as the case may
be, if at any time any payment which would otherwise have reduced such
Obligations of any Subsidiary Guarantor (whether such payment shall have been
made by or on behalf of the Company or by or on behalf of a Subsidiary
Guarantor) is rescinded or reclaimed from any of the Holders upon the
insolvency, bankruptcy, liquidation or reorganization of the Company or any
Subsidiary Guarantor or otherwise, all as though such payment had not been made.
If demand for, or acceleration of the time for, payment by the Company is stayed
upon the insolvency, bankruptcy, liquidation or reorganization of the Company,
all such Indebtedness otherwise subject to demand for payment or acceleration
shall nonetheless be payable by each Subsidiary Guarantor as provided herein.
SECTION 11.12. OBLIGATIONS NOT AFFECTED.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall not be affected, impaired or diminished in any way by any act,
omission, matter or thing whatsoever, occurring before, upon or after any demand
for payment (and whether or not known or consented to by any Subsidiary
Guarantor or any of the Holders) which, but for this provision, might constitute
a whole or partial defense to a claim against any Subsidiary Guarantor under its
Subsidiary Guarantee or might operate to release or otherwise exonerate any
Subsidiary Guarantor from any of its Obligations or otherwise affect such
Obligations, whether occasioned by default of any of the Holders or otherwise,
including, without limitation:
(a) any limitation of status or power, disability, incapacity or
other circumstance relating to the Company or any other Person, including any
insolvency, bankruptcy, liquidation, reorganization, readjustment, composition,
dissolution, winding-up or other proceeding involving or affecting either the
Company or any other Person;
(b) any irregularity, defect, unenforceability or invalidity in
respect of any Indebtedness or other Obligation of the Company or any other
Person under this Indenture, the Notes or any other document or instrument;
-89-
(c) any failure of the Company, whether or not without fault on its
part, to perform or comply with any of the provisions of this Indenture or the
Notes, or to give notice thereof to a Subsidiary Guarantor;
(d) the taking or enforcing or exercising or the refusal or neglect
to take or enforce or exercise any right or remedy from or against the Company
or any other Person or their respective assets or the release or discharge of
any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the Company
or any other Person;
(f) any change in the time, manner or place of payment of, or in any
other term of, any of the Notes, or any other amendment, variation, supplement,
replacement or waiver of, or any consent to departure from, any of the Notes or
this Indenture, including, without limitation, any increase or decrease in the
principal amount of or premium, if any, or interest on any of the Notes;
(g) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Company or a Subsidiary
Guarantor;
(h) any merger or amalgamation of the Company or a Subsidiary
Guarantor with any Person or Persons other than the Company;
(i) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or otherwise affect,
any of the Obligations of the Company under this Indenture or the Notes or the
Obligations of a Subsidiary Guarantor under its Subsidiary Guarantee; and
(j) any other circumstance, including release of the Subsidiary
Guarantor pursuant to Section 11.04 hereof (other than by complete, irrevocable
payment) that might otherwise constitute a legal or equitable discharge or
defense of the Company under this Indenture or the Notes or of a Subsidiary
Guarantor in respect of its Subsidiary Guarantee.
SECTION 11.13. WAIVER.
Without in any way limiting the provisions of Section 11.01 hereof,
each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of
any liability of any Subsidiary Guarantor under its Subsidiary Guarantee, notice
or proof of reliance by the Holders upon the Obligations of any Subsidiary
Guarantor under its Subsidiary Guarantee, and diligence, presentment, demand for
payment on the Company, protest, notice of dishonor or non-payment of any of the
Company's Obligations under this Indenture or the Notes, or other notice or
formalities to the Company or any Subsidiary Guarantor of any kind whatsoever.
-90-
SECTION 11.14. NO OBLIGATION TO TAKE ACTION AGAINST THE COMPANY.
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations of the Company under this Indenture or the Notes,
or against the Company or any other Person or any assets or properties of the
Company or any other Person before the Trustee is entitled to demand payment and
performance by any or all Subsidiary Guarantors of their liabilities and
obligations under any Subsidiary Guarantees or under this Indenture.
SECTION 11.15. DEALING WITH THE COMPANY AND OTHERS.
The Holders or the Trustee, without releasing, discharging, limiting
or otherwise affecting in whole or in part the Obligations of any Subsidiary
Guarantor and without the consent of or notice to any Subsidiary Guarantor, may:
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases and discharges to the Company or any other Person;
(b) take or abstain from taking security or Collateral from the
Company or from perfecting security interests in the Collateral;
(c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without consideration)
any and all collateral, mortgages or other security, including, without
limitation, the Collateral, given by the Company or any third party with respect
to the Obligations of the Company under, or matters contemplated by, this
Indenture or the Notes;
(d) accept compromises or arrangements from the Company;
(e) apply all monies at any time received from the Company or in
respect of the Collateral upon such part of the Obligations of the Company under
this Indenture or the Notes as the Holders may see fit or change any such
application in whole or in part from time to time as the Holders may see fit;
and
(f) otherwise deal with, or waive or modify their right to deal with,
the Company and all other Persons and any Collateral as the Holders or the
Trustee may see fit.
SECTION 11.16. DEFAULT AND ENFORCEMENT.
If any Subsidiary Guarantor fails to comply with Section 11.06 hereof,
the Trustee may proceed in its name as trustee hereunder in the enforcement of
the Subsidiary Guarantee and its Subsidiary Security Agreement of any such
Subsidiary Guarantor and such Subsidiary Guarantor's Obligations thereunder and
hereunder by any remedy provided by
-91-
law, whether by legal proceedings or otherwise, and to recover from such
Subsidiary Guarantor the Company's Obligations under this Indenture and the
Notes.
SECTION 11.17. CERTAIN BANKRUPTCY EVENTS.
Each Subsidiary Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Subsidiary Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking to
stay or to prohibit (even temporarily) execution on the Subsidiary Guarantee and
hereby waives and agrees not to take the benefit of any such stay of execution,
whether under Section 362 or 105 of the United States Bankruptcy Code or
otherwise.
SECTION 11.18. AMENDMENT, ETC.
No amendment, modification or waiver of any provision of this
Indenture relating to any Subsidiary Guarantor or consent to any departure by
any Subsidiary Guarantor or any other Persons from any such provision will in
any event be effective unless it is signed by such Subsidiary Guarantor and the
Trustee.
SECTION 11.19. ACKNOWLEDGMENT.
Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture and the Notes and consents to and approves of the same.
SECTION 11.20. COSTS AND EXPENSES.
Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all costs, fees and expenses (including, without limitation, legal fees)
incurred by the Trustee, its agents, advisors and counsel or any of the Holders
in enforcing any of their rights under any Subsidiary Guarantee or Subsidiary
Security Agreement.
SECTION 11.21. NO MERGER OR WAIVER; CUMULATIVE REMEDIES.
No Subsidiary Guarantee shall operate by way of merger of any of the
obligations of a Subsidiary Guarantor under any other agreement, including,
without limitation, this Indenture. No failure to exercise and no delay in
exercising, on the part of the Trustee or the Holders, any right, remedy, power
or privilege under this Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under this Indenture or the Notes preclude any other or further
-92-
exercise thereof or the exercise of any other right, remedy power or privilege.
The rights, remedies, powers and privileges in each Subsidiary Guarantee and
under this Indenture, the Notes and any other document or instrument between a
Subsidiary Guarantor and/or the Company and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
SECTION 11.22. SURVIVAL OF OBLIGATIONS.
Without prejudice to the survival of any of the other obligations of
each Subsidiary Guarantor, the obligations of each Subsidiary Guarantor under
Section 11.01 hereof shall survive the payment in full of the Company's
Obligations under this Indenture and the Notes and shall be enforceable against
such Subsidiary Guarantor without regard to and without giving effect to any
defense, right of offset or counterclaim available to or which may be asserted
by the Company or any Subsidiary Guarantor.
SECTION 11.23. SUBSIDIARY GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.
The obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee and this Indenture are in addition to and not in substitution for any
other obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes and any guarantees or security at any time held by or for
the benefit of any of them.
SECTION 11.24. SEVERABILITY.
Any provision of this Article Eleven which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any jurisdiction.
SECTION 11.25. SUCCESSORS AND ASSIGNS.
Each Subsidiary Guarantee shall be binding upon and inure to the
benefit of each Subsidiary Guarantor and the Trustee and the other Holders and
their respective successors and permitted assigns, except that no Subsidiary
Guarantor may assign any of its obligations hereunder or thereunder.
-93-
ARTICLE TWELVE
AGREEMENT TO SUBORDINATE SECURITY INTEREST
SECTION 12.01. SUBORDINATION OF SECURITY INTEREST.
The Company agrees, and each Holder by its acceptance thereof likewise
agrees, that the Trustee, on behalf of each Holder, may enter into an
Intercreditor Agreement with the Company and any Lender in connection with an
Eligible Credit Facility pursuant to which, among other things, such Lender
shall be granted a first priority security interest in certain assets of the
Company to the extent of the Indebtedness outstanding under the Eligible Credit
Facility; PROVIDED, HOWEVER, that (i) entering into the Eligible Credit Facility
at the time the Intercreditor Agreement is entered into is not prohibited by
Section 4.12 and (ii) the Liens upon any Collateral securing Indebtedness under
the Eligible Credit Facility are Permitted Liens, both as evidenced to the
Trustee in an Officers' Certificate delivered to the Trustee concurrently with
the execution and delivery of the Intercreditor Agreement. Notwithstanding the
foregoing, the grant of a Lien on such assets pursuant to the terms of an
Eligible Credit Facility and the Intercreditor Agreement shall not, other than
as specifically set forth in the Intercreditor Agreement, adversely affect in
any manner whatsoever the Security Interests created by this Indenture, the
Notes and the Collateral Agreements.
SECTION 12.02. AUTHORIZATION OF TRUSTEE AND COLLATERAL AGENT.
Each Holder by his acceptance thereof authorizes and expressly directs
the Trustee and the Collateral Agent on its behalf to take such action as may be
necessary or appropriate to effectuate on or after the Issue Date the
subordination provided in this Article Twelve and appoints the Trustee and the
Collateral Agent his attorney-in-fact for such purpose.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA 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 to be included by the TIA shall control; PROVIDED,
HOWEVER, that this Section 13.01 shall not of itself require that this Indenture
or the Trustee be qualified under the TIA or constitute any admission or
acknowledgement by any party hereto that any such qualification
-94-
is required prior to the time this Indenture and the Trustee are required by the
TIA to be so qualified.
SECTION 13.02. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Discovery Zone, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Trustee:
State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to such
Holder by first class mail or other equivalent means at such Holder's address as
it appears on the registration books of the Registrar and shall be sufficiently
given to such Holder 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.
-95-
SECTION 13.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee upon request:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the signers,
all conditions precedent to be performed by the Company and any Subsidiary
Guarantor, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company and
any Subsidiary Guarantor, if any, PROVIDED for in this Indenture relating
to the proposed action have been complied with (which counsel, as to
factual matters, may rely on an Officers' Certificate).
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably 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 each such
Person, such condition or covenant has been complied with; PROVIDED,
HOWEVER, that with
-96-
respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
SECTION 13.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 13.07. LEGAL HOLIDAYS.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York, Boston, Massachusetts or Fort Lauderdale, Florida or at such place of
payment are not required to be open. If a payment date is a Legal Holiday at
such place, payment may be made at such place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 13.08. GOVERNING LAW; JURISDICTION; SUBMISSION TO VENUE.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
AGREES TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COMPETENT COURTS OF
THE STATE OF NEW YORK SITTING IN THE CITY OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. EACH OF THE COMPANY
AND THE SUBSIDIARY GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
EACH OF THE COMPANY AND THE SUBSIDIARY GUARANTORS IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE COMPANY AND THE SUBSIDIARY GUARANTORS
IRREVOCABLY CONSENTS TO THE FULLEST
-97-
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE COMPANY AND THE GUARANTORS AT THE ADDRESS SET FORTH HEREIN, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT ANY
RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR THE
SUBSIDIARY GUARANTORS IN ANY OTHER JURISDICTION.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or those of any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Subsidiary Guarantor, as such, shall have
any liability for any Obligations of the Company or any Subsidiary Guarantor
under the Notes or this Indenture, any Subsidiary Guarantee, the Registration
Rights Agreement or the Collateral Agreements or for any claim based on, in
respect of, or by reason of such obligations or their creations. Each Holder by
accepting a Note waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Notes.
SECTION 13.11. SUCCESSORS.
All agreements of the Company and any Subsidiary Guarantor in this
Indenture and the Notes and under any Subsidiary Guarantee, as the case may be,
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 13.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
-98-
SECTION 13.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 13.14. INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
SECTION 13.15 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms and provisions hereof.
-99-
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
DISCOVERY ZONE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and
President
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President,
Chief Financial and
Administrative Officer
and Secretary
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title:
SUBSIDIARY GUARANTORS
DISCOVERY ZONE LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and
President
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President,
Chief Financial and
Administrative Officer
and Secretary
DISCOVERY ZONE (PUERTO RICO),
INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and
President
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President,
Chief Financial and
Administrative Officer
and Secretary
-100-
DISCOVERY ZONE LICENSING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Chief
Financial and Administrative
Officer and Secretary
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Admin. Asst.
-101-
EXHIBIT A
FORM OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE
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,
REGISTRATION.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE LAST DATE ON WHICH
DISCOVERY ZONE, INC. ("THE COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE)(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) FOR SO
LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, 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 TO
NON-U.S. PERSONS 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 SUBPARAGRAPH (A)(1), (2), (3) or (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," 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 COMPANY'S AND THE TRUSTEE'S, OR TRANSFER AGENT'S, AS APPLICABLE,
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, AN
ASSIGNMENT IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT. THIS LEGEND SHALL
A-1
BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
THIS NOTE IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF EVEN
DATE HEREWITH, BETWEEN THE COMPANY AND ▇▇▇▇▇▇▇▇▇ & COMPANY, INC., A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
A-2
CUSIP No.:
DISCOVERY ZONE, INC.
13 1/2% SENIOR SECURED NOTE DUE 2002
No. $
Discovery Zone, Inc., a Delaware corporation (the "Company," which
term includes any successor entity), for value received promises to pay to
____________________ or registered assigns, the principal sum of ________
Dollars, on August 1, 2002.
Interest Payment Dates: August 1, November 1, February 1 and May 1
Record Dates: July 15, October 15, January 15 and April 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers its corporate seal to
be affixed hereto or imprinted hereon.
Discovery Zone, Inc.
By:
---------------------------------------------
Name:
Title:
By:
---------------------------------------------
Name:
Title:
Dated: _____________, 199__
Certificate of Authentication
This is one of the 13 1/2% Senior Secured Notes due 2002 referred to in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
Dated: ______________, 199__ By:
---------------------------------------------
Name:
Title:
A-3
{REVERSE OF NOTE}
DISCOVERY ZONE, INC.
13 1/2% Senior Secured Note due 2002
1. INTEREST. Discovery Zone, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. The Company will pay interest quarterly in arrears
on each August 1, November 1, February 1 and May 1 (each an "Interest Payment
Date"), commencing August 1, 1997. Interest on the Notes will accrue from the
most recent date on which interest has been paid on this Note or, if no interest
has been paid, from July 22, 1997. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
to the Persons who are the registered Holders as of the close of business on the
Record Date immediately preceding the applicable Interest Payment Date even if
the Notes are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). The Notes will be
payable both as to principal and to interest at the office or agency of the
Company, or, at the option of the Company, payment of interest may be made by
its check payable in such U.S. Legal Tender and mailed to the Holders at their
respective registered addresses as set forth in the register of Holders. If the
Company defaults in a payment of interest on the Notes, it shall pay the
defaulted interest plus any interest payable on the defaulted interest in
accordance with Section 2.16 of the Indenture.
3. PAYING AGENT AND REGISTRAR. Until otherwise designated by the
Company, the Registrar and Paying Agent for the Notes shall be State Street Bank
and Trust Company, the trustee (the "Trustee") under the Indenture (as defined
below), having an address as ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Department. In addition, until otherwise
designated by the Company, the Company's office or agency maintained in the
Borough of Manhattan, in the City of New York at which the Notes may be
presented for payment or for transfer or exchange will be the office of State
Street Bank and Trust Company, N.A., having a principal office at ▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture,
dated as of July 22, 1997 (the "Indenture"), among the Company, the Subsidiary
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
A-4
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of them. The Notes are senior secured
obligations of the Company limited in aggregate principal amount to $85,000,000.
Payment on the Notes is guaranteed on a senior basis, jointly and severally, by
the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. Each
Holder, by accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture, as the same may be amended from time to time.
5. REDEMPTION.
(a) OPTIONAL REDEMPTION. Except as described in paragraph (b) of
this Section 5, the Notes are not redeemable at the Company's option, at any
time prior to August 1, 1999. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
15 nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of principal amount at maturity) if redeemed during the
twelve-month period commencing on August 1, of the years set forth below through
but not including the Maturity Date, plus, in each case, accrued and unpaid
interest thereon to the applicable date of redemption:
YEAR PERCENTAGE
1999 113.000%
2000 108.667%
2001 104.333%
(b) OPTIONAL REDEMPTION UPON PRIMARY OFFERING. Notwithstanding
paragraph (a) of this Section 5, at any time, prior to August 1, 1999, the
Company may, at its option, use the net cash proceeds of a Primary Offering to
redeem up to 35% of the original principal amount of the Notes at a redemption
price equal to 115% of the principal amount thereof outstanding on the
redemption date, plus accrued and unpaid interest thereon, if any, to the date
of redemption; PROVIDED that (i) such offering results in net proceeds to the
Company of at least $20,000,000 and (ii) such redemption shall occur within 30
days of the date of the closing of such Primary Offering.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed by
first class mail at least 15 days but not more than 60 days before the
redemption date to each Holder, at each of such Holder's registered address,
whose Notes are to be redeemed. If fewer than all of the Notes are to be
redeemed at any time, selection of Notes for redemption will be made by the
Trustee in compliance with the requirements of the national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee deems to be fair and
appropriate; PROVIDED that Notes of $1,000 or less may not be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such redemption
A-5
date, then, unless the Company defaults in the payment of such redemption price
plus accrued interest, if any, the Notes called for redemption will cease to
bear interest from and after such redemption date, and the only remaining right
of the Holders of such Notes will be to receive payment of the redemption price
plus accrued interest, if any, as of the redemption date upon surrender to the
Paying Agent of the Notes redeemed.
7. OFFERS TO PURCHASE. Sections 4.14 and 4.15 of the Indenture
provide that, after certain Asset Sales and upon the occurrence of a Change of
Control, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
8. REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement updated as of the date of the Indenture among the Company and the
Holders of the Initial Notes, the Company will be obligated to consummate an
exchange offer pursuant to which the Holder of this Note shall have the right to
exchange this Note for the Company's 13 1/2% Senior Secured Notes due 2002,
Series B (the "Exchange Notes"), which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar or co-Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. Subject to
certain provisions in the Indenture, the Registrar or co-Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption. Also the Registrar or co-Registrar need not register the
transfer or exchange of any Note during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of notes and
ending at the close of business on the day of such mailing.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of such Note for all purposes.
11. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years (or such sooner period as may be
required by applicable abandoned property laws), the Trustee and the Paying
Agent will pay the money back to the Company. After that, all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
12. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from
A-6
certain provisions of the Indenture and the Notes (including certain covenants,
but excluding its obligation to pay the principal of and interest on the Notes).
13. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented by the Company, the
Trustee and with the written consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding, and, subject to
Section 6.07 of the Indenture, noncompliance with any provision of the Indenture
or this Note may be waived with the written consent of the Holders of a majority
in aggregate principal amount of the Notes then outstanding. Without the
consent of any Holder, the parties thereto may amend or supplement the Indenture
or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders in the case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders or that does not
adversely affect the legal right under the Indenture of any such Holder, or to
comply with the requirements of the U.S. Securities and Exchange Commission (the
"SEC") in order to effect or maintain the qualification of the Indenture under
the TIA. As provided in the Indenture, there shall be no amendment, supplement
or waiver without the consent of each Holder of each Note affected thereby with
respect to the circumstances enumerated in Section 9.02 therein.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness or Liens, issue or sell its Capital Stock, enter into
transactions with Affiliates, cause to be effective restrictions affecting
Subsidiaries' abilities to pay certain dividends or make certain loans, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.
16. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee is not obligated to exercise any of the rights or powers
vested in it by the Indenture or the Notes and at the order or direction of any
Holders, unless it has received indemnity reasonably satisfactory to it.
Subject to certain limitations set forth in the Indenture, Holders of a majority
in aggregate principal amount of the Notes then outstanding 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 in the case
of a Default or Event of Default in payment of principal
A-7
or interest or a failure to comply with Article Five of the Indenture) if it
determines that withholding notice is in their interest.
17. TRUSTEE DEALINGS WITH COMPANY. 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 the Company, its Subsidiaries or their
respective Affiliates, as such, with the same rights it would have as if it were
not the Trustee.
18. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any Obligations of the Company
or any Subsidiary Guarantor under the Notes or the Indenture, the Collateral
Agreements, any Subsidiary Guarantee or the Registration Rights Agreement or for
any claim based on, in respect of, or by reason of such obligations or their
creations. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
19. AUTHENTICATION. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
20. GOVERNING LAW. The laws of the State of New York shall govern
this Note and the Indenture.
21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM (=
tenants-in-common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants-in-common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. 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 as a convenience to the Holders. 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
printed hereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture.
Requests may be made to: Discovery Zone, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief Financial Officer.
A-8
FORM OF ASSIGNMENT
If you, the Holder, want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code and social
security or tax ID number of assignee)
and irrevocably appoint ,
-------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: Signed:
--------------- ------------------------------------------------
(Sign exactly as your name appears on the other side of
this Note. This signature must be guaranteed by the
signatory's bank or broker.)
Signature Guarantee:
-------------------
A-9
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) ________________, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
(Check One)
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ 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 can be obtained from the Trustee); or
(4) ___ outside the United states to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the
Securities Act; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; PROVIDED that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A-10
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.15 of the Indenture shall have been satisfied.
Dated: Signed:
------------------ ------------------------------------------
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
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 requirements of the Securities Act provided by Rule 144A
thereunder.
Dated:
------------------ ---------------------------------------------
Executive Officer
Name: _______________________
Title: _______________________
A-11
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ]
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated: Signature:
------------------ ----------------------
Tax Identification No. ___________
Signature Guarantee:
---------------------------------------
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS IT
APPEARS UPON THE FACE OF THE WITHIN NOTE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND BE ACKNOWLEDGED AS GENUINE BY THE
ENDORSER'S BANK OR BROKER.
A-12
EXHIBIT B
FORM OF NOTE
CUSIP No.:
DISCOVERY ZONE, INC.
13 1/2% SENIOR SECURED NOTE DUE 2002, SERIES B
No. $
Discovery Zone, Inc., a Delaware corporation (the "Company," which
term includes any successor entity), for value received promises to pay to
____________________ or registered assigns, the principal sum of
_________________ Dollars, on August 1, 2002.
Interest Payment Dates: August 1, November 1, February 1 and May 1
Record Dates: July 15, October 15, January 15 and April 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers its corporate seal to
be affixed hereto or imprinted hereon.
Discovery Zone, Inc.
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Dated: _______________, 199__ Title:
Certificate of Authentication
This is one of the 13 1/2% Senior Secured Notes due 2002, Series B
referred to in the within-mentioned Indenture.
________________________________,
as Trustee
Dated: , 199__ By:
--------------- -- ----------------------------------------
Name:
Title:
B-1
{REVERSE OF NOTE}
DISCOVERY ZONE, INC.
13 1/2% Senior Secured Note due 2002, Series B
1. INTEREST. Discovery Zone, Inc., a Delaware corporation
(the"Company"), promises to pay interest on the principal amount of this Note at
the rate per annum shown above. The Company will pay interest quarterly in
arrears on each August 1, November 1, February 1 and May 1 (each an "Interest
Payment Date"), commencing August 1, 1997. Interest on the Notes will accrue
from the most recent date on which interest has been paid on this Note or, if no
interest has been paid, from July 22, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. On each Interest Payment Date the Company
shall pay interest on the Notes to the Persons who are the registered Holders as
of the close of business on the Record Date immediately preceding the applicable
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). The Notes will be payable both as to principal and to interest at the
office or agency of the Company, or, at the option of the Company, payment of
interest may be made by its check payable in such U.S. Legal Tender and mailed
to the Holders at their respective registered addresses as set forth in the
register of Holders. If the Company defaults in a payment of interest on the
Notes, it shall pay the defaulted interest plus any interest payable on the
defaulted interest in accordance with Section 2.16 of the Indenture.
3. PAYING AGENT AND REGISTRAR. Until otherwise designated by the
Company, the Company's office or agency will be the office of State Street Bank
and Trust Company, N.A., having a principal office at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Trustee"), who will act as Paying Agent and Registrar.
The Company may change any Paying Agent, Registrar or co-Registrar without
notice to the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture,
dated as of July 22, 1997 (the "Indenture"), among the Company, the Subsidiary
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of them. The Notes are senior secured
obligations of the Company limited in aggregate principal amount to $85,000,000.
Payment on the Notes is guaranteed on a senior basis, jointly and severally, by
the Subsidiary Guarantors, pursuant to Section Eleven of the
B-2
Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
5. REDEMPTION.
(a) OPTIONAL REDEMPTION. Except as described in paragraph (b) of
this Section 5, the Notes are not redeemable at the Company's option, at any
time prior to August 1, 1999. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
15 nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of principal amount at maturity) if redeemed during the
twelve-month period commencing on August 1 of the years set forth below through
but not including the Maturity Date, plus, in each case, accrued and unpaid
interest thereon to the applicable date of redemption:
YEAR PERCENTAGE
1999 113.000%
2000 108.667%
2001 104.333%
(b) OPTIONAL REDEMPTION UPON PRIMARY OFFERING. Notwithstanding
paragraph (a) of this Section 5, at any time, prior to August 1, 1999, the
Company may, at its option, use the net cash proceeds of a Primary Offering to
redeem up to 35% of the original principal amount of the Notes at a redemption
price equal to 115% of the principal amount thereof outstanding on the
redemption date, plus accrued and unpaid interest thereon, if any, to the date
of redemption; PROVIDED that (i) such offering results in net proceeds to the
Company of at least $20,000,000 and (ii) such redemption shall occur within 30
days of the date of the Closing of such Primary Offering.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed by
first class mail at least 15 days but nor more than 60 days before the
redemption date to each Holder, at each of such Holder's registered address,
whose Notes are to be redeemed. If fewer than all of the Notes are to be
redeemed, at any time, selection of Notes for redemption will be made by the
Trustee in compliance with the requirements of the national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee deems to be fair and
appropriate; PROVIDED that Notes of $1,000 or less may not be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such redemption date, then, unless the Company defaults in the
payment of such redemption price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such redemption date,
and the only remaining right of the Holders of such Notes will be to receive
payment of the redemption price plus accrued interest, if any, as of the
redemption date upon surrender to the Paying Agent of the Notes redeemed.
B-3
7. OFFERS TO PURCHASE. Sections 4.14 and 4.15 of the Indenture
provide that, after certain Asset Sales and upon the occurrence of a Change of
Control, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
8. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar or co-Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. Subject to
certain provisions in the Indenture, the Registrar or co-Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption. Also, the Registrar or co-Registrar need not register the
transfer or exchange of any Note during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of notes and
ending at the close of business on the day of such mailing.
9. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of such Note for all purposes.
10. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years (or such sooner period as may be
imposed by applicable abandoned property laws), the Trustee and the Paying Agent
will pay the money back to the Company. After that, all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
12. AMENDMENT: SUPPLEMENT; WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented by the Company, the
Trustee and with the written consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding, and, subject to
Section 6.07 of the Indenture, noncompliance with any provision of the Indenture
or this Note may be waived with the written consent of the Holders of a majority
in aggregate principal amount of the Notes then outstanding. Without the
consent of any Holder, the parties thereto may amend or supplement the Indenture
or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders in the case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders or that does not
adversely affect the legal right under the Indenture of any such Holder, or to
comply with the requirements of the U.S. Securities and Exchange Commission (the
"SEC") in order to effect or maintain the qualification of the Indenture under
the TIA.
B-4
As provided in the Indenture, there shall be no amendment, supplement or waiver
without the consent of each Holder of each Note affected thereby with respect to
the circumstances enumerated in Section 9.02 therein.
13. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness or Liens, issue or sell its Capital Stock, enter into
transactions with Affiliates, cause to be effective restrictions affecting
Subsidiaries' abilities to pay certain dividends or to make certain loans, merge
or consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
14. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.
15. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee is not obligated to exercise any of the rights or powers
vested in it by the Indenture or the Notes and at the order or direction of any
Holders, unless it has received indemnity reasonably satisfactory to it.
Subject to certain limitations set forth in the Indenture, Holders of a majority
in aggregate principal amount of the Notes then outstanding 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 in the case
of a Default or Event of Default in payment of principal or interest or a
failure to comply with Article Five of the Indenture) if it determines that
withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH COMPANY. 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 the Company, its Subsidiaries or their
respective Affiliates, as such, with the same rights it would have as if it were
not the Trustee.
17. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any Obligations of the Company
or any Subsidiary Guarantor under the Notes or the Indenture, the Collateral
Agreements, any Subsidiary Guarantee, the Registration Rights Agreement, the
Warrant Agreement or the Intercreditor Agreement, or for any claim based on, in
respect of, or by reason of such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Notes.
B-5
18. AUTHENTICATION. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
19. GOVERNING LAW. The Laws of the State of New York shall govern
this Note and the Indenture.
20. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM (=
tenants-in-common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants-in-common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. 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 as a convenience to the Holders. 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
printed hereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture.
Requests may be made to: Discovery Zone, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief Financial Officer.
B-6
FORM OF ASSIGNMENT
If you, the Holder, want to assign this; Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code and social
security or tax ID number of assignee)
and irrevocably appoint ,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------ ------------------------------------------
(Sign exactly as your name appears on the
other side of this Note. This signature
must be guaranteed by the signatory's
bank or broker.)
Signature Guarantee:
-----------------------------
B-7
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) _______________, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
(Check One)
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ 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 can be obtained from the Trustee); or
(4) ___ outside the United states to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the
Securities Act; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; PROVIDED that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
B-8
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.15 of the Indenture shall have been satisfied.
Dated: Signed:
------------------ ------------------------------------------
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
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 requirements of the Securities Act provided by Rule 144A
thereunder.
Dated:
------------------ ---------------------------------------------
Executive Officer
Name: ________________________
Title: ________________________
B-9
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ]
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated: Signature:
------------------ ----------------------
Tax Identification No. ___________
Signature Guarantee:
-----------------------------
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS IT
APPEARS UPON THE FACE OF THE WITHIN NOTE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND BE ACKNOWLEDGED AS GENUINE BY THE
ENDORSER'S BANK OR BROKER.
B-10
EXHIBIT C
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY) MAY BE REGISTERED
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
C-1
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS
__________, ____
State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Re: Discovery Zone, Inc. (the "Company")
13 1/2% Senior Secured Notes due
2002 (THE "NOTES")
Ladies and Gentlemen:
In connection with our proposed purchase of $____________ aggregate
principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Circular (the "Offering
Circular"), dated July 15, 1997, as amended or supplemented, relating to the
Notes and such other information as we have deemed necessary in order to make
our investment decision. We acknowledge that we have read and agreed to the
matters stated in the section entitled "Notice to Investors" of the Offering
Circular.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of July 22, 1997 relating to the Notes (the "Indenture"), and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with such restrictions and conditions and the U.S.
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
Persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes prior to the date
which is two years after the later of the date of (x) original issue of the Note
and (y) the last date on which the Note is owned by the Company or an affiliate
of the
D-1
Company, we will do so only (i) to the Company, (ii) pursuant to a registration
statement which has been declared effective under the Securities Act, (iii) for
so long as the Notes are eligible for resale pursuant to Rule 144A, to a person
it reasonably believes is a Qualified Institutional Buyer ("QIB") (within the
meaning of Rule 144A) that purchases for its own account or for the account of a
QIB to whom notice is given that the transfer is being made in reliance on Rule
144A, (iv) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you and to the Company, a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter, (v) pursuant
to offers and sales to non-U.S. persons that occur outside of the United States
in compliance with Rule 904 of Regulation S under the Securities Act or (vi)
pursuant to any other available exemption from the registration requirements of
the Securities Act, and we further agree to provide to any person purchasing any
of the Notes from us a notice advising such purchaser that resales of the Notes
are restricted as stated herein.
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974) except as permitted in the
section entitled "Notice to Investors" of the Offering Circular.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company reasonably may require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
each of the accounts for which we are acting are and is able to bear the
economic risk of our or its entire investment, as the case may be, for an
indefinite period.
7. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion, 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.
You, the Company and your and their respective counsel are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby, and we agree to
notify you promptly if any of our representations or warranties herein cease to
be accurate and complete.
D-2
This letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
Very truly yours,
[Name of Transferee]
By:
-----------------------------------------------
Authorized Signature
D-3
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S
__________, ____
State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Re: DISCOVERY ZONE, INC. (THE "COMPANY")
13 1/2% SENIOR SECURED NOTES DUE
2002 (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 promulgated under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either: (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States; or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf had knowledge that the transaction had been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
E-1
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby. Defined terms used herein without definition
have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------------------
Authorized Signature
E-2
EXHIBIT J
FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEE
For value received, _________________, [a _______________ corporation,]
hereby unconditionally guarantees to the Holder of the Note upon which this
Subsidiary Guarantee is endorsed: (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Note, whether at maturity
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of, premium, if any, and interest on the Note,
if any, to the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance with
the terms set forth in the Indenture, and (d) in case of any extension of time
of payment or renewal of any Note or any of such other obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms used herein have the meanings assigned to them in
the Indenture unless otherwise indicated.
This Subsidiary Guarantee shall be binding upon each Subsidiary Guarantor
and its successors and assigns and shall inure to the benefit of the successors
and assigns of the Trustee and the Holder and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof and
in the Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
[ ]
By: ________________________
Name:
Title:
Attest: _____________________
J-1
EXHIBIT K
FORM OF TRADEMARK ASSIGNMENT
K-1
EXHIBIT L
FORM OF SUBSIDIARY PLEDGE AGREEMENT
L-1
EXHIBIT M
FORM OF SUBSIDIARY SECURITY AGREEMENT
M-1
EXHIBIT N
FORM OF LEASEHOLD MORTGAGE
N-1
EXHIBIT O
FORM OF LESSOR'S CONSENT TO LEASEHOLD MORTGAGE
LESSOR CONSENT
THIS LESSOR CONSENT (this "Agreement"), dated as of the ____ day of
_____________, _____, by and among ________________________ ("LESSOR"),
__________________________ ("LESSEE"), and [the Collateral Agent, on behalf of
the Noteholders] ("MORTGAGEE").
WHEREAS, Lessor is the holder of Lessor's interest and Lessee is the
holder of Lessee's interest, respectively, in, to and under the leases and
amendments thereof (the "LEASE") described on SCHEDULE "A" annexed hereto and
made a part hereof, which Lease cover the premises described therein and on
SCHEDULE "B" annexed hereto and made a part hereof (the "PREMISES"), Lessee's
estate and interest in the Lease being hereinafter referred to as the "LEASEHOLD
INTEREST"; and
WHEREAS, Mortgagee and Lessee have entered into an Indenture dated as
of ____________ pursuant to which certain notes of the Lessee were issued to the
Noteholders, and were to be secured by, among other things, a lien upon the
interest of Lessee under the Lease and upon further condition, among others,
that Lessor and Lessee enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, Lessor and Lessee
hereby modify and amend the Lease by incorporating the following as a Rider
thereto:
1. Lessee shall have the right, without Lessor's consent, to
mortgage its interest in the Lease to Mortgagee by a "Leasehold Mortgage" (as
hereinafter defined).
2. If Lessee shall mortgage its Leasehold Interest, then until the
same shall be satisfied of record, Lessor agrees that it shall not, without the
prior written consent of Mortgagee:
(a) amend or modify the Lease;
(b) consent to, acquiesce in or accept the termination of the
Lease or surrender of all or part of the Premises except pursuant to the
exercise by Lessee of an option to purchase or right of first refusal consented
to by Mortgagee;
(c) consent to the assignment or other transfer of all or part
of Lessee's Leasehold Interest;
O-1
(d) consent to any further encumbrance of Lessee's Leasehold
Interest;
(e) create or permit any further encumbrance of Lessor's
interest in the real property described in Schedule "A".
3. If Lessee shall mortgage its Leasehold Interest, and if Mortgagee
shall send to Lessor notice of its making a Leasehold Mortgage, then until the
same shall be satisfied of record: (a) Mortgagee shall have and be subrogated to
any and all rights of Lessee with respect to the curing of any default under the
Lease; (b) Lessor shall give to Mortgagee, simultaneously with the serving of
the same on Lessee, a copy of each notice or demand ("NOTICE") which it gives to
Lessee, including all Notices of default by Lessee (which shall specify the
default), each Notice to be sent to the address designated by Mortgagee, by
registered or certified mail, return receipt requested, and the same shall be
effective upon receipt by such addressee; (c) Mortgagee shall have the right,
but not the obligation, to perform any covenant or agreement under the Lease to
be performed by Lessee (including the exercise of renewal or purchase options,
if any), and Lessor shall accept such performance by Mortgagee as though the
same had been performed by Lessee; (d) Mortgagee shall have the right (but not
the obligation) to cure any default by Lessee in the payment of rent and all
other charges provided for in the Lease and Lessor shall accept such
performance by Mortgagee as though the same had been performed by Lessee; and
(e) Lessee may assign its Leasehold Interest to Mortgagee (or its assignee,
designee or nominee) without Lessor's consent. Any notice or demand given by
Lessor in derogation hereof shall be deemed of no effect.
4. In addition to the right to cure defaults granted to Mortgagee in
the preceding paragraph, Lessor agrees that it will take no action to effect a
termination of the term of the Lease by reason of any default without first
giving Mortgagee reasonable time within which either (a) to cure each default if
such default can be cured without obtaining possession of the Premises, or
(b) to obtain possession of the Premises by Mortgagee (including possession by a
receiver) and thereafter to cure such default, if the default be one which can
be cured with the exercise of reasonable diligence by Mortgagee upon so
obtaining possession, or (c) to institute foreclosure proceedings and to
complete such foreclosure, or otherwise to acquire Lessee's interest under the
Lease with diligence and without unreasonable delay, in the case of a default
which cannot be cured with the exercise of reasonable diligence by Mortgagee
after obtaining possession of the Premises. Mortgagee shall not be required to
continue such foreclosure proceedings or proceedings to acquire Lessee's
interest under the Lease if the default shall be cured by Lessee, and Lessor
shall accept such cure by Lessee even if effected after the time provided to
Lessor under the Lease for effecting such cure.
5. (a) In the event of the termination of the Lease prior to its
stated expiration date, or the date of the expiration of any renewal option in
the event a renewal option shall have been exercised prior to the date of such
termination, Lessor agrees that it will give Mortgagee notice of such
termination, will waive its right to accelerate any payments due to it upon a
default under the Lease, and will enter into a new lease for the Premises with
Mortgagee or, at Mortgagee's option, with an assignee, designee or nominee
O-2
of Mortgagee for the remainder of the term of the Lease, effective as of the
date of such termination, upon the same covenants, agreements, rights, terms,
options, provisions and limitations contained in the Lease except for
requirements which are no longer applicable or have already been performed,
provided i) Mortgagee or its assignee, designee or nominee makes written request
upon Lessor for such new lease within thirty (30) days after the giving of such
notice of termination and such written request is accompanied by payment to
Lessor of all amounts then due to Lessor of which Lessor shall have given
Mortgagee notice (provided, however, that Lessee shall not be required to make
any payments under any provisions of the Lease),ii) Mortgagee or its assignee,
designee or nominee pays or causes to be paid to Lessor at the time of the
execution and delivery of such new lease any and all additional sums which would
at the time of the execution and delivery thereof be due under the Lease but for
such termination, and pays or causes to be paid any and all expenses including
reasonable counsel fees, court costs and costs and disbursements incurred by
Lessor in connection with any such termination and in connection with the
execution and delivery of such new lease, less the net income from the Premises
collected by Lessor subsequent to the date of the termination of the Lease and
prior to the execution and delivery of such new lease. The provisions contained
herein shall survive the termination of the Lease.
(b) Lessee covenants and agrees that there shall be no merger of
the Lease, or of the Leasehold Interest, or of any interest in any building,
building service equipment or other improvement now or hereafter constituting a
portion of the Premises, with the fee estate of the owner or owners of the land
and other property described in the Lease or with a superior leasehold estate,
by reason of the fact that the Lease or the Leasehold Interest or any interest
in any such building, equipment of other improvements, may be held by or for the
account of any person or persons who shall be the owner or owners of such fee
estate or superior leasehold estate in said land and other property, unless and
until all persons at the time having an interest in the fee estate or superior
leasehold estate in said land and premises and all persons, including Mortgagee,
at the time having an interest in the Lease, Leasehold Interest, buildings,
equipment and improvements, shall join in a written instrument effecting such
merger and shall duly record the same.
6. With respect to the rights granted to Lessee to assign or
otherwise transfer its interest under the Lease, the granting of the Leasehold
Mortgage to Mortgagee shall not cause Mortgagee to be deemed an assignee or
transferee of the Lease or of the leasehold estate thereby created so as to
require it, as such, to assume the performance of any of the terms, covenants or
conditions on the part of Lessee to be performed thereunder, but the purchaser
at any sale of the Lease and of the leasehold estate thereby created in any
proceedings for the foreclosure of the Leasehold Mortgage, or the assignee or
transferee of the Lease and of the leasehold estate thereby created under any
instrument of assignment or transfer in lieu of the foreclosure of the Leasehold
Mortgage, or the assignee or transferee of the Lease and of the leasehold estate
thereby created pursuant to any other right granted to Mortgagee under the
Leasehold Mortgage, shall be deemed to be an assignee or transferee within the
meaning of the Lease and shall be deemed to have assumed the performance of all
of the terms, covenants and conditions on the part of Lessee to be performed
thereunder from and after the date of such purchase and assignment.
O-3
7. If Mortgagee or any purchaser at a foreclosure sale shall acquire
Lessee's Leasehold Interest, and cure all defaults of Lessee which affect the
Premises and are susceptible of being cured (other than requirements of the
Lease which are no longer applicable or have already been performed), then
(a) said party shall be entitled to exercise any options or rights contained in
the Lease, (b) such other defaults which are not susceptible of being cured by
Mortgagee or by such purchaser no longer shall be defaults thereunder, and
(c) notwithstanding any provision in the Lease to the contrary, Mortgagee or
such purchaser or any of their designees or nominees shall have the further
right to assign the Leasehold Interest without Lessor's consent.
8. Lessor hereby agrees that any and all liens, distraints and other
rights against Lessee's inventory, equipment, machinery, personal property and
trade fixtures located at the Premises which Lessor has or may have under
applicable law or agreement for the payment of rent and other sums due pursuant
to the Lease or otherwise are fully subordinate to Mortgagee's now existing and
hereafter arising security interests and liens in such property which secure
Lessee's obligations and indebtedness to Mortgagee.
9. As used herein, the term "LEASEHOLD MORTGAGE" shall be deemed to
mean that certain recorded mortgage lien on the Leasehold Interest by Mortgagee
and any modification of any of the terms thereof, including, without limitation,
any supplement, modification, extension, renewal or refinancing of the
indebtedness secured thereby or any additional advance secured by the Leasehold
Mortgage or any additional Leasehold Mortgage given to secure the same.
10. Notwithstanding any provision in the Lease to the contrary, in
the event of any casualty to or condemnation of the Premises or any portion
thereof, Mortgagee shall be entitled to receive insurance proceeds and/or
condemnation awards otherwise payable to Lessee and shall have the right (but
not the obligation except as provided in the next sentence) to restore the
Premises. In addition, if Mortgagee (by reason of its acquiring Lessee's
Leasehold Interest) shall be obligated under the Lease to restore the Premises
in such event, then such obligation shall be limited to the amount of such
proceeds or award.
11. Lessor represents that Lessor (i) is the owner of record of the
Premises and (ii) has the necessary power and authority to execute this Lease
Amendment and has obtained all the consents or approvals of any party necessary
to effectuate the terms of this Lease Amendment.
12. Except as herein set forth, the Lease shall remain in full force
and effect.
13. The rights accorded to Mortgagee hereunder shall bind and inure
to the benefit of its successors, assignees, nominees and designees.
O-4
14. Lessor and Lessee each represent and warrant to Mortgagee, its
successors and/or assigns, that:
(a) The Lease i) sets forth the entire agreement between Lessor
and Lessee with respect to the Premises, ii) is in full force and effect, and
iii) has not been amended or modified except for the amendment and
modifications, if any, described in Schedule "A" attached hereto.
(b) There are no defaults under the Lease and no event has
occurred which, with the giving of notice, lapse of time, or both, would
constitute a default under the Lease, or if any such default or state of fact
exists the same is hereby waived.
(c) All rent payable under the Lease has been paid through
______________.
15. Lessor hereby confirms that this Agreement constitutes notice
from Mortgagee that Mortgagee is the holder of a Leasehold Mortgage. Any notice
or communication necessary or desirable to be sent under the Lease or this
Agreement to Mortgagee shall be sent by registered or certified mail, postage
prepaid, return receipt requested to ______________________________ or such
other addresses and to such other persons as Mortgagee may designate from time
to time by written notice to Lessor.
16. Any notice or communication necessary or desirable to be sent
under the Lease to Lessor and Lessee shall be sent in accordance with the terms
of the Lease to the following addresses:
(a) If to Lessor:
______________________________
______________________________
______________________________
______________________________
(b) If to Lessee:
______________________________
______________________________
______________________________
______________________________
17. In the event of any conflict or inconsistency between the terms
of the Lease and this Agreement, the terms of this Agreement shall govern and be
binding.
O-5
IN WITNESS WHEREOF, the parties hereto have executed this Lessor
Consent as of the day and year first above written.
WITNESS/ATTEST LESSOR
By:______________________ By:___________________________
Name:_________________________
Title:________________________
LESSEE
_________________________ By:___________________________
Name:_________________________
Title:________________________
MORTGAGEE
_________________________ By:___________________________
Name:_________________________
Title:________________________
[ACKNOWLEDGEMENTS]
O-6
SCHEDULE "A"
DESCRIPTION OF THE LEASE
O-7
SCHEDULE "B"
DESCRIPTION OF THE PREMISES
O-8
EXHIBIT P
FORM OF SUBORDINATION AGREEMENT
P-1
SCHEDULE 4.25(A)
REAL PROPERTIES OWNED IN FEE BY THE COMPANY
P-2
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
310(a)(1).............................................................. 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(a)(5)......................................................... 7.08; 7.10
(b)..................................................... 7.08; 7.10; 13.02
(c).................................................................. N.A.
311(a)................................................................. 7.11
(b).................................................................. 7.11
(c).................................................................. N.A.
312(a)................................................................. 2.05
(b)................................................................. 13.03
(c)................................................................. 13.03
313(a)................................................................. 7.06
(b)(1).............................................................. 10.05
(b)(2)............................................................... 7.07
(c)........................................................... 7.06; 13.02
(d).................................................................. 7.06
314(a).................................................... 4.07; 4.08; 13.02
(b)................................................................. 10.03
(c)(1).............................................................. 13.04
(c)(2).............................................................. 13.04
(c)(3)............................................................... N.A.
(d)................................................................. 10.04
(e)................................................................. 13.05
(f).................................................................. N.A.
315(a).............................................................. 7.01(b)
(b)........................................................... 7.05; 13.02
(c)............................................................... 7.01(a)
(d)............................................................... 7.01(c)
(e).................................................................. 6.11
316(a) (last setence).................................................. 2.09
(a)(1)(A)............................................................ 6.05
(a)(1)(B)............................................................ 6.04
(a)(2)............................................................... N.A.
(b).................................................................. 6.07
(c).................................................................. 9.04
317(a)(1).............................................................. 6.08
(a)(2)............................................................... 6.09
(b).................................................................. 2.04
318(a)................................................................ 13.01
(c)................................................................. 13.01
______________
N.A. means not applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
P-3
EXHIBITS
EXHIBIT A - FORM OF INITIAL NOTES.........................................A-1
EXHIBIT B - FORM OF EXCHANGE NOTES........................................B-1
EXHIBIT C - FORM OF LEGEND FOR GLOBAL NOTES...............................C-1
EXHIBIT D - CERTIFICATE IN CONNECTION WITH TRANSFERS TO
INSTITUTIONAL ACCREDITED INVESTORS............................D-1
EXHIBIT E - CERTIFICATE IN CONNECTION WITH
REGULATION S TRANSFERS........................................E-1
EXHIBIT F - FORM OF ESCROW AND SECURITY AGREEMENT.........................F-1
EXHIBIT G - FORM OF INTERCREDITOR AGREEMENT...............................G-1
EXHIBIT H - FORM OF PLEDGE AGREEMENT......................................H-1
EXHIBIT I - FORM OF SECURITY AGREEMENT....................................I-1
EXHIBIT J - FORM OF NOTATION ON NOTE RELATING
TO SUBSIDIARY GUARANTEE.......................................J-1
EXHIBIT K - FORM OF TRADEMARK ASSIGNMENT..................................K-1
EXHIBIT L - FORM OF SUBSIDIARY PLEDGE AGREEMENT ..........................L-1
EXHIBIT M - FORM OF SUBSIDIARY SECURITY AGREEMENT.........................M-1
EXHIBIT N - FORM OF LEASEHOLD MORTGAGE ...................................N-1
EXHIBIT O - FORM OF LESSOR'S CONSENT TO LEASHOLD MORTGAGE.................O-1
EXHIBIT P - FORM OF SUBORDINATION AGREEMENT...............................P-1
SCHEDULE
SCHEDULE 4.25(a) - REAL PROPERTIES OWNED IN FEE BY THE COMPANY
P-4