COMMUNITY DISTRIBUTORS, INC.
Issuer,
and
THE GUARANTORS NAMED HEREIN
and
THE BANK OF NEW YORK
Trustee
------------------------
INDENTURE
Dated as of October 16, 1997
-------------------
$80,000,000
10-1/4% Senior Notes due 2004
1
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions...................................................................1
SECTION 1.2. Incorporation by Reference of TIA............................................19
SECTION 1.3. Rules of Construction........................................................20
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating..............................................................20
SECTION 2.2. Execution and Authentication.................................................21
SECTION 2.3. Registrar and Paying Agent...................................................22
SECTION 2.4. Paying Agent to Hold Assets in Trust.........................................22
SECTION 2.5. Securityholder Lists.........................................................23
SECTION 2.6. Transfer and Exchange........................................................23
SECTION 2.7. Replacement Securities.......................................................31
SECTION 2.8. Outstanding Securities.......................................................31
SECTION 2.9. Treasury Securities..........................................................32
SECTION 2.10. Temporary Securities.........................................................32
SECTION 2.11. Cancellation.................................................................32
SECTION 2.12. Defaulted Interest...........................................................33
SECTION 2.13. CUSIP Numbers................................................................34
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption..........................................................34
SECTION 3.2. Notices to Trustee...........................................................35
SECTION 3.3. Selection of Securities to Be Redeemed.......................................35
SECTION 3.4. Notice of Redemption.........................................................36
SECTION 3.5. Effect of Notice of Redemption...............................................37
SECTION 3.6. Deposit of Redemption Price..................................................37
SECTION 3.7. Securities Redeemed in Part..................................................38
i
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities........................................................38
SECTION 4.2. Maintenance of Office or Agency..............................................38
SECTION 4.3. Limitation on Restricted Payments............................................39
SECTION 4.4. Corporate Existence..........................................................40
SECTION 4.5. Payment of Taxes and Other Claims............................................40
SECTION 4.6. Compliance Certificate; Notice of Default....................................40
SECTION 4.7. Reports......................................................................41
SECTION 4.8. Limitation on Status as Investment Company...................................41
SECTION 4.9. Limitation on Transactions with Affiliates...................................41
SECTION 4.10. Limitation on Incurrence of Additional Indebtedness and
Disqualified
Capital Stock................................................................42
SECTION 4.11. Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries.................................................................43
SECTION 4.12. Limitation on Liens..........................................................44
SECTION 4.13. Limitation on Sale of Assets and Subsidiary Stock............................44
SECTION 4.14. Limitation on Lines of Business..............................................47
SECTION 4.15. Restriction on Sale and Issuance of Subsidiary Stock.........................47
SECTION 4.16. Waiver of Stay, Extension or Usury Laws......................................48
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation..................................48
SECTION 5.2. Successor Corporation Substituted............................................49
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default............................................................49
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment......................51
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee..............52
SECTION 6.4. Trustee May File Proofs of Claim.............................................53
SECTION 6.5. Trustee May Enforce Claims Without Possession of Securities..................53
SECTION 6.6. Priorities...................................................................54
SECTION 6.7. Limitation on Suits..........................................................54
ii
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest.....................................................................55
SECTION 6.9. Rights and Remedies Cumulative...............................................55
SECTION 6.10. Delay or Omission Not Waiver.................................................56
SECTION 6.11. Control by Holders...........................................................56
SECTION 6.12. Waiver of Past Default.......................................................56
SECTION 6.13. Undertaking for Costs........................................................57
SECTION 6.14. Restoration of Rights and Remedies...........................................57
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee............................................................58
SECTION 7.2. Rights of Trustee............................................................59
SECTION 7.3. Individual Rights of Trustee.................................................60
SECTION 7.4. Trustee's Disclaimer.........................................................60
SECTION 7.5. Notice of Default............................................................60
SECTION 7.6. Reports by Trustee to Holders................................................61
SECTION 7.7. Compensation and Indemnity...................................................61
SECTION 7.8. Replacement of Trustee.......................................................62
SECTION 7.9. Successor Trustee by Merger, Etc.............................................63
SECTION 7.10. Eligibility; Disqualification................................................63
SECTION 7.11. Preferential Collection of Claims Against Company............................64
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.....................64
SECTION 8.2. Legal Defeasance and Discharge...............................................64
SECTION 8.3. Covenant Defeasance..........................................................65
SECTION 8.4. Conditions to Legal or Covenant Defeasance...................................65
SECTION 8.5. Deposited Cash and U.S. Government Obligations to be Held in
Trust;
Other Miscellaneous Provisions...............................................67
SECTION 8.6. Repayment to the Company.....................................................67
SECTION 8.7. Reinstatement................................................................68
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
iii
SECTION 9.1. Supplemental Indentures Without Consent of Holders...........................68
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent
of Holders...................................................................69
SECTION 9.3. Compliance with TIA..........................................................71
SECTION 9.4. Revocation and Effect of Consents............................................71
SECTION 9.5. Notation on or Exchange of Securities........................................72
SECTION 9.6. Trustee to Sign Amendments, Etc..............................................72
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. Repurchase of Securities at Option of the Holder Upon a Change of
Control......................................................................72
ARTICLE XI
GUARANTEE
SECTION 11.1. Guarantee....................................................................75
SECTION 11.2. Execution and Delivery of Guarantee..........................................76
SECTION 11.3. Future Subsidiary Guarantors.................................................77
SECTION 11.4. Limitation on Merger, Sale or Consolidation of Subsidiaries..................77
SECTION 11.5. Certain Bankruptcy Events....................................................78
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA Controls.................................................................78
SECTION 12.2. Notices......................................................................78
SECTION 12.3. Communications by Holders with Other Holders.................................79
SECTION 12.4. Certificate and Opinion as to Conditions Precedent...........................79
SECTION 12.5. Statements Required in Certificate or Opinion................................80
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar....................................80
SECTION 12.7. Non-Business Days............................................................80
SECTION 12.8. Governing Law................................................................80
SECTION 12.9. No Adverse Interpretation of Other Agreements................................81
SECTION 12.10. No Recourse against Others...................................................81
SECTION 12.11. Successors...................................................................81
SECTION 12.12. Duplicate Originals..........................................................82
iv
Page
SECTION 12.13. Severability.................................................................82
SECTION 12.14. Table of Contents, Headings, Etc.............................................82
SECTION 12.15. Qualification of Indenture...................................................82
SECTION 12.16. Registration Rights..........................................................82
SIGNATURES .........................................................................................83
Exhibit A ........................................................................................A-1
v
Page
CROSS-REFERENCE TABLE
TIAIndenture
Section Section
310(a)(1)................................................................................. 7.10
(a)(2).................................................................................. 7.10
(a)(3).................................................................................. N.A.
(a)(4).................................................................................. N.A.
(a)(5).................................................................................. 7.10
(b) .................................................................................... 7.8;
7.10;
12.2
(c) .................................................................................... N.A.
311(a).................................................................................... 7.11
(b) .................................................................................... 7.11
(c) .................................................................................... N.A.
312(a).................................................................................... 2.5
(b) .................................................................................... 12.3
(c) .................................................................................... 12.3
313(a).................................................................................... 7.6
(b)(1).................................................................................. N.A.
(b)(2).................................................................................. 7.6
(c) .................................................................................... 7.6;
12.2
(d) .................................................................................... 7.6
314(a).................................................................................... 4.6;
4.7;
12.2
(b) .................................................................................... N.A.
(c)(1).................................................................................. 2.2;
7.2;
12.2
(c)(2).................................................................................. 7.2;
12.2
(c)(3).................................................................................. N.A.
(d) .................................................................................... N.A.
(e) .................................................................................... 12.5
(f) .................................................................................... N.A.
315(a).................................................................................... 7.1(b)
vi
Page
(b) .................................................................................... 7.5;
7.6;
12.2
(c) .................................................................................... 7.1(a)
(d) .................................................................................... 6.11;
7.1(b),
(c)
(e) .................................................................................... 6.13
316(a)(last sentence)..................................................................... 2.9
(a)(1)(A)............................................................................... 6.11
(a)(1)(B)............................................................................... 6.12
(a)(2).................................................................................. N.A.
(b) .................................................................................... 6.12;
6.7
317(a)(1)................................................................................. 6.3
(a)(2).................................................................................. 6.4
(b) .................................................................................... 2.4
----------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
vii
INDENTURE, dated as of October 16, 1997, by and among
Community Distributors, Inc., a Delaware corporation (the "Company"), the
Guarantors referred to below and The Bank of New York, a New York banking
corporation, as Trustee.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Company's 10-1/4% Senior Notes due 2004:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified
Capital Stock of any Person existing at the time such Person becomes a
Subsidiary of the Company or is merged or consolidated into or with the Company
or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any
Person or substantially all the assets of any Person by any other Person,
whether by purchase, stock purchase, merger, consolidation, or other transfer,
and whether or not for consideration.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company. For purposes of this definition, the term "control" means the power to
direct the management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided, that a Beneficial Owner of 10% or more of the total
voting power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
"Affiliate Transaction" shall have the meaning specified in
Section 4.9.
"Agent" means any authenticating agent, Registrar, Paying
Agent or transfer agent.
"Asset Sale" shall have the meaning specified in Section 4.13.
"Asset Sale Offer" shall have the meaning specified in
Section 4.13.
1
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Period" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in
Section 4.13.
"Average Life" means, as of the date of determination, with
respect to any security or instrument, the quotient obtained by dividing (i) the
sum of (a) the product of the number of years from the date of determination to
the date or dates of each successive scheduled principal (or redemption) payment
of such security or instrument and (b) the amount of each such respective
principal (or redemption) payment by (ii) the sum of all such principal (or
redemption) payments.
"Bankruptcy Law" means Title 11, U.S. Code, as amended, or any
similar Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" has the meaning attributed to it in Rules
l3d-3 and l3d-5 under the Exchange Act (as in effect on the Issue Date), whether
or not applicable, except that a "Person" shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Board of Directors" or "Board" means, with respect to any
Person, the Board of Directors of such Person or any committee of the Board of
Directors of such Person authorized, with respect to any particular matter, to
exercise the power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close.
"Capital Stock" means, (i) with respect to any corporation,
any and all shares, interests, rights to purchase (other than convertible or
exchangeable Indebtedness that is not itself otherwise Capital Stock), warrants,
options, participations or other equivalents of or interests (however
designated) in stock issued by that corporation, (ii) in the case of an
association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, (iii) in
the case of a partnership, partnership interests (whether general or limited),
and (iv) any other interest or participation
2
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"Capitalized Lease Obligation" means rental obligations under
a lease that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"Cash" or "cash" 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.
"Cash Equivalent" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500 million and commercial paper issued by any other issuer which
is rated at least A-1 or the equivalent thereof by Standard & Poor's Corporation
or at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.,
and in each case maturing within one year after the date of acquisition.
"Change of Control" means (i) any merger or consolidation of
the Company or the Holding Company with or into any Person or any sale, transfer
or other conveyance, whether direct or indirect, of all or substantially all of
the assets of either the Company or the Holding Company on a consolidated basis,
in one transaction or a series of related transactions, if, immediately after
giving effect to such transaction, any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) (other than an Excluded Person) is or becomes the Beneficial
Owner, directly or indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferees or surviving entity or entities,
(ii) any "person" or "group" (as such terms are used for purposes of Section
13(d) and 14(d) of the Exchange Act, whether or not applicable) (other than an
Excluded Person or the Holding Company) is or becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock of the Company or the Holding Company
then outstanding normally entitled to vote in elections of directors, or (iii)
during any period of 12 consecutive months after the Issue Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of either the Company or the Holding Company (together, in each case, with any
new directors whose election by such Board or whose nomination for election by
the shareholders of the Company or the Holding Company, as applicable, was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease
3
for any reason to constitute a majority of the Board of Directors of the Company
or the Holding Company then in office, as applicable.
"Change of Control Offer" shall have the meaning specified in
Section 10.1.
"Change of Control Offer Period" shall have the meaning
specified in Section 10.1.
"Change of Control Purchase Date" shall have the meaning
specified in Section 10.1.
"Change of Control Purchase Price" shall have the meaning
specified in Section 10.1.
"Commission" means the SEC.
"Company" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions 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
adjusted to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense, (ii) consolidated depreciation and amortization expense,
provided that consolidated depreciation and amortization of a Subsidiary that
is less than wholly owned shall only be added to the extent of the equity
interest of the Company in such Subsidiary and (iii) Consolidated Interest
Expense.
"Consolidated Interest Coverage Ratio" of any Person on any
date of determination (the "Transaction Date") means the ratio, on a pro forma
basis, of (a) the aggregate amount of Consolidated Cash Flow of such Person
attributable to continuing operations and businesses (exclusive of amounts
attributable to operations and businesses that would in accordance with GAAP be
deemed to be discontinued operations) for the Reference Period to (b) the
aggregate Consolidated Interest Expense of such Person (exclusive of amounts
attributable to operations and businesses permanently discontinued or disposed
of, but only to the extent that the obligations giving rise to such Consolidated
Interest Expense would no longer be obligations contributing to such Person's
Consolidated Interest Expense subsequent to the Transaction Date) during the
Reference Period; provided, that for purposes of such calculation, (i)
Acquisitions which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period, (ii) transactions giving
rise to the need to calculate the Consolidated Interest Coverage Ratio shall be
assumed to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness or issuance
4
of any Disqualified Capital Stock during the Reference Period or subsequent to
the Reference Period and on or prior to the Transaction Date (and the
application of the proceeds therefrom to the extent used to refinance or retire
other Indebtedness) shall be assumed to have occurred on the first day of such
Reference Period, and (iv) the Consolidated Interest Expense of such Person
attributable to interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the beginning of the
Reference Period to the Transaction Date had been the applicable rate for the
entire period, unless such Person or any of its Subsidiaries is a party to an
Interest Swap or Hedging Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used. If any Indebtedness that is being given
pro forma effect was incurred under a revolving credit facility, the interest
expense on such Indebtedness shall be computed based upon the average daily
balance of such Indebtedness during the applicable period.
"Consolidated Interest Expense" of any Person means, for any
period, the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such
Person and its Consolidated Subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations, and
(iii) all commissions, discounts and other fees and charges owed with respect
to bankers' acceptances and letters of credit financings and currency and
Interest Swap and Hedging Obligations, in each case to the extent attributable
to such period, and (b) the amount of dividends accrued or payable (or
guaranteed) by such Person or any of its Consolidated Subsidiaries in respect of
Preferred Stock (other than by Subsidiaries of such Person to such Person or
such Person's wholly owned Subsidiaries). For purposes of this definition, (x)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined in good faith by the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP, and (y) interest expense attributable to any Indebtedness represented by
the guarantee by such Person or a Subsidiary of such Person of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Net Income" means, with respect to any Person
for any period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) (i) in calculating
Consolidated Net Income for the purposes of the Debt Incurrence Ratio in Section
4.10, all gains and losses and (ii) in calculating Consolidated Net Income for
the purposes of Section 4.3, all gains but not losses, in each case which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including
5
any gain or loss, as applicable, from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
Capital Stock), (b) the net income, if positive, of any Person, other than a
Consolidated Subsidiary in which such Person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a wholly
owned Consolidated Subsidiary of such Person during such period, but in any case
not in excess of such Person's pro rata share of such Person's net income for
such period, (c) the net income or loss of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such Person's Consolidated Subsidiaries
in the event and solely to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or bylaws or any other agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Consolidated Subsidiary and (e) the effects of changes in accounting principles,
"Consolidated Net Worth" of any Person at any date means the
aggregate consolidated stockholders' equity of such Person (plus amounts of
equity attributable to Preferred Stock) and its Consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such Person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
resulting from or in connection with the transaction or series of related
transactions giving rise to the calculation of the Consolidated Net Worth of
such Person at such date, and (c) all investments in Subsidiaries that are not
Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which are consolidated for financial
statement reporting purposes with the financial statements of such Person in
accordance with GAAP.
"Covenant Defeasance" shall have the meaning specified in
Section 8.3.
"Credit Agreement" means the New Credit Facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time whether or not with the same agent, trustee,
representative, lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any such credit
agreement and all refundings, refinancings and replacements of any such credit
agreement, including any agreement (i) extending the maturity of any
6
Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, so long as borrowers and issuers
include one or more of the Company and its Subsidiaries and their respective
successors and assigns, (iii) increasing the amount of Indebtedness incurred
thereunder or available to be borrowed thereunder, provided that on the date
such additional Indebtedness is incurred it would not be prohibited by Section
4.10, or (iv) otherwise altering the terms and conditions thereof in a manner
not prohibited by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in
Section 4.10.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in
Section 2.12.
"Definitive Securities" means Securities that are in the form
of the Security attached hereto as Exhibit A that do not include the information
called for by footnotes 1 and 5 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means (a) except as set forth in
clause (b) of this paragraph, with respect to any Person, Capital Stock of such
Person that, by its terms or by the terms of any security into which it is then
convertible, exercisable or exchangeable, is, or upon the happening of an event
or the passage of time would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by such Person or any of its
Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the
Securities and (b) with respect to any Subsidiary of such Person (including with
respect to any Subsidiary of the Company), any Capital Stock other than any
common stock with no preference, privileges, or redemption or repayment
provisions.
"DTC" shall have the meaning specified in Section 2.3.
"Equity Offering" means an underwritten public offering
pursuant to a registration statement filed with the SEC in accordance with the
Securities Act, the
7
consequence of which is that the common stock of either the Company or the
Holding Company is listed on a national securities exchange or quoted on the
national market system of NASDAQ and, in the case of an Equity Offering of the
Common Stock of the Holding Company, all the net proceeds (after payment of
related transaction costs) of such Equity Offering are contributed as common
equity to the Company.
"Event of Default" shall have the meaning specified in Section
6.1.
"Excess Proceeds" shall have the meaning specified in Section
4.13.
"Excess Proceeds Date" shall have the meaning specified in
Section 4.13.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Securities" means the 10-1/4% Senior Notes due 2004
to be issued pursuant to this Indenture in connection with the offer to exchange
Securities for the Initial Securities that may be made by the Company and the
Guarantors pursuant to the Registration Rights Agreement.
"Excluded Person" means collectively or individually
BancBoston Capital and Harvest Partners, Inc. and all Related Persons of such
Person.
"Exempted Affiliate Transaction" means (a) customary employee
or director compensation arrangements approved by a majority of independent (as
to such transactions) members of the Board of Directors of the Company or its
Subsidiary, as applicable, (b) dividends permitted under the terms of Section
4.3 and payable, in form and amount, on a pro rata basis to all holders of
Common Stock of the Company (after taking into account the exercise of one or
more outstanding options or warrants), (c) transactions solely between the
Company and any of its Wholly owned Subsidiaries or solely among Wholly owned
Subsidiaries of the Company, (d) transactions set forth in clause (i) or (iii)
of the definition of "Permitted Payments, and (e) the payment to ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ of performance related bonuses in an aggregate
amount not to exceed $1.4 million to be paid no later than the first anniversary
of the Issue Date
"Fair Market Value" means, with respect to any asset or
property, the price that could be negotiated in an arms'-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Unless
otherwise specified herein, Fair Market Value shall be determined by the Board
of Directors of the Company acting in good faith.
"Future Subsidiary Guarantor" shall have the meaning specified
in Section 11.3.
8
"GAAP" means United States 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 in the United States, as in effect on the Issue
Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 5
to the form of Security attached hereto as Exhibit A.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means (i) the Holding Company and (ii) the
Subsidiary Guarantors, but excluding in each case any Persons whose guarantees
have been released pursuant to the terms of this Indenture.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding Company" means CDI Group, Inc., a Delaware
corporation or any successor thereto.
"Incurrence Date" shall have the meaning specified in Section
4.10.
"Indebtedness" of any Person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of any such Person,
(i) in respect of borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such Person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar instruments, (iii) representing
the balance deferred and unpaid of the purchase price of any property or
services, except (other than accounts payable or other obligations to trade
creditors which have remained unpaid for greater than 90 days past their
original due date) those incurred in the ordinary course of its business that
would constitute a trade payable to trade creditors, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) for the
payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced
by a letter of credit or a reimbursement obligation of such Person with respect
to any letter of credit; (b) all net obligations of such Person under Interest
Swap and Hedging Obligations; (c) all liabilities and obligations of others of
the kind described in the preceding clause (a) or (b) that such Person has
guaranteed or that is otherwise its legal liability or which are secured by any
assets or property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock; and (d) any and all deferrals, renewals, extensions,
refinancings and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b) or (c), or this clause (d), whether
9
or not between or among the same parties. Indebtedness shall not include
obligations of any Person resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Purchasers" means ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation and Bear, ▇▇▇▇▇▇▇ & Co. Inc.
"Initial Securities" means the 10-1/4% Senior Notes due 2004,
as supplemented from time to time in accordance with the terms hereof, issued
under this Indenture on the Issue Date.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of
any Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Company or any Subsidiary to the extent permitted by Section
4.10, the entering into by such Person of any guarantee of, or other credit
support or contingent obligation with respect to, Indebtedness or other
liability of such other Person; and (d) the making of any capital contribution
by such Person to such other Person.
10
"Issue Date" means the date of first issuance of the
Securities under this Indenture.
"Legal Defeasance" shall have the meaning specified in Section
8.2.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).
"Management Fee Agreements" means the Management Fee
Agreements, dated as of January 30, 1995, as amended, between the Company and
BancBoston Ventures Inc. and Harvest Partners Inc., respectively, each
substantially as in effect on the Issue Date.
"Maturity Date" means, when used with respect to any Security,
the date specified on such Security as the fixed date on which the final
installment of principal of such Security is due and payable (in the absence of
any acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"Net Cash Proceeds" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and (in the case of Asset Sales, reasonable and customary)
expenses (including, without limitation, the fees and expenses of legal counsel
and investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset
Sale.
"New Credit Facility" means the Loan and Security Agreement
dated as of October 16, 1997 among the Company and PNC Bank, National
Association.
"Offering Memorandum" means the offering memorandum dated
October 10, 1997 relating to the Securities.
11
"Officer" means, with respect to the Company or a Guarantor,
the Chief Executive Officer, the President, any Executive or Senior Vice
President, the Chief Financial Officer, the Treasurer, or the Secretary of the
Company or such Guarantor.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and other wise complying with the requirements of Sections 12.4
and 12.5, and delivered to the Trustee or an Agent, as applicable.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee (which may include counsel
to the Trustee or the Company including an employee of the Company) or an Agent,
as applicable, complying with the requirements of Sections 12.4 and 12.5, and
delivered to the Trustee or an Agent, as applicable.
"Paying Agent" shall have the meaning specified in Section
2.3.
"Permitted Indebtedness" means, without duplication (a)
Indebtedness evidenced by the Securities and represented by this Indenture up
to the amounts specified therein as of the date thereof; (b) Indebtedness of the
Company and its Subsidiaries incurred under or in respect of the Credit
Agreement up to an aggregate amount outstanding (including any Indebtedness
issued to refinance, refund or replace such Indebtedness in whole or in part) at
any time of $20.0 million, minus the amount of any such Indebtedness retired
with Net Cash Proceeds from any Asset Sale or assumed by a transferee in an
Asset Sale; (c) Refinancing Indebtedness incurred by the Company and its
Subsidiaries, as applicable, with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a) and (b) above, incurred
pursuant to the second paragraph of Section 4.10 or which is outstanding on the
Issue Date; (d) Indebtedness incurred by the Company or its Subsidiaries in an
aggregate amount outstanding at any time (including any Indebtedness issued to
refinance, replace, or refund such Indebtedness in whole or in part) of up to
$5.0 million, minus the amount of any such Indebtedness retired with Net Cash
Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale; and
(e) Indebtedness incurred by the Company to any of its Subsidiaries, and
Indebtedness incurred by any Subsidiary to any other Subsidiary or to the
Company; provided, that, in the case of Indebtedness of the Company, such
obligations shall be unsecured and subordinated in all respects to the Company's
obligations pursuant to the Securities.
"Permitted Lien" means any of the following:
(a) Liens existing on the Issue Date;
(b) Liens imposed by governmental authorities for taxes,
assessments or other charges not yet subject to penalty or which are being
contested in good faith and by
12
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP;
(c) statutory liens of carriers, warehousemen, mechanics,
materialmen, landlords, repairmen or other like Liens arising by operation of
law in the ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 30 days, or (ii) such
Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP;
(d) Liens securing the performance of bids, trade contracts
(other than borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and
other similar encumbrances or title defects which, singly or in the aggregate,
do not in any case materially detract from the value of the property subject
thereto (as such property is used by the Company or any of its Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(f) Liens arising by operation of law in connection with
judgments, only to the extent, for an amount and for a period not resulting in
an Event of Default with respect thereto;
(g) pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security legislation;
(h) Liens securing the Securities;
(i) Liens securing Indebtedness of a Person existing at the
time such Person becomes a Subsidiary or is merged with or into the Company or a
Subsidiary or Liens securing Indebtedness incurred in connection with an
Acquisition, provided in each case that such Liens were in existence prior to
the date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any other assets;
(j) Liens securing Refinancing Indebtedness incurred to
refinance any Indebtedness that was previously so secured in a manner no more
adverse to the Holders of the Securities than the terms of the Liens securing
such refinanced Indebtedness provided that the Indebtedness secured is not
increased and the lien is not extended to any additional assets of property;
13
(k) Liens consisting of customary restrictions on assignment
or transfer in any lease or other agreement not relating to Indebtedness.
(l) Liens on the applicable accounts receivables, proceeds and
contract rights securing the Company's obligations with respect to a customary
factoring arrangement of Third Party Plan Receivables; and
(m) Liens securing Permitted Indebtedness of the type referred
to in clauses (b) and (d) of the definition of "Permitted Indebtedness", and any
Refinancing Indebtedness with respect to such Indebtedness.
"Permitted Payments" means (i) (a) payments to the Holding
Company in an amount not to exceed $250,000 in the aggregate in any fiscal year
sufficient to permit the Holding Company to pay reasonable and necessary
operating expenses and other general corporate expenses (including any
reasonable professional fees and expenses) and (b) cash dividends to the Holding
Company to the extent necessary to permit the Holding Company to repurchase
common stock, stock options and stock equivalents or other equity securities of
the Holding Company held by departing or deceased directors, officers or
employees of the Holding Company, the Company or any Subsidiary Guarantor
("Management Holders"), provided that the aggregate amount of all such
repurchases shall not exceed $500,000 during any fiscal year or $2,000,000
during the term of the Securities (plus the net cash proceeds received by the
Company after the Issue Date as a capital contribution in the form of common
equity from the sale to Management Holders of such equity securities of the
Holding Company), (ii) a Qualified Exchange; (iii) payments made pursuant to the
Management Fee Agreements; and (iv) the payment of any dividend on Qualified
Capital Stock within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions.
"Person" or "person" means any corporation, individual,
limited liability company, joint stock company, joint venture, partnership,
trust, unincorporated association, or a government or any agency or political
subdivision thereof.
"Plan of Liquidation" means a plan that provides for,
contemplates or the effectuation of which is preceded or accompanied by (whether
or not substantially contemporaneously) (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company otherwise
than as an entirety or substantially as an entirety and (ii) the distribution of
all or substantially all of the proceeds of such sale, lease, conveyance or
other disposition and all or substantially all of the remaining assets of the
Company to holders of Capital Stock of the Company.
"Preferred Stock" as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary
14
or involuntary liquidation or dissolution of such Person, over Capital Stock of
any other class of such Person.
"Principal Corporate Trust Office of the Trustee" means the
office of the Trustee as set forth in Section 12.2 and such other offices as the
Trustee may designate from time to time.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible.
"Purchase Date" shall have the meaning specified in Section
4.13.
"Purchase Money Indebtedness" means any Indebtedness of such
Person to any seller or other Person Incurred to finance the acquisition or
construction (including in the case of a Capitalized Lease Obligation, the
lease) of any after acquired real or personal tangible property which, in the
reasonable good faith judgment of the Board of Directors of the Company, is
directly related to a Related Business of the Company and which is incurred
concurrently with such acquisition and is secured only by the assets so
financed.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock, or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness of the Company issued on or after the Issue Date.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security attached hereto as
Exhibit A.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the form of Security attached hereto as Exhibit A, which shall
include, without duplication, in each case, accrued and unpaid interest to the
Redemption Date (subject to the provisions of Section 3.5).
"Reference Period" with regard to any Person means the four
full fiscal quarters (or such lesser period during which such Person has been in
existence) ended
15
immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Securities or this Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing plus the amount of premium paid in connection with such
Refinancing in accordance with the terms of the documents governing the
Indebtedness Refinanced) the lesser of (i) the principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to Refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x)
not have an Average Life shorter than the Indebtedness or Disqualified Capital
Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Securities than was the Indebtedness or Disqualified Capital
Stock to be refinanced and (C) such Refinancing Indebtedness shall have no
installment of principal (or redemption payment) scheduled to come due earlier
than the scheduled maturity of any installment of principal of the Indebtedness
or Disqualified Capital Stock to be so refinanced which was scheduled to come
due prior to the Stated Maturity or a final stated maturity or redemption date,
as applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so financed.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date by and between the Company and the Holding
Company on the one hand, and the Initial Purchasers, on the other hand,
providing for certain registration rights for the Securities.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of Directors
of the Company are materially related businesses.
16
"Related Person" means any Person who controls, is controlled
by or is under common control with an Excluded Person; provided that for
purposes of this definition "control" means the beneficial ownership of more
than 50% of the total voting power of a Person normally entitled to vote in the
election of directors, managers or trustees, as applicable of a Person.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in (a) Cash Equivalents,
and (b) the Company or a Wholly owned Subsidiary that is engaged in a Related
Business; provided, however, that a merger of another Person with or into the
Company or any of its Subsidiaries shall not be deemed to be a Restricted
Investment so long as the surviving entity is the Company or a direct Wholly
owned Subsidiary.
"Restricted Payment" means, with respect to any Person, (a)
the declaration or payment of any dividend or other distribution in respect of
Capital Stock of such Person or any parent or Subsidiary of such Person, (b) any
payment on account of the purchase, redemption or other acquisition or
retirement for value of Capital Stock of such Person or any parent or Subsidiary
of such Person, (c) other than with the proceeds from the substantially
concurrent sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption, or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any Subordinated
Indebtedness, directly or indirectly, by such Person or a parent or Subsidiary
of such Person prior to the scheduled maturity, any scheduled repayment of
principal, or scheduled sinking fund payment, as the case may be, of such
Indebtedness and (d) any Restricted Investment by such Person; provided,
however, that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on or with respect to Capital Stock of an issuer
to the extent payable solely in shares of Qualified Capital Stock of such
issuer; or (ii) any dividend, distribution or other payment to the Company, or
to any of its Wholly owned Subsidiaries, by the Company or any of its
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities and,
when and if issued as provided in the Registration Rights Agreement, the
Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Registrar, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"Securityholder" or "Holder" means the Person in whose name a
Security is registered on the Registrar's books.
17
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X under the Securities Act and the Exchange Act, as such Rule is in effect on
the Issue Date.
"Special Record Date" for payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security,
means October 15, 2004.
"Subordinated Indebtedness" means Indebtedness of the Company
or a Guarantor that is subordinated in right of payment to the Securities or
such Guarantee, as applicable, in any respect.
"Subsidiary," with respect to any Person, means (i) a
corporation a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors, is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such Person or a Subsidiary of such Person is,
at the time, a general partner and in which such Person, directly or indirectly,
at the date of determination thereof has at least a majority ownership interest.
"Subsidiary Guarantors" means (i) the Company's Subsidiaries
and (ii) any Future Subsidiary Guarantors that become Guarantors pursuant to the
terms of this Indenture, but excluding any Persons whose guarantees have been
released in accordance with the terms of this Indenture.
"Third Party Plan Receivable" means a right to receive payment
from a managed health care provider or other third party payer (a "Third Party
Plan") resulting from a sale to customers associated with a Third Party Plan of
pharmacy goods or services by a Person pursuant to an arrangement with such
Third Party Plan under which such Third Party Plan is obligated to pay for such
goods or services under terms that permit the purchase of such goods or services
on credit.
"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S. Code ▇▇.▇▇. 77aaa-77bbbb), as in effect on the date of the execution of
this Indenture; except as otherwise provided in Section 9.3.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
18
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture, and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
administration division (or any successor group) of the Trustee including,
without limitation, any vice president, assistant vice president, assistant
treasurer, corporate trust officer or any other officer or employee (authorized
by the Trustee to act with respect to the Securities) of the Trustee customarily
performing functions similar to those performed by the Persons who at that time
shall be such officers or employees, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"U.S. Government Obligations" means direct non-callable
obligations of, or non-callable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"Wholly owned Subsidiary" means a Subsidiary all the Capital
Stock of which is owned by the Company or one or more Wholly owned Subsidiaries
of the Company.
SECTION 1.2. Incorporation by Reference of TIA.
Whenever this Indenture 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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture Trustee" or "institutional Trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, each
Guarantor and any other obligor on the Securities.
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 thereby.
19
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "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; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication
in respect thereof shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage or the terms hereof.
The Company shall approve the form of the Securities and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not contained
in the form of Security attached as Exhibit A hereto shall be delivered in
writing to the Trustee. Each Security shall be dated the date of its
authentication.
The terms and provisions contained in the form of Securities
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.
20
SECTION 2.2. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, the Security for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless
and the Company shall nevertheless be bound by the terms of the Securities and
this Indenture.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Initial Securities for
original issue in the aggregate principal amount of up to $80,000,000 and shall
authenticate Exchange Securities for original issue in the aggregate principal
amount of up to $80,000,000, in each case upon a written order of the Company in
the form of an Officers' Certificate, provided that such Ex change Securities
shall be issuable only upon the valid surrender for cancellation of Initial
Securities of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $80,000,000, except as provided in
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
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SECTION 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where Securities may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent") and where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as Registrar or Paying Agent, except that for the purposes of
Articles III, VIII, X and Section 4.13 and as otherwise specified in this
Indenture, neither the Company nor any Affiliate of the Company shall act as
Paying Agent. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars and one or
more additional Paying Agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional Paying Agent. The Company
hereby initially appoints the Trustee as Registrar and Paying Agent, and by its
signature hereto, the Trustee hereby agrees so to act. The Company may at any
time change any Paying Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate written agency
agreement with any Agent (including the Paying Agent) not a party to this
Indenture, which agreement shall implement the provisions of this Indenture that
relate to such Agent, and shall furnish a copy of each such agreement to the
Trustee. The Company shall promptly notify the Trustee in writing of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as
Securities Custodian with respect to the Global Securities.
Upon the occurrence of an Event of Default described in
Section 6.1(d) or (f), the Trustee shall, or upon the occurrence of any other
Event of Default by notice to the Company, the Registrar and the Paying Agent,
the Trustee may, assume the duties and obligations of the Registrar and the
Paying Agent hereunder.
The Trustee is authorized to enter into a letter of
representation with DTC in the form provided to the Trustee by the Company and
to act in accordance with such letter.
SECTION 2.4. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, premium, if any, or
22
interest on, the Securities (whether such assets have been distributed to it by
the Company or any other obligor on the Securities), and shall promptly notify
the Trustee in writing of any Default in making any such payment. If either of
the Company or an Affiliate of the Company acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit of
the Holders or the Trustee. 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 or any Event of 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 (if other than the Company) shall have no further liability for
such assets.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee or any Paying Agent is not the Registrar, the Company shall furnish to
the Trustee on or before the third Business Day preceding each Interest Payment
Date and at such other times as the Trustee or any such Paying Agent may request
in writing a list in such form and as of such date as the Trustee or any such
Paying Agent reasonably may require of the names and addresses of Holders and
the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Registrar duly executed by the Holder thereof or his attorney duly
authorized in writing; and
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(ii) in the case of Transfer Restricted Securities that
are Definitive Securities, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification from such Holder
to that effect (in substantially the form set forth on the reverse
of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (within the meaning
of Rule 144A promulgated under the Securities Act), that is aware
that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer
Restricted Security for its own account or for the account of
another such "qualified institutional buyer," a certification from
such Holder to that effect (in substantially the form set forth on
the reverse of the Security); or
(C) if such Transfer Restricted Security is being
transferred pursuant to an exemption from registration in accordance
with Rule 144, or outside the United States in an offshore
transaction in compliance with Rule 904 under the Securities Act,
or pursuant to an effective registration statement under the
Securities Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being
transferred to an "institutional accredited investor" within the
meaning of Rule 501(A)(1), (2), (3) or (7) under the Securities Act
(an "IAI") that is acquiring the Security for its own account, or
for the account of such an IAI, not with a view to or for offer or
sale in connection with any distribution in violation of the
Securities Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security)
(including a letter in the form of Annex A to the Security) and, if
such transfer is in respect of an aggregate principal amount of
Securities less than $250,000, an opinion of counsel reasonably
acceptable to the Company, the Trustee and the Registrar to the
effect that such transfer is in compliance with the Securities Act;
or
(E) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act and in accordance with all
applicable securities laws of the States of the United States, a
certification from such Holder to
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that effect (in substantially the form set forth on the reverse of
the Security) and an opinion of counsel reasonably acceptable to
the Company and to the Registrar to the effect that such transfer
is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the form set forth on
the reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the Trustee
to make, or to direct the Securities Custodian to make, an endorsement on
the Global Security to reflect an in crease in the aggregate principal
amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Security for
a Definitive Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depositary,
from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Security, and upon receipt by the
25
Trustee of a written instruction or such other form of instructions as
is customary for the Depositary or the Person designated by the
Depositary as having such a beneficial interest in a Transfer
Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the beneficial
owner, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to
a "qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act), that is aware that any sale
of Securities to it will be made in reliance on Rule 144A under the
Securities Act and that is acquiring such beneficial interest in the
Transfer Restricted Security for its own account or the account of
another such "qualified institutional buyer", a certification to
that effect from the transferor (in substantially the form set forth
on the reverse of the Security); or
(C) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule
144, or outside the United States in an offshore transaction in
compliance with Rule 904 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act, a
certification from the transferor to that effect (in substantially
the form set forth on the reverse of the Security);
(D) if such beneficial interest is being transferred to
an IAI that is acquiring the Security for its own account, or for
the account of such an IAI, not with a view to or for offer or sale
in connection with any distribution in violation of the Securities
Act, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Security)
(including a letter in the form of Annex A to the Security) and, if
such transfer is in respect of an aggregate principal amount of
Securities less than $250,000, an Opinion of Counsel reasonably
acceptable to the Company, the Trustee and the Registrar to the
effect that such transfer is in compliance with the Securities Act;
or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act and in accordance with all applicable securities
laws of the States of the United States, a certification to that
effect from the transferor (in substantially the form set forth on
the reverse of the Security) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the
26
Company and to the Registrar to the effect that such transfer is in
compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form
of an Officers' Certificate, the Trustee or the Trustee's authenticating agent
will authenticate and make available for delivery to the transferee a Definitive
Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
make available for delivery such Definitive Securities to the Persons in
whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Securities (x) notifies the
Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Securities and a successor Depositary for the
Global Securities is not appointed by the Company within 90 days after
delivery of such notice or (y) has ceased to be a clearing agency
registered under the Exchange Act;
(ii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture; or
(iii) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Securities;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will, or its authenticating agent will, authenticate and make available for
delivery Definitive Securities, in an aggregate
27
principal amount equal to the principal amount of the Global Securities, in
exchange for such Global Securities.
(g) Cancellation and/or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, redeemed, repurchased or
cancelled, the principal amount of Securities represented by such Global
Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(h) Legends.
(i) Except as permitted by the following paragraph
(ii), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following
form:
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), OR (D) IT
HAS OTHERWISE ACQUIRED THIS NOTE OR A BENEFICIAL INTEREST
HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE RELATING
TO THIS NOTE AND IN COMPLIANCE WITH APPLICABLE SECURITIES
LAWS, (2) AGREES THAT IT WILL NOT,
28
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR THE
HOLDING COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, THE TRUSTEE AND THE
REGISTRAR THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, THE
TRUSTEE AND THE REGISTRAR) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S. PERSONS" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902
OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.
29
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or an
effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) any such Transfer Restricted Security
represented by a Global Security shall not be subject to the
provisions set forth in (i) above (such sales or transfers
being subject only to the provisions of Section 2.6(c)
hereof); provided, however, that with respect to any request
for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security
that does not bear a legend, which request is made in reliance
upon Rule 144 under the Securities Act, the Holder thereof
shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144 under the Securities Act (such
certification to be substantially in the form set forth on the
reverse of the Security).
(i) Obligations with respect to Transfers and Exchanges
of Definitive Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee or any authenticating agent of
the Trustee shall authenticate Definitive Securities and Global Securities
at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessment, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments, or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.2 (fourth
paragraph), 2.10, 3.7, 4.13(8), 9.5, or 10.1 (final paragraph)).
30
(iii) The Registrar shall not be required to register
the transfer of or exchange (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Definitive Security being redeemed in part, or
(b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Article X or
Section 4.13 hereof or redeem Securities pursuant to Article III hereof
and ending at the close of business on the day of such mailing.
(iv) Prior to due presentment for registration or
transfer of any Security, the Trustee, any Agent and the Company may deem
and treat the Person in whose name the Security is registered as the
absolute owner of such Security, and none of the Trustee, Agent or the
Company shall be affected by notice to the contrary.
(j) Miscellaneous.
Each Holder of a Security agrees to indemnify the Company and
the Trustee against any liability that may result from the transfer,
exchange or assignment of such Holder's Security in violation of any
provision of this Indenture and/or applicable United States federal or
state securities law.
SECTION 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee or any authenticating agent of the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide 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 Security is replaced. The Company may require the payment of a
sum sufficient to cover any transfer tax, assessment or similar governmental
charge that may be imposed in relation to the issuance of any new Security and
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities
that have been authenticated by the Trustee (including any Security represented
by a Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in
31
a Global Security effected by the Trustee hereunder and those described in this
Section 2.8 as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security, except as
provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Company or an Affiliate of the Company) holds Cash or U.S.
Government Obligations sufficient to pay all of the principal and interest and
premium, if any, due on the Securities payable on that date and payment of the
Securities called for redemption is not otherwise prohibited, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.9. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company or Affiliates of the Company
shall be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, amendment,
supplement, waiver or consent, only Securities that a Trust Officer of the
Trustee actually knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities.
Until Definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of Definitive Securities
but may have variations that the Company reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall, upon receipt of a written order of the
Company in the form of an Officers' Certificate, authenticate Definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to it or them (as applicable) for
registration of transfer, exchange or payment.
32
The Trustee or, at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Company or an Affiliate of the Company), and no one else
shall cancel and return to the Company all Securities surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.7, the Company may not
issue new Securities to replace Securities that have been paid or delivered to
the Trustee for cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by
this Indenture.
SECTION 2.12. Defaulted Interest.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more predecessor Securities) is
registered at the close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date plus any
interest payable on the defaulted interest at the rate and in the manner
provided in Section 4.1 and in the Security (herein called "Defaulted Interest")
shall forthwith cease to be payable to the registered holder on the relevant
Record Date, or, as applicable, the Special Record Date (as defined below), and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of cash
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such cash when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as provided in this clause (1). Thereupon the
Trustee shall fix a special record date (a "Special Record Date") for the
payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Security register not less than 10 days prior to such Special Record Date.
Notice of the proposed
33
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their respective
predecessor Securities) are registered on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause, such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such number
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.
Redemption of Securities, as permitted by any provision of
this Indenture, shall be made in accordance with such provision and this Article
III. The Company will not have the right to redeem any Securities prior to
October 15, 2001, except as provided in the immediately following paragraph. On
or after October 15, 2001, the Company will have the right to redeem all or any
part of the Securities at the Redemption Prices specified in the form of
Security attached as Exhibit A set forth therein in Paragraph 5 thereof,
including accrued and unpaid interest to the Redemption Date (subject to the
right of Holders of record on a
34
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date, and subject to the provisions set forth in
Section 3.5).
Notwithstanding the foregoing, prior to October 15, 2000, the
Company may redeem from time to time up to 35% of the aggregate principal amount
of the Securities originally outstanding at a redemption price of 110-1/4% of
the principal amount thereof (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), plus accrued and unpaid interest thereon, if
any, to the Redemption Date, with the net proceeds of one or more Equity
Offerings; provided, that at least 65% of the aggregate principal amount of the
Securities originally outstanding remain outstanding immediately after the
occurrence of such redemption; provided, further, that such notice of
redemption shall be sent within 30 days after the date of closing of any such
Equity Offering, and such redemption shall occur within 60 days after the date
such notice is sent.
SECTION 3.2. Notices to Trustee.
If the Company elects to redeem Securities pursuant to
Paragraph 5 of the Securities, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed and
whether it wants the Trustee to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by crediting
against any such redemption Securities it has not previously delivered to the
Trustee for cancellation, it shall so notify the Trustee of the amount of the
reduction and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for
in this Section 3.2 at least 45 days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee). Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.3. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select the Securities or portions
thereof for redemption on a pro rata basis, by lot or by such other method as
the Trustee shall determine to be fair and appropriate.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions
35
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.
SECTION 3.4. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed to
such Holder's last address as then shown on the registry books of the Registrar.
At the Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of
accrued and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the
Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless the Company defaults in its obligation
to deposit Cash or U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide Cash in an amount to fund the Redemption Price
with the Paying Agent in accordance with Section 3.6 hereof or such
redemption payment is otherwise prohibited, interest on Securities called
for redemption ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest to
the Redemption Date, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the
portion of the principal amount, equal to $1,000 or any integral multiple
thereof, of such Security to be redeemed and that, on and after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
36
(7) if less than all the Securities are to be redeemed,
the identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed;
(8) the CUSIP number of the Securities to be redeemed;
and
(9) that the notice is being sent pursuant to this
Section 3.4 and pursuant to the optional redemption provisions of
Paragraph 5 of the Securities.
SECTION 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or, if the Trustee is no longer
the Paying Agent, to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if any, accrued and
unpaid to the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date to which such
Record Date relates, the accrued interest shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a non-Business Day, payment shall be made
on the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
SECTION 3.6. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
Cash or U.S. Government Obligations sufficient to pay the Redemption Price of,
and accrued and unpaid interest on, all Securities to be redeemed on such
Redemption Date (other than Securities or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any Cash or
U.S. Government Obligations so deposited which is not required for that purpose
upon the written request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the
37
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
4.1 hereof and the Security.
SECTION 3.7. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder, without service charge to the Holder, a new Security
or Securities equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities.
The Company shall pay the principal of and interest and
premium, if applicable, on the Securities on the dates and in the manner
provided herein and in the Securities. An installment of principal of or
interest and premium, if applicable, on the Securities shall be considered paid
on the date it is due if the Trustee or Paying Agent (other than the Company, a
Subsidiary of the Company or an Affiliate of the Company) holds for the benefit
of the Holders, on or before 10:00 a.m. New York City time on that date, Cash
deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on
overdue installments of interest at the rate specified in the Securities
compounded semi-annually, to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. 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 12.2.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes
38
and may from time to time rescind such designations; provided, however, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. The Company hereby initially
designates the Trustee's agency at The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇.▇., ▇.▇. ▇▇▇▇▇, Attn: Corporate Trust Trustee Administration as
such office.
SECTION 4.3. Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted Payment if, after
giving effect to such Restricted Payment on a pro forma basis, (l) a Default or
an Event of Default shall have occurred and be continuing, (2) the Company is
not permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Debt Incurrence Ratio in Section 4.10, or (3) the aggregate amount of all
Restricted Payments made by the Company and its Subsidiaries, including after
giving effect to such proposed Restricted Payment, from and after the Issue
Date, would exceed the sum of (a) 50% of the aggregate Consolidated Net Income
of the Company and its consolidated Subsidiaries for the period (taken as one
accounting period) commencing on the first day after the Issue Date, to and
including the last day of the fiscal quarter ended immediately prior to the
date of each such calculation (or, in the event Consolidated Net Income for such
period is a deficit, then minus 100% of such deficit), plus (b) the aggregate
Net Cash Proceeds received by the Company from the sale of its Qualified Capital
Stock (other than (i) to a Subsidiary of the Company, and (ii) to the extent
applied in connection with a Qualified Exchange after the Issue Date), plus (c)
the aggregate of cash capital contributions in the form of common equity made to
the Company by the Holding Company. The foregoing clauses (2) and (3), however,
will not prohibit Permitted Payments. The full amount of any Permitted Payment
made pursuant to clause (iv) of the definition of Permitted Payments (but not
pursuant to clauses (i), (ii) and (iii) thereof), however, will be deducted in
the calculation of the aggregate amount of Restricted Payments available to be
made referred to in clause (3) of this paragraph.
The foregoing provisions will not prohibit or be violated by
(A) payments to the Holding Company to enable the Holding Company to pay
federal, state or local tax liabilities, not to exceed the aggregate amount of
(1) the amount of such tax liabilities that would be due from the Company or the
Subsidiary Guarantors to the appropriate taxing authority if they were separate
taxable entities to the extent that the Holding Company has an obligation to
satisfy such federal, state or local tax liabilities relating to the operations,
assets or capital of the Company or the Subsidiary Guarantors, plus (2) the
amount of such tax liabilities that are due from the Holding Company with
respect to the Holding Company's ownership of the Company's Capital Stock, as
applicable; provided such payment shall either be used by the Holding Company to
pay such federal, state or local tax liabilities within 90
39
days of its receipt of such payment or refunded to the payee, and (B) payment by
the Company of a cash dividend on the Issue Date to the Holding Company in an
amount of $45.0 million to enable it to pay a cash distribution to the
securityholders of the Holding Company as contemplated under the caption "Use of
Proceeds" in the Offering Memorandum.
SECTION 4.4. Corporate Existence.
Subject to Article V and Section 11.4, the Company and the
Guarantors shall do or cause to be done all things necessary to preserve and
keep in full force and effect their respective corporate existence in accordance
with the respective organizational documents of each of them (as the same may be
amended from time to time) and the rights (charter and statutory) and corporate
franchises of the Company and the Guarantors; provided, however, that neither
the Company nor any Guarantor shall be required to preserve any right or
franchise if (a) its Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of such entity and
(b) the loss thereof is not adverse in any material respect to the holders.
SECTION 4.5. Payment of Taxes and Other Claims.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except (i) as contested in good faith by appropriate
proceedings and with respect to which appropriate reserves have been taken to
the extent required by GAAP or (ii) where the failure to effect such payment is
not adverse in any material respect to the Holders.
SECTION 4.6. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120
days after the end of its fiscal year an Officers' Certificate, one of the
signers of which shall be the principal executive, principal financial or
principal accounting officer of the Company, complying with Section 314(a)(4) of
the TIA and stating that a review of its activities and the activities of its
Subsidiaries, if any, during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture (without regard to notice requirements or grace periods) and further
stating, as to each such Officer signing such certificate, to the best of his
knowledge, based on such review, whether or not the signer knows of any Event of
Default or event which with notice or the passage of time would become an Event
of Default which has occurred and is continuing. The Officers' Certificate shall
also notify the Trustee should the relevant fiscal year end on any date other
than the current fiscal year end date.
(b) The Company shall so long as any of the Securities
are outstanding, deliver to the Trustee, promptly upon becoming aware, and in
any event within
40
five Business Days after the Company becomes aware, of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
The Trustee shall not be deemed to have knowledge of any Default or any Event of
Default unless one of its Trust Officers receives written notice thereof from
the Company or any of the Holders.
SECTION 4.7. Reports.
Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee and to each Holder and to prospective purchasers of
Securities identified to the Company by an Initial Purchaser, within 15 days
after it is or would have been (if it were subject to such reporting
obligations) required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if the Company were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the Commission, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required. In addition, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely on Officers' Certificates).
SECTION 4.8. Limitation on Status as Investment Company.
Neither the Company nor any Subsidiary shall be required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act")) or otherwise
become subject to regulation under the Investment Company Act.
SECTION 4.9. Limitation on Transactions with Affiliates.
Neither the Company nor any of its Subsidiaries shall, on or
after the Issue Date, enter into any contract, agreement, arrangement or
transaction with any Affiliate (an "Affiliate Transaction") or any series of
related Affiliate Transactions (other than Exempted Affiliate Transactions),
unless such Affiliate Transaction is made in good faith, the terms of
41
such Affiliate Transaction are fair and reasonable to the Company or such
Subsidiary, as the case may be, and are no less favorable as the terms which
could be obtained by the Company or such Subsidiary, as the case may be, in a
comparable transaction made on an arm's-length basis with Persons who are not
Affiliates.
Without limiting the foregoing, in connection with any
Affiliate Transaction or series of related Affiliate Transactions (other than
Exempted Affiliate Transactions), (1) involving consideration to either party in
excess of $1 million, the Company must deliver an Officers' Certificate
addressed and delivered to the Trustee, stating that the terms of such Affiliate
Transaction are fair and reasonable to the Company or such Subsidiary and no
less favorable to the Company or such Subsidiary than could have been obtained
in an arm's length transaction with a non-Affiliate, and (2) involving
consideration to either party in excess of $5 million, the Company must also,
prior to the consummation thereof, obtain a written favorable opinion as to the
fairness of such transaction to the Company or such Subsidiary from a financial
point of view from an independent investment banking firm of national
reputation.
The foregoing provisions shall not apply to any Restricted
Payment that is made in compliance with or exempt from the provisions described
in the first paragraph of Section 4.3 hereof.
SECTION 4.10. Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.
Except as set forth in this Section 4.10, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
issue, assume, guaranty, incur, become directly or indirectly liable with
respect to (including as a result of an Acquisition), or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur" or, as appropriate, an "incurrence"), any Indebtedness or any
Disqualified Capital Stock (including Acquired Indebtedness), except for
Permitted Indebtedness.
Notwithstanding the foregoing: if (i) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect to, such incurrence of Indebtedness or Disqualified Capital
Stock and (ii) on the date of such Incurrence (the "Incurrence Date"), the
Consolidated Interest Coverage Ratio of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on a pro forma
basis to such incurrence of such Indebtedness or Disqualified Capital Stock and,
to the extent set forth in the definition of Consolidated Interest Coverage
Ratio, the use of proceeds thereof, would be at least 2.00 to l (the "Debt
Incurrence Ratio"), then the Company and its Subsidiaries may incur such
Indebtedness or Disqualified Capital Stock.
Indebtedness of any Person which is outstanding at the time
such Person becomes a Subsidiary of the Company or is merged with or into or
consolidated with the
42
Company or a Subsidiary of the Company shall be deemed to have been incurred at
the time such Person becomes such a Subsidiary of the Company or is merged with
or into or consolidated with the Company or a Subsidiary of the Company, as
applicable.
SECTION 4.11. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of any Subsidiary of the Company: (i) to
pay dividends or make other distributions to or on behalf of the Company or any
of its Subsidiaries, (ii) to pay any obligation to or on behalf of the Company
or any of its Subsidiaries, (iii) to make or pay loans or advances to or on
behalf of the Company or any of its Subsidiaries or (iv) otherwise to transfer
any of its properties or assets to or on behalf of the Company or any of its
Subsidiaries, except (a) restrictions imposed by the Securities or this
Indenture, (b) restrictions imposed by applicable law, (c) existing restrictions
under specified Indebtedness outstanding on the Issue Date, or under any
Acquired Indebtedness not incurred in violation of this Indenture or under any
agreement relating to any property, asset, or business acquired by the Company
or any of its Subsidiaries, which restrictions in each case existed at the time
of acquisition, were not put in place in connection with or in anticipation of
such acquisition and are not applicable to any Person, other than the Person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (d) any such restriction or requirement imposed by
Indebtedness incurred under clause (b) of the definition of "Permitted
Indebtedness", provided such restriction or requirement is no more restrictive
than that imposed by the Credit Agreement as of the Issue Date, (e)
restrictions with respect solely to a Subsidiary of the Company imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary,
provided such restrictions apply solely to the Capital Stock or assets of such
Subsidiary that are being sold and only to the extent such Subsidiary is so sold
within 180 days of such event, (f) restrictions on transfer contained in
Purchase Money Indebtedness, provided such restrictions relate only to the
transfer of the property acquired with the proceeds of such Purchase Money
Indebtedness, (g) customary restrictions imposed on the transfer of copyrighted
or patented materials and customary provisions in agreements (other than
agreements relating to Indebtedness) that restrict the assignment of such
agreements or any rights thereunder, and (h) in connection with and pursuant to
permitted Refinancings, replacements of restrictions imposed pursuant to clause
(c) of this Section 4.11 that are not more restrictive than those being replaced
and do not apply to any other Person or assets than those that would have been
covered by the restrictions in the Indebtedness so refinanced. Notwithstanding
the foregoing, neither (a) customary provisions restricting subletting or
assignment of any lease entered into in the ordinary course of business,
consistent with industry practice nor (b) Liens permitted under the terms of
this Indenture shall in and of themselves be considered a restriction on the
ability of the applicable Subsidiary to transfer such agreement or assets, as
the case may be.
43
SECTION 4.12. Limitation on Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind,
other than Permitted Liens, upon any of their respective assets now owned or
acquired on or after the date of this Indenture or upon any income or profits
therefrom unless the Company or such Subsidiary provides, concurrently
therewith, that the Securities are equally and ratably secured; provided that,
if such Lien is to secure Subordinated Indebtedness, the Lien securing such
Subordinated Indebtedness shall be subordinate and junior to the Lien securing
the Securities or the applicable Guarantee, as applicable, with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Securities or the Guarantee, as applicable, provided, further, that, in case
of a Subsidiary, if such Subsidiary shall cease to be a Subsidiary Guarantor in
accordance with the provisions of this Indenture, such equal and ratable Lien to
secure the Securities shall, without any further action, cease to exist.
SECTION 4.13. Limitation on Sale of Assets and Subsidiary
Stock.
The Company shall not, and shall not permit any of its
Subsidiaries to, in one transaction or a series of related transactions, convey,
sell, transfer, assign or otherwise dispose of, directly or indirectly, any of
their respective property, business or assets, including by merger or
consolidation (in the case of a Subsidiary of the Company), and including any
sale or other transfer or issuance of any Capital Stock of any Subsidiary of the
Company, whether by the Company or a Subsidiary of either or through the
issuance, sale or transfer of Capital Stock by a Subsidiary of the Company (an
"Asset Sale"), unless (1)(a) within 180 days after the date of such Asset Sale,
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Securities in accordance with the terms of this
Indenture or to the repurchase of the Securities pursuant to an irrevocable,
unconditional cash offer (the "Asset Sale Offer") to repurchase Securities at a
purchase price (the "Asset Sale Offer Price") of 100% of the principal amount
thereof, plus accrued interest to the date of payment, made within 180 days of
such Asset Sale or (b) within 180 days following such Asset Sale, the Asset Sale
Offer Amount is (i) invested in fixed assets and property (other than notes,
bonds, obligations and securities) which in the good faith reasonable judgment
of the Board will immediately constitute or be a part of a Related Business of
the Company or such Subsidiary (if it continues to be a Subsidiary) immediately
following such transaction or (ii) used to retire any Indebtedness ranking at
least pari passu with the Securities and the Guarantees and to permanently
reduce the amount of such Indebtedness (including that in the case of a revolver
or similar arrangement that makes credit available, such commitment is so
permanently reduced by such amount); (2) at least 75% of the consideration for
such Asset Sale consists of Cash or Cash Equivalents; (3) no Default or Event of
Default would occur and be continuing at the time of, or would occur after
giving effect to, such Asset Sale; and (4) with respect to any Asset Sale
resulting in Net Cash Proceeds in excess of $500,000, the Board of Directors of
the Company determines in good
44
faith that the Company or such Subsidiary, as applicable, receives Fair Market
Value for such Asset Sale.
Notwithstanding the foregoing provisions of the prior
paragraph:
(i) the Company and its Subsidiaries may, in the
ordinary course of business, convey, sell, lease, transfer, assign or
otherwise dispose of inventory acquired and held for resale in the
ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the provisions of Article V;
(iii) the Company and its Subsidiaries may convey,
sell, lease, transfer, assign or otherwise dispose of assets to the
Company or any of its Subsidiaries;
(iv) the Company and its Subsidiaries may in the
ordinary course of business sell, transfer, convey or otherwise dispose of
Third Party Plan Receivables in customary factoring arrangements; and
(v) the Company and its Subsidiaries may consummate any
sale or series of related sales of assets or properties of the Company and
its Subsidiaries having an aggregate Fair Market Value of less than $1
million in any fiscal year.
An Asset Sale Offer may be deferred until the accumulated Net
Cash Proceeds from Asset Sales not applied to the uses set forth in clause
(l)(b) above (the "Excess Proceeds") exceeds $3 million (the date on which the
Excess Proceeds exceed $3 million being herein referred to as the "Excess
Proceeds Date") and each Asset Sale Offer shall remain open for 20 Business Days
following its commencement and no longer (the "Asset Sale Offer Period"). Upon
expiration of the Asset Sale Offer Period, the Company shall apply the Asset
Sale Offer Amount plus an amount equal to accrued and unpaid interest to the
purchase of all Securities properly tendered (on a pro rata basis if the Asset
Sale Offer Amount is insufficient to purchase all Securities so tendered) at
the Asset Sale Offer Price (together with accrued interest). To the extent that
the aggregate amount of Securities tendered pursuant to an Asset Sale Offer is
less than the Asset Sale Offer Amount, the Company may use any remaining Net
Cash Proceeds for general corporate purposes as otherwise permitted by this
Indenture, and following each Asset Sale Offer, the Excess Proceeds amount shall
be reset to zero.
Notice of an Asset Sale Offer will be sent 20 Business Days
prior to the close of business on the third Business Day prior to the date set
by the Company to repurchase
45
Securities pursuant to this Section 4.13 (the "Purchase Date"), by first-class
mail, by the Company to each Holder at its registered address, with a copy to
the Principal Corporate Trust Office of the Trustee. The notice to the Holders
will contain all information, instructions and materials required by applicable
law. The notice, which (to the extent consistent with this Indenture) shall
govern the terms of the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
(2) the Asset Sale Offer, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), and the Purchase
Date, which Purchase Date shall be on or prior to 45 Business Days
following the Excess Proceeds Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the provisions of this Section
4.13, any Security, or portion thereof, accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Purchase
Date;
(5) that Holders electing to have a Security, or portion
there of, purchased pursuant to an Asset Sale Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 4.13, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the third Business Day prior to the Purchase Date;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, up to the
close of business on the third Business Day prior to the Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Securities the Holder is withholding and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess
of the principal amount of Securities to be acquired pursuant to the Asset
Sale Offer are tendered and not withdrawn, the Company shall purchase
Securities on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
46
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) a brief description of the circumstances and
relevant facts regarding such Asset Sales.
On or before the Purchase Date, the Company shall (i) accept
for payment Securities or portions thereof properly tendered pursuant to the
Asset Sale Offer on or before the third Business Day prior to the Purchase Date
(on a pro rata basis if required pursuant to paragraph (7) hereof) and (ii)
deposit with the Paying Agent Cash sufficient to pay the Asset Sale Offer Price
for all Securities or portions thereof so tendered and accepted plus accrued and
unpaid interest thereon to the Purchase Date. On the Purchase Date, the Company
shall deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on the Purchase Date mail or deliver to Holders
of Securities so accepted payment in an amount equal to the Asset Sale Offer
Price for such Securities (together with accrued and unpaid interest), and the
Trustee shall promptly authenticate and make available for delivery to such
Holders a new Security equal in principal amount to any unpurchased portion of
the Security surrendered. Any Security not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company agrees that any
Asset Sale Offer shall be made in compliance with all applicable laws, rules,
and regulations, including, if applicable, Regulation 14E of the Exchange Act
and the rules and regulations thereunder and all other applicable Federal and
state securities laws, and any provisions of this Indenture which conflict with
such laws shall be deemed to be superseded by the provisions of such laws.
SECTION 4.14. Limitation on Lines of Business.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, engage to any substantial extent in any
line or lines of business activity other than that which, in the reasonable good
faith judgment of the Board of Directors of the Company, is a Related Business.
SECTION 4.15. Restriction on Sale and Issuance of Subsidiary
Stock.
The Company shall not issue or sell, and shall not permit any
of its Subsidiaries to issue or sell, any shares of Capital Stock of any
Subsidiary of the Company to any Person other than the Company or a Wholly owned
Subsidiary of the Company, except for shares of common stock with no preferences
or special rights and with no redemption or prepayment provisions.
Notwithstanding the foregoing, (a) the Company and the Subsidiary Guarantors may
consummate an Asset Sale of all of the Capital Stock owned by the Company and
the Subsidiary Guarantors of any Subsidiary in accordance with the provisions of
Section 4.13 and (b) the Company or any Subsidiary Guarantor may pledge,
hypothecate or otherwise
47
▇▇▇▇▇ ▇ ▇▇▇▇ on any Capital Stock of any Subsidiary to the extent not prohibited
under Section 4.12 herein.
SECTION 4.16. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors 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 which would prohibit or
forgive the Company or any Guarantor from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein
or in the Securities or which may affect the covenants or the performance of
this Indenture, wherever enacted, now or at any time hereafter in force; and (to
the extent that it may lawfully do so) each of the Company and the Guarantors
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 relating to any such law, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation.
The Company shall not, directly or indirectly, consolidate
with or merge with or into another Person or sell, lease, convey or transfer all
or substantially all of its assets (computed on a consolidated basis), whether
in a single transaction or a series of related transactions, to another Person
or group of affiliated Persons or adopt a Plan of Liquidation, unless (i) either
(a) the Company is the continuing entity or (b) the resulting, surviving or
transferee entity or, in the case of a plan of liquidation, the entity which
receives the greatest value from such Plan of Liquidation, is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia, and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities and this Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect to such transaction; (iii) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth of the consolidated
surviving or transferee entity or, in the case of a Plan of Liquidation, the
entity which receives the greatest value from such Plan of Liquidation, is at
least equal to the Consolidated Net Worth of the Company immediately prior to
such transaction; and (iv) immediately after giving effect to such transaction
on a pro forma basis, the consolidated resulting, surviving or transferee entity
or, in the case of a Plan of Liquidation, the entity which receives the greatest
value from such Plan of Liquidation, would immediately thereafter be permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio set forth in Section 4.10. For
48
purposes of this Section 5.1, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, 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.
SECTION 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a Plan of
Liquidation in accordance with Section 5.1, the successor corporation formed by
such consolidation or into which the Company is merged or to which such transfer
is made or, in the case of a Plan of Liquidation, the entity which receives the
greatest value from such Plan of Liquidation, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named herein as the Company, and the Company shall be released from all
obligations under the Securities and this Indenture.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the failure by the Company to pay any installment of
interest on the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of
the principal, or premium, if any, on the Securities when and as the same
becomes due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price;
(c) the failure by the Company or any Guarantor to
observe or perform any covenant or agreement on the part of the Company or any
Guarantor contained in the Securities, the Guarantees or this Indenture (other
than a default in the performance of
49
any covenant or agreement which is specifically dealt with elsewhere in this
Section 6.1) and the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding, specifying such Default and requiring that it be
remedied;
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 consecutive days; or
a decree, judgement, or order of a court of competent jurisdiction appointing a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency for the
Company, any of its Significant Subsidiaries, or any substantial part of the
property of any such Person, or for the winding up or liquidation of the affairs
of any such Person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for a period of 60 days;
(e) a default in any Indebtedness of the Company or any
of its Subsidiaries with an aggregate principal amount in excess of $2 million
(a) resulting from the failure to pay principal at maturity or (b) as a result
of which the maturity of such Indebtedness has been accelerated prior to its
stated maturity;
(f) the Company or any of its Significant Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization under any bankruptcy or
similar law or similar statute, or shall consent to the filing of any such
petition, or shall consent to the appointment of a Custodian, receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of it or any
substantial part of its assets or property, or shall make a general assignment
for the benefit of creditors, or shall admit in writing its inability to pay its
debts as they become due, fail generally to pay its debts as they become due, or
take any corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing;
(g) final unsatisfied judgments not covered by insurance
aggregating in excess of $2 million, at any one time rendered against the
Company or any of its Subsidiaries and not stayed, bonded or discharged within
60 days; and
(h) except for any release of a Guarantee in accordance
with Section 11.4, any Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any further liability
under any Guarantee, or gives notice to such effect (other than by reason of the
termination of this Indenture or the release of any such Guarantee in accordance
with the terms of this Indenture).
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If an Event of Default occurs and is continuing, the Trustee
shall, within 90 days after occurrence of such default, give to the Holders
notice of such default.
SECTION 6.2. Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default occurs and is continuing (other than an
Event of Default specified in clauses (d) and (f) of Section 6.1, above,
relating to the Company or any Significant Subsidiary) then in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of 25% in aggregate principal amount
of the Securities then outstanding, by notice in writing to the Company (and to
the Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal and accrued interest thereon to be due and payable immediately. If an
Event of Default specified in clauses (d) and (f) of Section 6.1, above,
relating to the Company or any Significant Subsidiary occurs, all principal and
accrued interest thereon will be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of Trustee or the
Holders.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article VI, the Holders
of not less than a majority in aggregate principal amount of then outstanding
Securities, by written notice to the Company and the Trustee, may rescind, on
behalf of all Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee
Cash sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due other than by
reason of such declaration of acceleration, and interest thereon at
the rate borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne by the
Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel, and any other
amounts due the Trustee under Section 7.7, and
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(2) all Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.12.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to (i) any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event and (ii) any provision requiring supermajority approval to amend, unless
such default has been waived by such a supermajority. No such waiver shall cure
or waive any subsequent default or impair any right consequent thereon.
SECTION 6.3. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if an Event of Default in payment
of principal, premium, or interest specified in clause (a) or (b) of Section 6.1
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of, the Trustee and its agents and counsel and all other amounts due the Trustee
under Section 7.7.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust in favor
of the Holders, may at the expense of the Company institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon the Securities and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of
the Company or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
52
SECTION 6.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal and premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect
of the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and
all other amounts due the Trustee under Section 7.7) and of the Holders
allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7.
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 Securities 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 6.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the
53
Holders, and any recovery of judgment shall, after provision for the payment of
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel and all other amounts due the Trustee under Section 7.7, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6.6. Priorities.
Any money collected by the Trustee pursuant to this Article VI
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant
to Section 7.7;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any) and interest on, the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To the Company, the Guarantors or such other Person as
may be lawfully entitled thereto, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record
date and payment date for any payment to the Holders under this Section 6.6.
SECTION 6.7. Limitation on Suits.
No Holder of any Security shall have any right to order or
direct the Trustee to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(A) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate
principal amount of then outstanding Securities shall have
made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as Trustee
hereunder;
54
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities to be incurred or reasonably probable to be
incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and
(E) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in aggregate principal amount of the
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
interest on, such Security on the respective dates such payments are due as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of a Change of Control Offer, the
Change of Control Purchase Price on the Change of Control Purchase Date, and in
the case of an Asset Sale Offer, the Asset Sale Offer Price, on the date of
payment thereof) and to institute suit for the enforcement of any such payment
after such respective dates, and such rights shall not be impaired without the
consent of such Holder.
SECTION 6.9. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, 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.
55
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default shall
impair the exercise of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article VI or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 6.11. Control by Holders.
The Holder or Holders of a majority in aggregate principal
amount of then outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee, provided,
that
(1) such written direction shall not be in conflict with
any rule of law or with this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking part in
such written direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such written direction.
SECTION 6.12. Waiver of Past Default.
Subject to Section 6.8, prior to the declaration of
acceleration of the maturity of the Securities, the Holder or Holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding may, on behalf of all Holders, waive any past default hereunder and
its consequences, except a default
(A) in the payment of the principal of, premium, if any,
or interest on, any Security as specified in clauses (a) and (b) of
Section 6.1 and not yet cured;
(B) in respect of a covenant or provision hereof which,
under Article IX, cannot be modified or amended without the consent
of the Holder of each outstanding Security affected; or
(C) in respect of any provision hereof which, under
Article IX, cannot be modified, amended or waived without the
consent of
56
the Holders of 66-2/3% of the aggregate principal amount of the
Securities at the time outstanding; provided, that any such
waiver may be effected with the consent of the Holders of
66-2/3% of the aggregate principal amount of the Securities
then outstanding.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
SECTION 6.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that 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, suffered or omitted to be taken
by it as Trustee, any court may in its discretion require the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.13 shall not
apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the outstanding
Securities, or to any suit instituted by any Holder for enforcement of the
payment of principal of, or premium (if any) or interest on, any Security on or
after the respective Maturity Date expressed in such Security (including, in the
case of redemption, on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture 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 case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall 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.
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ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed,
subject to the terms hereof.
SECTION 7.1. Duties of Trustee.
(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 same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(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 others, and no
covenants or obligations shall be implied in or read into this Indenture
which are adverse to 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 (whether in their original or facsimile form) furnished to the
Trustee and conforming to the requirements of this Indenture. However, in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture but not to
verify the contents thereof.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.1,
(2) The Trustee shall not be liable for any error
of judgment made in good faith by it, 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 6.11.
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(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 to take or omit
to take any action under this Indenture or at the request, order or direction of
the Holders 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), (d) and (f) of
this Section 7.1.
(f) The Trustee shall not be liable for interest on any
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.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document
believed by it in good faith 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 of its selection and may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Sections 12.4 and
12.5. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or advice 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.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by 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.
(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
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Holders, pursuant to the provisions of this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company or any
Guarantor shall be sufficient if signed by an Officer of the Company or such
Guarantor, as applicable.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's or any Guarantor's covenants in Article IV hereof
or as to the performance by any Agent of its duties hereunder. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of Default
except any Default or Event of Default of which the Trustee shall have received
written notification (which notice references this Indenture) or with respect to
which a Trust Officer shall have actual knowledge.
(i) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of their Subsidiaries, 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.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if written notice thereof has been given received by the Trustee, the
Trustee shall mail to each Securityholder--notice of the uncured Default or
Event of Default within 90 days after such Default or Event of Default occurs.
Except in the case of a Default or an Event of Default in payment of principal
(or premium, if any) of, or interest on, any Security (including the
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payment of the Change of Control Purchase Price on the Change of Control
Purchase Date, the payment of the Redemption Price on the Redemption Date and
the payment of the Asset Sale Price on the date of payment thereof), the Trustee
may withhold the notice if and so long as a Trust Officer in good faith
determines that withholding the notice is in the best interests of the
Securityholders.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15, beginning with May 15, 1998,
the Trustee shall, if required by law, mail to each Securityholder a brief
report dated as of such May 15 that complies with TIA ss. 313(a). The Trustee
also shall comply with TIA ▇▇.▇▇. 313(b) and 313(c) and, if applicable, TIA ss.
313(d).
The Company shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic quotation system
or are delisted therefrom.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Securities are listed.
SECTION 7.7. Compensation and Indemnity.
The Company and the Guarantors jointly and severally agree to
pay to the Trustee from time to time such compensation as shall be agreed in
writing between the Company and the Trustee 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 and the Guarantors shall reimburse the Trustee upon
request for all such disbursements, expenses and advances incurred or made by it
in accordance with this Indenture as shall be agreed in writing between the
Company and the Trustee. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company and the Guarantors jointly and severally agree to
indemnify each Trustee and any predecessor Trustee (in each case in its capacity
as Trustee) and each of its officers, directors, attorneys-in-fact and agents
for, and hold it harmless against, any and all claims, demands, expenses
(including but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), taxes (other than taxes based on
the income of the Trustee), losses, damages or liabilities incurred by it
without negligence or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust and its rights or
duties hereunder, including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Trustee shall notify
the Company promptly of any claim asserted against the Trustee for which it may
seek indemnity.
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The Company and the Guarantors shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's and the Guarantors' expense in
the defense. The Trustee may have separate counsel of its selection and the
Company and the Guarantors shall pay the reasonable fees and expenses of such
counsel. The Company and the Guarantors need not pay for any settlement made
without their written consent. The Company and the Guarantors 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 and the Guarantors' payment
obligations in this Section 7.7, the Trustee shall have a lien prior to the
Securities on all assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust for the benefit of the Holders to pay
principal and premium, if any, of or interest on particular Securities.
When the Trustee or any predecessor Trustee incurs expenses or
renders services after an Event of Default specified in Section 6.1(d) or (f)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
The Company's and the Guarantors' obligations under this
Section 7.7 and any lien arising hereunder shall survive the resignation or
removal of the Trustee, the discharge of the Company's and the Guarantors'
obligations pursuant to Article VIII of this Indenture and any rejection or
termination of this Indenture under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing,
to become effective upon the appointment of a successor trustee. The Holder or
Holders of a majority in aggregate principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holder or Holders of a majority in aggregate
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principal amount of the Securities 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
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, 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. A successor Trustee shall mail notice of its
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 Holder or Holders of at least 10% in aggregate principal amount
of the outstanding Securities may at the expense of the Company petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's and the Guarantors' obligations under Section 7.7
shall continue for the benefit of the retiring Trustee.
SECTION 7.9. 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
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
ss. 310(a)(1), (2) and (5). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA ss. 310(b).
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SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at its option and at any time, elect to have
Section 8.2 or Section 8.3 applied to all outstanding Securities upon compliance
with the conditions set forth below in this Article VIII.
SECTION 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.2, the Company and the Guarantors shall be deemed
to have been discharged from their respective obligations with respect to all
outstanding Securities on the date the 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, and this Indenture shall cease to be of further
effect as to, all outstanding Securities and Guarantees, which shall thereafter
be deemed to be "out standing" only for the purposes of Section 8.5 and the
other Sections of this Indenture referred to in (a) and (b) below, and the
Company and the Guarantors shall be deemed to have satisfied all their other
respective obligations under such Securities and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due from the trust funds
described below; (b) the Company's obligations with respect to such Securities
concerning issuing temporary Securities, registration of Securities, mutilated,
destroyed, lost or stolen Securities, and the maintenance of an office or agency
for payment and money for security payments held in trust; (c) the rights,
powers, trust, duties, and immunities of the Trustee, and the Company's and the
Guarantors' obligations in connection therewith; and (d) this Article VIII.
Subject to compliance with this Article VIII, the Company may exercise its
option under this Section 8.2 notwithstanding the prior exercise of its option
under Section 8.3 with respect to the Securities.
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SECTION 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, the Company and the Guarantors shall be released
from their respective obligations under the covenants contained in Sections
4.3, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15, and Article V and
Article X with respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Securities shall thereafter be deemed not "outstanding" for the purposes
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, neither the Company nor any Guarantor need comply with and shall
have any 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 Section
6.1(c)) shall not apply to any such covenant), but, except as specified above,
the remainder of this Indenture and such Securities shall be unaffected thereby.
In addition, upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, Sections 6.1(e) and 6.1(g) shall not constitute
Events of Default.
SECTION 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 who shall agree to comply with the provisions of
this Article VIII applicable to it), in trust, for the benefit of the Holders of
such Securities, (i) Cash in an amount, or (ii) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before the
due date of any payment, Cash in an amount, or (iii) a combination thereof, in
such amounts, as in each case will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on the outstanding
Securities on the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal, premium, if any, or
interest on the Securities and the Trustee, for the exclusive benefit of the
Holders of the Securities, shall have a valid, perfected, exclusive security
interest in such trust;
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(b) In the case of an election under Section 8.2 before
the date that is one year prior to the Stated Maturity, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii) since
the date hereof, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the outstanding Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such Legal
Defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) In the case of an election under Section 8.3 before
the date that is one year prior to the Stated Maturity, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to Federal
income tax in the same amount, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
insofar as Section 6.1(d) or Section 6.1(f) is concerned, at any time in the
period ending on the 91st day after the date of such deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) In the case of an election under either Section 8.2
or 8.3, the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 8.2 or 8.3 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;
and
(g) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that the
conditions precedent provided for in, in the case of the Officer's Certificate,
clauses (a) through (f), and, in the case of the Opinion of Counsel, clauses
(a) (with respect to the validity and perfection of the security interest), (b),
(c) and (e) of this Section 8.4 have been complied with.
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If the funds deposited with the Trustee to effect Legal
Defeasance or Covenant Defeasance are insufficient to pay the principal of,
premium, if any, and interest on the Securities when due, then the obligations
of the Company and the Guarantors under this Indenture, the Securities and the
Guarantees will be revived and no such defeasance will be deemed to have
occurred.
SECTION 8.5. Deposited Cash and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all Cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Paying Agent") pursuant to Section 8.4 in respect of the outstanding Securities
shall be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law. The Company
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to
Section 8.4 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 Securities.
SECTION 8.6. Repayment to the Company.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee or the Paying Agent, as applicable, shall deliver or pay to the
Company from time to time upon the request of the Company any Cash or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Any Cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall,
subject to the requirements of applicable law, be paid to the Company on its
request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in The
New York Times and The Wall Street Journal (national edition),
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notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company at the Company's written request.
SECTION 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any Cash or
U.S. Government Obligations in accordance with Section 8.2 or 8.3, as the case
may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's and the Guarantors' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 until such time as the Trustee or Paying Agent is
permitted to apply such money in accordance with Section 8.2 and 8.3, as the
case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the Cash and U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company or any
Guarantor, when authorized by Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided such action pursuant to this clause shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company or the
Guarantors for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company or the Guarantors;
(3) to provide for additional Guarantors of the
Securities;
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(4) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the obligations of
the Company, herein and in the Securities in accordance with Article V;
(5) to comply with the TIA;
(6) to evidence the succession of another corporation to
any Guarantor and assumption by any such successor of the Guarantee of
such Guarantor (as set forth in Section 11.4) in accordance with Article
XI;
(7) to evidence the release of any Guarantor in
accordance with Article XI;
(8) in any other case where a supplemental indenture is
required or permitted to be entered into pursuant to the provisions of
this Indenture without the consent of any Holder;
(9) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities;
(10) to secure the Securities if required in accordance
with the provisions of Section 4.12; or
(11) to provide for the issuance and authentication of
the Exchange Securities in exchange for the Initial Securities in
compliance with this Indenture and the Registration Rights Agreement.
SECTION 9.2. Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 6.8, with the consent of the Holders of not
less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said Holders delivered to the Company and the
Trustee, the Company or any Guarantor, when authorized by Board Resolutions, and
the Trustee may amend or supplement this Indenture or the Securities or enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or the Securities or of modifying in any manner the rights of
the Holders under this Indenture or the Securities. Subject to Section 6.8, the
Holder or Holders of not less than a majority in aggregate principal amount of
then outstanding Securities may waive compliance by the Company or any Guarantor
with any provision of this Indenture or the Securities. Notwithstanding any of
the above, however, no such amendment, supplemental indenture or waiver shall
without the consent of the Holders of not less than 66-2/3% of the aggregate
principal amount of Securities at the time outstanding alter the terms or
provisions
69
of Section 10.1 in a manner adverse to the Holders and no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
(1) change the Maturity Date on any Security, or reduce
the principal amount thereof or the rate (or extend the time for payment)
of interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any
Security or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or in the case of redemption, on or
after the Redemption Date), or reduce the Change of Control Purchase Price
or the Asset Sale Offer Price or alter the provisions of this Indenture
(including the defined terms used herein) regarding the right of the
Company to redeem the Securities in a manner adverse the Holders; or
(2) reduce the percentage in principal amount of
outstanding Securities the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in this
Indenture;
(3) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other
provision of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Note affected thereby; or
(4) cause the Securities or any Guarantee to become
subordinate in right of payment to any extent or under any circumstances
to any other Indebtedness.
It shall not be necessary for the consent of the Holders under
this Section 9.2 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
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 any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section
9.2 or Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under
this Article IX, the Company may, but shall not be obligated to, offer to any
Holder who consents to such
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amendment, supplement or waiver, or to all Holders, consideration for such
Holder's consent to such amendment, supplement or waiver.
SECTION 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. 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 Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company or the Person designated by the Company as the Person to whom
consents should be sent if such revocation is received by the Company or such
Person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
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 the date so fixed by
the Company notwithstanding the provisions of the TIA. 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, and only those
Persons (or their duly designated proxies), 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.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (4) of Section 9.2, in which case, the amendment, supplement
or waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any other Holder to receive
payment of principal and premium of and interest on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
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SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms. Any failure to make the appropriate notation or to issue a new Security
shall not affect the validity of such amendment, supplement or waiver.
SECTION 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, 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 stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. Repurchase of Securities at Option of the Holder
Upon a Change of Control.
(a) In the event that a Change of Control occurs, each
Holder shall have the right, at such Holder's option, pursuant to an irrevocable
and unconditional offer by the Company (the "Change of Control Offer") subject
to the terms and conditions of this Indenture, to require the Company to
repurchase all or any part of such Holder's Securities (provided, that the
principal amount of such Securities must be $1,000 or an integral multiple
thereof) on a date (the "Change of Control Purchase Date") that is no later than
45 Business Days after the occurrence of such Change of Control, at a cash price
(the "Change of Control Purchase Price") equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date.
(b) In the event of a Change of Control, the Company
shall be required to commence an offer to purchase Securities (a "Change of
Control Offer") as follows:
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(1) the Change of Control Offer shall commence within 15
Business Days following the occurrence of the Change of Control;
(2) the Change of Control Offer shall remain open for
not less than 20 Business Days following its commencement (the "Change of
Control Offer Period");
(3) upon the expiration of the Change of Control Offer
Period, the Company shall purchase all Securities properly tendered in
response to the Change of Control Offer at the Change of Control Purchase
Price, plus accrued and unpaid interest thereon;
(4) if the Change of Control Purchase Date is on or
after a Record Date and on or before the related interest payment date,
any accrued interest will be paid to the Person in whose name a Security
is registered at the close of business on such Record Date, and no
additional interest will be payable to Securityholders who tender
Securities pursuant to the Change of Control Offer;
(5) the Company shall provide the Trustee and the Paying
Agent with written notice of the Change of Control Offer at least three
Business Days before the commencement of any Change of Control Offer; and
(6) on or before the commencement of any Change of
Control Offer, the Company or the Registrar (upon the request and at the
expense of the Company) shall send, by first-class mail, a notice to each
of the Securityholders, which (to the extent consistent with this
Indenture) shall govern the terms of the Change of Control Offer and shall
state:
(i) that the Change of Control Offer is being made
pursuant to such notice and this Section 10.1 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest) and the Change of Control Purchase
Date;
(iii) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing
Cash with the Paying Agent in accordance with the last paragraph of this
Article X or such payment is prevented, any Security, or portion thereof,
accepted for payment pursuant to the Change of Control Offer shall cease
to accrue interest after the Change of Control Purchase Date;
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(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be required
to surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent (which may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any
Affiliate of the Company) at the address specified in the notice prior to
the expiration of the Change of Control Offer;
(vi) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent receives, prior to the
expiration of the Change of Control Offer, a facsimile transmission or
letter setting forth the name of the Holder, the certificate number (if
applicable), the principal amount of the Securities the Holder is
withdrawing and a statement that such Holder is withdrawing his election
to have such principal amount of Securities purchased;
(vii) that Holders whose Securities are purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(viii) a brief description of the events resulting in
such Change of Control.
Any such Change of Control Offer shall be made in compliance
with all applicable Federal and state laws, rules and regulations, including, if
applicable, Regulation 14E under the Exchange Act and the rules thereunder and
all other applicable Federal and state securities laws.
On or before the Change of Control Purchase Date, the Company
shall (i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent Cash
sufficient to pay the Change of Control Purchase Price (together with accrued
and unpaid interest) for all Securities or portions thereof so tendered and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly deliver to Holders of Securities so
accepted payment in an amount equal to the Change of Control Purchase Price
(together with accrued and unpaid interest), for such Securities, and the
Trustee shall promptly authenticate and mail or deliver (or cause to be
transferred by book entry) to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security surrendered; provided,
however, that each such new Security will be in a principal amount of $1,000 or
an integral multiple thereof. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
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ARTICLE XI
GUARANTEE
SECTION 11.1. Guarantee.
(a) In consideration of good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each of the
Guarantors hereby irrevocably and unconditionally guarantees (the "Guarantee"),
jointly and severally, on a senior basis, to each Holder of a Security
authenticated and made available for delivery by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
against the Company and the other Guarantors of this Indenture, the Securities
or the obligations of the Company under this Indenture or the Securities, that:
(i) the principal and premium (if any) of and interest on the Securities will be
paid in full when due, whether at the Maturity Date or Interest Payment Date, by
acceleration or call for redemption, (ii) the purchase price for all Securities
properly and timely tendered for a acceptance in response to a Change of Control
Offer or Asset Sale Offer will be timely, or otherwise in accordance with the
provisions of this Indenture, paid in full, (iii) all other obligations of the
Company to the Holders or the Trustee under this Indenture or the Securities
will be promptly paid in full or performed, all in accordance with the terms of
this Indenture and the Securities, and (iv) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, they will
be paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration, call for redemption,
upon a Change of Control Offer, upon an Asset Sale Offer or otherwise. Failing
payment when due of any amount so guaranteed for whatever reason, each Guarantor
shall be jointly and severally obligated to pay the same before failure so to
pay becomes an Event of Default. If the Company or a Guarantor defaults in the
payment of the principal of, premium, if any, or interest on, the Securities
when and as the same shall become due, whether upon maturity, acceleration, call
for redemption, upon a Change of Control Offer, Asset Sale Offer or other wise,
without the necessity of action by the Trustee or any Holder, each Guarantor
shall be required, jointly and severally, to promptly make such payment in full.
(b) Each Guarantor hereby agrees that its obligations
with regard to this Guarantee shall be unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, any delays in obtaining or realizing
upon or failures to obtain or realize upon collateral, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives 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 or right to require the prior disposition of the assets of the Company
to meet its obligations, protest, notice and all demands whatsoever and
covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities and this Indenture.
75
(c) If any Holder or the Trustee is required by any
court or otherwise to return to either the Company or any Guarantor, or any
Custodian, trustee, or similar official acting in relation to either the
Company or such Guarantor, any amount paid by either the Company or such
Guarantor to the Trustee or such Holder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between such Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 6.2 for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration as to the Company of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of those obligations as
provided in Section 6.2, those obligations (whether or not due and payable)
will forthwith become due and payable by each of the Guarantors for the purpose
of this Guarantee.
(d) It is the intention of each Guarantor and the
Company that the obligations of each Guarantor hereunder shall be joint and
several and in, but not in excess of, the maximum amount permitted by applicable
law. Accordingly, if the obligations in respect of the Guarantee would be
annulled, avoided or subordinated to the creditors of any Guarantor by a court
of competent jurisdiction in a proceeding actually pending before such court as
a result of a determination both that such Guarantee was made without fair
consideration and, immediately after giving effect thereto, such Guarantor was
insolvent or unable to pay its debts as they mature or left with unreasonably
small capital, then the obligations of such Guarantor under such Guarantee shall
be reduced by such court if and to the extent such reduction would result in the
avoidance of such annulment, avoidance or subordination; provided, however, that
any reduction pursuant to this paragraph shall be made in the smallest amount as
is strictly necessary to reach such result. For purposes of this paragraph,
"fair consideration", "insolvency", "unable to pay its debts as they mature",
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
SECTION 11.2. Execution and Delivery of Guarantee.
Each Guarantor shall, by virtue of such Guarantor's execution
and delivery of this Indenture or such Guarantor's execution and delivery of an
indenture supplement pursuant to Section 11.3 hereof, be deemed to have signed
on each Security issued hereunder the notation of guarantee set forth on the
form of the Securities attached hereto as Exhibit A to the same extent as if the
signature of such Guarantor appeared on such Security.
76
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the guarantee
set forth in Section 11.1 on behalf of each Guarantor. The notation of a
guaranty set forth on any Security shall be null and void and of no further
effect with respect to the guaranty of any Guarantor which, pursuant to Section
11.4 or 11.5, is released from such guarantee.
SECTION 11.3. Future Subsidiary Guarantors.
Upon the acquisition by the Company or Guarantor of the
Capital Stock of any Person, if, as a result of such acquisition, such Person
becomes a Subsidiary (hereinafter any such Subsidiary being called a "Future
Subsidiary Guarantor"), then such Future Subsidiary Guarantor shall
unconditionally guarantee the obligations of the Company with respect to
payment and performance of the Securities and the other obligations of the
Company under this Indenture to the same extent that such obligations are
guaranteed by the other Guarantors pursuant to Section 11.1; and, within 10 days
of the date of such occurrence, such Future Subsidiary Guarantor shall execute
and deliver to the Trustee a supplemental indenture making such Future
Subsidiary Guarantor a party to this Indenture.
SECTION 11.4. Limitation on Merger, Sale or Consolidation of
Subsidiaries.
Each Subsidiary of the Company shall not, and the Company
shall not cause or permit any Subsidiary to, directly or indirectly, consolidate
with or merge with or into another Person or sell, lease, convey or transfer all
or substantially all of its assets (computed on a consolidated basis), whether
in a single transaction or a series of related transactions, to another Person
or group of affiliated Persons or adopt a Plan of Liquidation, unless (i) either
(a) the Subsidiary is the continuing entity or (b) the resulting, surviving or
transferee entity or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation, is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Subsidiary in connection with its Guarantee; (ii) no Default
or Event of Default shall exist or shall occur immediately after giving effect
to such transaction; (iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Net Worth of the Company is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and (iv) immediately after giving effect to such transaction on a
pro forma basis, the Company would immediately thereafter be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio
set forth in Section 4.10. Any such transaction with and into the Company (with
the Company being the surviving entity) or another Subsidiary that is a Wholly
owned Subsidiary of the Company need not comply with this Section 11.4.
Notwithstanding the foregoing provisions of this paragraph, upon the sale or
disposition (whether by merger, stock purchase, asset sale or otherwise) of a
Subsidiary or all or substantially all of the assets of such Subsidiary to an
entity which is not a Subsidiary of the Company, which transaction complies with
the provisions of Section 4.13, such sale or disposition shall be permitted
under the Indenture and
77
such Subsidiary shall be deemed released from all of its obligations under its
Guarantee of the Notes without complying with the provisions of this paragraph.
SECTION 11.5. Certain Bankruptcy Events.
Each 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 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 Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under the
Bankruptcy Law or otherwise.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
upon qualification of this Indenture under the TIA, shall control.
SECTION 12.2. Notices.
Any notices or other communications to the Company or any
Guarantor or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Guarantor:
Community Distributors, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:
78
if to the Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when receipt
is acknowledged, if telecopied; and five Business Days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
ad dress shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him or her by first-class mail or other equivalent means at his or
her address as it appears on the registration books of the Registrar and shall
be sufficiently given to him or her if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and any other Person
shall have the protection of TIA ss. 312(c). The Trustee shall comply with TIA
ss. 312.
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, such Person
shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been met; and
79
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been met.
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been met; and
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been met; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 12.7. Non-Business Days.
If a payment date is not a Business Day at such place, payment
may be made at such place on the next succeeding day that is a Business Day, and
no interest shall accrue for the intervening period.
SECTION 12.8. Governing Law.
THIS INDENTURE, THE GUARANTEES AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PER FORMED WITHIN THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND THE GUARANTORS
80
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 INDENTURE AND THE
SECURITIES, 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 GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH 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.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITY HOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY
OTHER JURISDICTION.
SECTION 12.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any Guarantor or any of their
respective Subsidiaries. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 12.10. No Recourse against Others.
No direct or indirect stockholder, employee, officer or
director, as such, past, present or future of the Company, the Guarantors or any
successor entity, shall have any personal liability in respect of the
obligations of the Company or the Guarantors under the Securities or this
Indenture by reason of his, her or its status as such stockholder, employee,
officer or director, except to the extent such Person is the Company or a
Guarantor. Each Security holder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 12.11. Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
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SECTION 12.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 12.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Securities 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 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 12.14. Table of Contents, Headings, Etc.
The Table of Contents and headings of the Articles and the
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 12.15. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs and expenses (including attorneys' fees for the Company
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 12.16. Registration Rights.
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
COMMUNITY DISTRIBUTORS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
CDI GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
THE BANK OF NEW YORK, as Trustee,
Registrar, Paying Agent and
Securities Custodian
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:
Exhibit A
FORM OF SECURITY
COMMUNITY DISTRIBUTORS, INC.
10-1/4% SENIOR NOTE
DUE 2004
CUSIP:
No. $
Community Distributors, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to , or registered assigns, the principal sum of Dollars,
on October 15, 2004.
Interest Payment Dates: April 15 and October 15 commencing
April 15, 1998.
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
COMMUNITY DISTRIBUTORS, INC., a
Delaware corporation
[Seal]
By: _______________________________
Name:
Title:
Attest: _______________________________
Name:
Title:
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the
within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK
as Trustee
By: _______________________________
Authorized Signatory
COMMUNITY DISTRIBUTORS, INC.
10-1/4% Senior Note due 2004
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇) ("▇▇▇"), 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 requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.(1)
-------------
(1) This paragraph should only be added if the Security is issued in global
form.
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (A) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), OR (D) IT HAS
OTHERWISE ACQUIRED THIS NOTE OR A BENEFICIAL INTEREST HEREIN IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE RELATING TO THIS NOTE AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS, (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE
TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR CDI GROUP,
INC., (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN
BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY, THE TRUSTEE AND THE REGISTRAR) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTIONS," "U.S.
PERSONS" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING.(2)
1. Interest.
Community Distributors, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate of 10-1/4% per annum from October 16, 1997
until maturity. To the extent it is lawful, the Company promises to pay
interest on any interest payment due but unpaid on such principal amount at a
rate of 10-1/4% per annum compounded semi-annually.
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(2) This paragraph should be included only for the Transfer Restricted
Securities.
The Company will pay interest semi-annually on April 15 and
October 15 of each year (each, an "Interest Payment Date"), commencing April 15,
1998. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
the date of issuance. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the April 1 or October 1 immediately preceding the Interest
Payment Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. Except as provided below, the Company shall pay principal
and interest in such coin or currency of the United States of America as at the
time of payment shall be legal tender for payment of public and private debts
("Cash"). The Securities will be payable as to principal, premium, if any, and
interest, and the Securities may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose
within the Borough of Manhattan, The City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest and premium on all Global Securities,
and all other Securities the Holders of which shall have provided wire transfer
instructions to an account within the United States to the Company or the Paying
Agent at least five days before the relevant Record Date. Until otherwise
designated by the Company, the Company's office or agency will be the corporate
trust office of the Trustee presently located at The Bank of New York, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇.▇., ▇▇. ▇▇▇▇▇, Attn: Corporate Trust Trustee
Administration.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee," which term
includes any successor Trustee under the Indenture) will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of October 16, 1997 (the "Indenture"), among the Company, CDI Group, Inc., a
Delaware corporation (the "Holding Company") and the Trustee. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act,
as amended. The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture and said Act for a statement of them.
The Securities are senior unsecured general obligations of the Company limited
in aggregate principal amount to $80,000,000. The Securities are guaranteed on a
senior basis by the Holding Company and each of the Company's future
Subsidiaries (together with the Holding Company, the "Guarantors").
5. Redemption.
The Securities may be redeemed, at the option of the Company,
in whole or in part, at any time on or after October 15, 2001, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, together with any accrued but unpaid
interest to the Redemption Date (subject to the right of Holders of record on a
Record Date to receive interest due on the Interest Payment Date that is on or
prior to such Redemption Date). The Securities may not be so redeemed prior to
October 15, 2001, except as provided in the immediately following paragraph.
If redeemed during
the 12-month period
commencing Redemption Price
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2001........................................ 105.125%
2002 ...................................... 102.562%
2003 and thereafter......................... 100.000%
Notwithstanding the foregoing, prior to October 15, 2000, the
Company may redeem from time to time up to 35% of the aggregate principal amount
of the Securities originally outstanding at a redemption price of 110 1/4%% of
the principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the redemption date, with the net proceeds of one or more Equity Offerings;
provided, that at least 65% of the aggregate principal amount of the Securities
originally outstanding remain outstanding immediately after the occurrence of
such redemption; provided, further, that such notice of redemption shall be sent
within 30 days after the date of closing of any such Equity Offering, and such
redemption shall occur within 60 days after the date such notice is sent.
Any such redemption will comply with Article III of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at
least 30 days and not more than 60 days prior to the Redemption Date to the
Holder of each Security to be redeemed at such Holder's last address as then
shown upon the registry books of the Registrar. Securities may be redeemed in
part in multiples of $1,000 only.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date, the Securities called for redemption will cease to bear interest and the
only right of the Holders of such Securities will be to receive payment of the
Redemption Price, plus any accrued and unpaid interest on the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons,
in denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of the
Securities, but the Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes or other
governmental charge payable in connection therewith. The Registrar need not
register the transfer of or exchange any Securities (a) selected for redemption
except the unredeemed portion of any Security being redeemed in part or (b) for
a period beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redemption and ending at the close of business on the day of
such mailing.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money
back to the Company at its written request. After that, all liability of the
Trustee and any such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company
irrevocably deposits with the Trustee, in trust, for the benefit of the Holders,
Cash, U.S. Government Obligations or a combination thereof, in such amounts as
will be 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 Securities to redemption or maturity and comply with the other
provisions of the Indenture relating thereto, the Company and the Guarantors
will be discharged from certain provisions of the Indenture and the Securities
(including the restrictive covenants described in paragraph 12 below, but
excluding their obligation to pay the principal of, premium, if any and interest
on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding except that any
amendments or supplements to the provisions relating to the right of Holders to
require repurchase upon a Change of Control, described in paragraph 13 below, in
any manner adverse to the Holders shall require the consent of Holders of not
less than 66 2/3% of the aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
under certain circumstances amend or supplement the Indenture or the Securities
to, among other things, cure any ambiguity, defect or inconsistency, or make any
other change that does not adversely affect the rights of any Holder of a
Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, pay dividends or make certain other
Restricted Payments, enter into certain transactions with Affiliates, incur
Liens, sell assets and subsidiary stock, merge or consolidate with any other
Person or transfer (by lease, assignment or otherwise) substantially all of the
properties and assets of the Company. The limitations are subject to a number of
important qualifications and exceptions. The Company must periodically report to
the Trustee on compliance with such limitations.
13. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be
required to offer to purchase on the Change of Control Purchase Date all
outstanding Securities at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date. Holders of Securities will receive a Change of Control Offer from
the Company prior to any related Change of Control Purchase Date and may elect
to have such Securities purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability
of the Company and its Subsidiaries to sell assets and subsidiary stock. In the
event the proceeds from a permitted Asset Sale exceed certain amounts, as
specified in the Indenture, the Company generally will be required either to
reinvest the proceeds of such Asset Sale in a Related Business, use such
proceeds to retire debt, or to make an asset sale offer to purchase a certain
amount of each Holder's Securities at 100% of the principal amount thereof,
plus accrued interest, if any, to the purchase date, as more fully set forth in
the Indenture
14. Notation of Guarantee.
As set forth more fully in the Indenture, the Persons
constituting Guarantors from time to time, in accordance with the provisions of
the Indenture, unconditionally and jointly and severally guarantee, in
accordance with Section 11.1 of the Indenture, to the Holder and to the Trustee
and its successors and assigns, that (i) the principal of, premium, if any, and
interest on the Security will be paid, whether at the Maturity Date or Interest
Payment Dates, by acceleration, call for redemption or otherwise, and all other
obligations of the Company to the Holders or the Trustee under the Indenture or
this Security will be promptly paid in full or performed, all in accordance with
the terms of the Indenture and this Security, and (ii) in the case of any
extension of payment or renewal of this Security or any of such other
obligations, they will be paid in full when due or performed in accordance with
the terms of such extension or renewal, whether at the Maturity Date, as so
extended, by acceleration or otherwise. Such guarantees shall cease to apply,
and shall be null and void, with respect to any Guarantor who, pursuant to
Article XI of the Indenture, is released from its guarantees, or whose
guarantees otherwise cease to be applicable pursuant to the terms of the
Indenture.
15. Ranking.
The indebtedness of the Company evidenced by the Notes will
rank senior in right of payment to all existing and future subordinated
indebtedness of the Company and pari passu in right of payment with all other
existing or future unsubordinated indebtedness of the Company.
16. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their best interest.
18. Trustee or Agent Dealings with Company.
The Trustee and each Agent under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates as if it were not the Trustee and such Agent.
19. No Recourse Against Others.
No direct or indirect stockholder, employee, officer or
director, as such, past, present or future, of the Company, the Guarantors or
any successor entity shall have any personal liability in respect of the
obligations of the Company or the Guarantors under the Securities or the
Indenture by reason of his or its status as such stockholder, employee, officer
or director, except to the extent such Person is the Company or a Guarantor.
Each Holder of a Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TENENT (=
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 will cause CUSIP numbers
to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
23. Additional Rights of Holders of Securities.
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.(3)
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
Community Distributors, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
24. Governing Law.
The Indenture and the Securities shall be governed by and
construed in accordance with the internal laws of the State of New York without
regard to principles of conflicts of law.
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(3) This paragraph should be included only for the Initial Securities.
ASSIGNMENT
I or we assign this Security to
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(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
-------------------------
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Securities and Exchange Commission of the effectiveness of a registration
statement under the Securities act of 1933, as amended (the "Securities Act")
covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) October 16, 1999,
the undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that:
[Check One]
[_] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided by Rule 144A
thereunder.
[_] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer or
registration set forth herein and in Section 2.6 of the Indenture shall have
been satisfied.(4)
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(4) This paragraph should be included only for the Initial Securities.
Dated: __________ Signed: ______________________________
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(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee*
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* NOTICE: The Signature must be guaranteed by an Institution which is a member
of one of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee program acceptable to the Trustee.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.13 or Article X of the Indenture, check the
appropriate box:
[_] Section 4.13 [_] Article X
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.13 or Article X of the Indenture,
as the case may be, state the amount you want to be purchased: $________
Date: ________________ Signature: ____________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee**
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** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs:
(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The
New York Stock Exchange Medallion Program (MSP); (iii) The Stock
Exchange Medallion Program (SEMP); or (iv) in such other guarantee
program acceptable to the Trustee.
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(5)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized signatory of
Date of Principal Amount Principal Amount of Security following Trustee or
Exchange of this Global this Global such decrease (or Securities
Security Security increase) Custodian
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(5) This schedule should only be added if the Security is issued in global
form.
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES(6)
Re: 10-1/4% SENIOR NOTES DUE 2004 OF COMMUNITY DISTRIBUTORS, INC.
This Certificate relates to $______ principal amount of Securities held
in (check applicable box) _____ book-entry or ______ definitive form by _____
(the "Transferor").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Securities and as provided in Section
2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because (check
applicable box):
|_| Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
|_| Such Security is being transferred to a "qualified institutional
buyer" (within the meaning of Rule 144A promulgated under the Securities Act),
that is aware that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer Restricted
Security for its own account, or for the account of another such "qualified
institutional buyer" (in satisfaction of Section 2.06(a)(ii)(B) or Section 2.06
(d)(i)(B) of the Indenture).
|_| Such Security is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
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(6) This Certificate shall be included only for Transfer Restricted Securities.
|_| Such Security is being transferred to an institutional "accredited
investor" within the meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the Security for its own account, or for the
account of such an institutional accredited investor, not with a view to or for
offer or sale in connection with any distribution in violation of the
Securities Act, and a letter in the form of Annex A to this Security accompanies
this Certificate, and, if such transfer is in respect of an aggregate principal
amount of Securities less than $250,000, an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of
the Indenture).
|_| Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act and
in accordance with applicable securities laws of the states of the United
State0s, other than as provided in the three immediately preceding paragraphs.
An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(E) or Section 2.6(d)(i)(E) of the Indenture).
___________________________________
[INSERT NAME OF TRANSFEROR]
By: ___________________________
Date: ___________________________
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES(7)
Re: 10-1/4% SENIOR NOTES DUE 2004 OF COMMUNITY DISTRIBUTORS, INC.
This Certificate relates to $______ principal amount of Securities held in
(check applicable box) _____ book-entry or ______ definitive form by _____ (the
"Transferor").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
|_| has requested the Registrar by written order to exchange or
register the transfer of a Security or Securities.
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(7) This certificate shall be included only for the Exchange Securities.
ANNEX A TO OFFERING SECURITY(8)
Investor Letter of Representation
Community Distributors, Inc.
The Bank of New York, as Trustee
▇/▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Trustee Administration
Ladies and Gentlemen:
This letter is delivered by the undersigned to request a transfer of
$ principal amount of the 10-1/4% Senior Notes due 2004 (the "Notes")
of Community Distributors, Inc. (the "Company"). The Notes are described in that
certain Offering Memorandum (the "Offering Memorandum") dated October 10, 1997
relating to the offering of the Notes. We acknowledge receipt of the Offering
Memorandum and acknowledge that we have read the Offering Memorandum, including
the information on pages 68-69, have had access to such financial and other
information and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as we deem necessary
in connection with our decision to purchase the Notes.
Upon transfer the Notes would be registered in the name of the
undersigned:
Name: _________________________________
Address: ______________________________
Taxpayer ID Number: ___________________
The undersigned represents and warrants to you that:
(a) We are an institutional "accredited investor" (as defined in Rule
501(a)(1),(2),(3),or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing Notes for our own account or for the account of
such an institutional "accredited investor," and we are acquiring the Notes for
investment purposes and not with a view to, or for offer or sale in connection
with any distribution in violation of the
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(8) This Annex shall be included only for Transfer Restricted Securities.
Securities Act, and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risk of our
investment in the Notes and invest in or purchase securities similar to the
Notes in the normal course of our business and we, and any accounts for which we
are acting, are each able to bear the economic risk of our or its investment. We
confirm that neither the Company nor any person acting on its behalf has offered
to sell the Notes by, and that we have not been made aware of the offering of
the Notes by, any form of general solicitation or general advertising,
including, but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio.
(b) We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes within the time period referred to under Rule 144(k) (taking into
account the provisions of Rule 144(d) under the Securities Act, if applicable)
under the Securities Act as in effect on the Note of the transfer, (the "Resale
Restriction Termination Date") only (a) to the Company or the Holding Company,
(b) pursuant to a registration statement that has been declared effective under
the Securities Act, (c) so long as the Notes are eligible for resale pursuant to
Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A under the Securities Act (a "QIB")
that purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d) in
an offshore transaction complying with Rule 903 or 904 of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" within the meaning
of Rule 501(a)(1),(2),(3),or (7) under the Securities Act that is purchasing
for its own account or for the account of an institutional "accredited
investor", in each case, with respect of the Notes, or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property of such investor account or accounts be at all
times within our or their control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply subsequent
to the Resale Restriction Termination Date. If any resale or other transfer of
the Notes is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the from of this letter to the Company and the
trustee (the "Trustee") under the indenture, dated as of October 16, 1997,
between the Company, CDI Group, Inc. and the Trustee relating to the Notes,
which shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7) under
the Securities Act and that it is acquiring such Notes for investment purposes
and not for distribution in violation of the Securities Act. Each purchaser
acknowledges that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer, prior to the Resale Restriction Termination Date,
of the Notes (i) pursuant to clause (e) above (if
such transfer is in respect of an aggregate principal amount of Securities less
than $250,000) or (ii) pursuant to clause (f) above, to require the delivery of
an opinion of counsel satisfactory to the Company and the Trustee.
(c) We understand that the Notes will be in the form of definitive
physical certificates bearing the legend set forth in clause (4) in the "Notice
to Investors" section of the Offering Memorandum.
We acknowledge that you, the Initial Purchasers and others will rely
upon our confirmations acknowledgments and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations and
warranties herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
_____________________________________
By: _________________________________