SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _________
Commission file number 1-1363
ENVIROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 34-0617390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 Business Center Drive, Horsham, Pennsylvania 19044-3454
(Address of principal executive offices) (Zip Code)
(215) 956-5500
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
---------- ----------
The number of shares outstanding of the Registrant's Common Stock as of the
close of business on November 10, 1997 was 40,713,765.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. Financial Statements.
- ------ --------------------
ENVIROSOURCE, INC.
------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 8,868 $ 9,678
Accounts receivable, less allowance
for doubtful accounts of $881
and $1,220 38,462 31,550
Net assets of discontinued
IMSAMET operations 34,864
Net deferred income taxes 3,200 15,200
Other current assets 4,566 4,686
----- -----
Total current assets 55,096 95,978
Property, plant and equipment, at cost 286,294 270,857
Less allowance for depreciation (142,651) (128,392)
-------- --------
143,643 142,465
Goodwill, less amortization 135,281 138,635
Closure trust funds and deferred
charges, less amortization 33,325 34,139
Landfill permits, less amortization 23,861 23,064
Net deferred income taxes 11,084 10,800
Debt issuance costs, less amortization 10,611 8,442
Other assets 7,584 6,386
----- -----
$ 420,485 $ 459,909
========== ===========
See notes to condensed consolidated financial statements.
<PAGE>
ENVIROSOURCE, INC.
------------------
CONDENSED CONSOLIDATED BALANCE SHEETS -- Continued
(Dollars in thousands)
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,412 $ 9,302
Salaries, wages and related benefits 8,280 7,253
Insurance obligations 5,508 6,187
Estimated reorganization and
restructuring costs 887 2,207
Interest 8,241 2,487
Other current liabilities 10,402 12,800
Current portion of debt 6,248 64,504
----- ------
Total current liabilities 52,978 104,740
Long-term debt:
9 3/4% Senior Notes due 2003 270,000 220,000
Other long-term debt 12,316 48,424
------ ------
282,316 268,424
Other long-term liabilities 40,911 47,688
Stockholders' equity:
Common stock, par value $.05 per
share, shares authorized-60,000,000,
shares issued and outstanding-
40,713,765 in 1997 and
40,351,446 in 1996 2,036 2,018
Capital in excess of par value 174,190 173,472
Accumulated deficit (130,219) (134,631)
Stock purchase loans receivable from
officers (690) (810)
Canadian translation adjustment (1,037) (992)
------ ----
Total stockholders' equity 44,280 39,057
------ ------
$ 420,485 $ 459,909
=========== ==========
See notes to condensed consolidated financial statements.
<PAGE>
ENVIROSOURCE, INC.
------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues $ 57,149 $ 54,651 $168,977 $160,155
Cost of revenues 45,611 42,623 133,398 122,997
Selling, general and
administrative expenses 5,425 4,975 18,561 16,781
Unusual charges 500 960 500 5,600
--- --- --- -----
Operating income 5,613 6,093 16,518 14,777
Interest income 315 586 815 1,096
Interest expense (7,346) (7,365) (21,763 (20,757)
------ ------ ------- -------
Loss before income taxes (1,418) (686) (4,430) (4,884)
Income tax benefit(expense):
Current (330) (215) (1,042) (704)
Deferred (2,109) (1,187) 284 -
------ ------ --- -----
Loss from continuing
operations (3,857) (2,088) (5,188) (5,588)
Income from discontinued
IMSAMET operations 1,300 279 9,600 711
----- --- ----- ---
Net income (loss) (2,557) (1,809) 4,412 (4,877)
Preferred stock dividend
requirements, reduced by a
retirement gain of $250 (1) (151)
------- --- ----- -----
Income (loss) applicable to
common shares $ (2,557) $ (1,810) $ 4,412 $(5,028)
======== ======== ======= ========
Income (loss) per share:
Continuing operations $ (.09) $ (.05) $ (.13) $ (.14)
Discontinued operations .03 .01 .24 .02
-------- -------- ------- -------
Net income (loss) $ (.06) $ (.04) $ .11 $ (.12)
======== ======== ======= =======
Weighted average shares 40,714 40,479 40,472 40,459
See notes to condensed consolidated financial statements.
<PAGE>
ENVIROSOURCE, INC.
------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Nine months ended
September 30,
------------------
1997 1996
---- ----
OPERATING ACTIVITIES
Net income (loss) $ 4,412 $ (4,877)
Adjustments to reconcile net income (loss)
to cash provided by operations:
Deferred income taxes 11,716
Gain from sale of IMSAMET (21,600)
Depreciation 19,558 19,742
Amortization 8,167 6,908
Unusual charges, net of payments (1,248) 2,080
Changes in working capital 4,158 584
Other 1,198 584
----- ---
Cash provided by operating activities 26,361 25,021
INVESTING ACTIVITIES
Net proceeds from sale of IMSAMET 56,464
Purchase of Alexander Mill Services, Inc.
(net of cash acquired) (5,934)
Property, plant and equipment:
Additions (21,551) (19,088)
Proceeds from dispositions 424 2,685
Landfill permit additions and closure
expenditures (2,790) (2,442)
Closure trust fund payments (572) (588)
Ongoing net cash flows related to
IU International acquisition (10,258) (2,156)
Other (1,309) (806)
------ ----
Cash provided (used) by investing activities 20,408 (28,329)
FINANCING ACTIVITIES
Debt issuance 73,000 54,000
Debt repayment (117,364) (16,229)
Retirement of preferred stock (33,242)
Debt issuance costs (3,215) (183)
Sale of common stock 155
------- ---
Cash (used) provided by financing activities (47,579) 4,501
------- -----
CASH AND CASH EQUIVALENTS
(Decrease) increase during the period (810) 1,193
Beginning of year 9,678 8,367
----- -----
End of period $ 8,868 $ 9,560
======== =========
See notes to condensed consolidated financial statements.
<PAGE>
ENVIROSOURCE, INC.
------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A. BASIS OF PRESENTATION
- ---------------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments (consisting
of normal recurring accruals and the unusual charges discussed in Note B)
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. The condensed consolidated balance sheet at December 31, 1996 has been
derived from audited financial statements at that date. For further information,
refer to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain amounts reported in the prior year have been reclassified for
comparative purposes.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which will change the method for computing earnings per
share starting in the fourth quarter of 1997. The new method would have resulted
in the same per share amounts in both the 1997 and 1996 periods.
NOTE B. UNUSUAL CHARGES
- ---------------------------------
In the first quarter of 1996, the Company initiated a reorganization to improve
productivity and reduce costs. The reorganization consisted principally of
consolidating all the Company's headquarters functions in a single office. The
Company's corporate headquarters in Stamford, Connecticut and the Treatment &
Disposal Services segment's headquarters in Horsham, Pennsylvania were closed by
mid-1996 and their activities moved to the International Mill Service
headquarters building, also in Horsham. Approximately 50 positions were
eliminated, mostly in the Treatment & Disposal Services segment. To cover the
cost of these and related charges, the Company provided $4.4 million in 1996, of
which $.7 million was provided in the third quarter.
Unusual charges in 1996 also included $1.2 million, of which $.3 million was
provided in the third quarter, to settle the last disputed matter from the
Company's 1993 restructuring.
<PAGE>
ENVIROSOURCE, INC.
------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE B. UNUSUAL CHARGES -- Continued
- ----------------------------------------------
The 1996 unusual charges amounted to a $.02 per share loss in the quarter and
$.14 per share loss in the nine month period.
The 1997 quarter includes an unusual charge of $.5 million to provide for costs
to vacate an office as part of the Company's further consolidation of its
operations. After taxes, the 1997 unusual charge amounted to a $.01 per share
loss in both the quarter and the nine month period.
NOTE C. SALE OF IMSAMET
- ---------------------------------
In January 1997 the Company sold the capital stock of IMSAMET, Inc., a
wholly-owned subsidiary that performed recycling and waste management services
for the aluminum industry, for $58 million, realizing a pre-tax gain of $19.6
million. In the third quarter, a purchase price adjustment increased the pre-tax
gain by $2 million. After deferred income tax charges, the gain amounted to $1.3
million or $.03 per share for the quarter and $9.6 million or $.23 per share for
the nine month period. The proceeds from the sale were used to repay revolving
credit borrowings and expenses related to the transaction. The gain from the
sale in 1997 and IMSAMET's 1996 results have been classified as discontinued
operations. IMSAMET revenues for the 1996 three and nine month periods were
$8,723,000 and $27,602,000.
NOTE D. ALEXANDER MILL SERVICES ACQUISITION
- -----------------------------------------------------
The Company purchased Alexander Mill Services, Inc., a metal reclamation company
serving the mini-mill sector of the steel industry, in May 1996. Pro forma
results of operations, as if this transaction occurred at the beginning of 1996,
are as follows (in thousands, except per share amount):
Nine months ended
September 30, 1996
------------------
Pro forma revenues $ 164,571
Pro forma net loss (4,158)
Pro forma net loss per share $ (.11)
The pro forma information is not necessarily indicative of the results that
would have occurred had the transaction taken place at the beginning of 1996.
<PAGE>
ENVIROSOURCE, INC.
------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE E. OTHER INFORMATION
- -----------------------------------
On September 30, 1997, the Company issued $50 million of 9 3/4% Senior Notes due
2003, Series B, having substantially the same terms as the Company's existing
$220 million of 9 3/4% Senior Notes due 2003. The Company used most of the net
proceeds to pay off the outstanding balance on its bank credit facility. The
effective interest rate on the new Senior Notes is approximately 11.1%,
including amortization of issuance costs. In conjunction with that transaction,
the borrowing capacity under the bank credit facility was reduced by $15 million
and various financial covenants, requiring the Company to meet certain financial
ratios and tests, were modified. As of September 30, 1997, $6.6 million of
standby letters of credit and no revolving credit borrowings were outstanding
under this $50 million facility.
During the nine months ended September 30, 1997 and 1996, the Company paid
interest of $15 million and $15.7 million.
Current income tax expense consists of state and foreign income taxes. During
the nine months ended September 30, 1997 and 1996, the Company made cash income
tax payments, net of refunds, of $.9 million and $.6 million. In the three
months ended September 30, 1997 and 1996, the Company recorded $2.1 million and
$1.2 million of deferred federal income tax expense to reduce the benefit
recorded in the first six months of each year, due to lower expected earnings in
each year.
In the third quarter of 1997, the Company paid $7.9 million and issued 362,319
shares of common stock to satisfy obligations, including resolution of a
disputed matter, related to the 1988 acquisition of IU International
Corporation.
In the first quarter of 1996, the Company retired 236,120 shares of Class G
redeemable preferred stock for $33.1 million, resulting in a $250,000 retirement
gain.
NOTE F. COMMITMENTS AND CONTINGENCIES
- -----------------------------------------------
As of September 30, 1997, the Company has commitments to spend $12 million for
equipment additions and improvements to waste treatment facilities.
At September 30, 1997, the Company was contingently liable for $6.6 million of
letters of credit outstanding under its bank credit agreement, including $4.9
<PAGE>
ENVIROSOURCE, INC.
------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE F. COMMITMENTS AND CONTINGENCIES -- Continued
- --------------------------------------------------
million that secure liabilities already reflected in the condensed consolidated
balance sheet.
To secure its obligations to close its landfills and perform post-closure
monitoring and maintenance procedures, the Company must make payments into
closure trust funds. Based on current regulations, planned improvements to waste
treatment facilities and permitted capacity, such payments are expected to
amount to approximately $1.7 million in 1997 and $2.7 million in 1998, including
the reinvestment of Idaho trust fund earnings that the Company includes in
interest income. Thereafter, such payments are not expected to exceed the
reinvestment of trust fund earnings, based on current requirements.
The Company's Ohio and Idaho facilities hold operating permits issued by state
and federal environmental agencies under the Resource Conservation and Recovery
Act, as amended, that require renewal and modification from time to time. The
Company expects that it will obtain the renewals and modifications to its
permits that it requires to continue to provide landfill capacity in its
approved disposal cells well into the next decade.
The Company and its competitors and customers are subject to a complex, evolving
array of federal, state and local environmental laws and regulations. In
particular, such requirements not only can affect the demand for treatment and
disposal services, but could also require the Company to incur significant costs
for such matters as facility upgrading, remediation or other corrective action,
facility closure and post-closure maintenance and monitoring. It is possible
that the future imposition of additional environmental compliance requirements
could have a material adverse effect on the Company's results of operations or
financial condition, but the Company is unable to predict any such future
requirements. The Company believes that the consolidated financial statements
appropriately reflect all presently-known compliance costs in accordance with
generally accepted accounting principles.
The Company is a party to litigation and proceedings arising in the normal
course of its present or former businesses. In the opinion of management, the
outcome of such matters will not have a material adverse effect on the Company's
financial condition or results of operations.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
- ------- -----------------------------------------------------------
and Results of Operations.
--------------------------
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30
- -------------------------------------------------------------
Three months 1997
ended better/(worse)
September 30, than 1996
------------- ---------
1997 1996 Amount %
---- ---- ------ ---
(Dollars in millions)
Revenues
Industrial Environmental Services $ 46,534 $ 46,110 $ 424 .9 %
Treatment & Disposal Services 10,615 8,541 2,074 24.3 %
------ ----- -----
$ 57,149 $ 54,651 $ 2,498 4.6 %
========= ========= =======
Gross Profit
Industrial Environmental Services $ 10,049 $ 11,469 $(1,420)(12.4)%
Treatment & Disposal Services 1,489 559 930 166.4 %
----- --- ---
$ 11,538 $ 12,028 $ (490) (4.1)%
========= ========= =======
Operating Income
Industrial Environmental Services $ 6,231 $ 8,231 $(2,000)(24.3)%
Treatment & Disposal Services 559 (690) 1,249 -
Corporate headquarters (677) (488) (189)(38.7)%
Unusual charges (500) (960) 460 47.9 %
---- ---- ---
$ 5,613 $ 6,093 $ (480) (7.9)%
========= ========= =======
Industrial Environmental Services revenues increased slightly as
compared to the 1996 second quarter. Revenue improvements, due to strong
production at most of the segment's steel industry customer sites, were largely
offset by a revenue reduction resulting from a strike (settled in mid-August) by
a major steel industry customer's employees. Treatment & Disposal Services
revenues increased significantly in the 1997 third quarter as compared to the
1996 quarter due to a sharp increase in the volume of electric arc furnace dust
(a hazardous waste produced by steel mini-mills) stabilized at the Company's
Ohio and Idaho treatment facilities.
Industrial Environmental Services gross profit decreased primarily due
to the strike and the temporary impact of changes in manufacturing practices at
two other customers. Treatment & Disposal Services gross profit increased due to
the increase in electric arc furnace dust disposal volume.
Selling, general and administrative expenses increased as compared to
the 1996 third quarter, primarily due to an increase in legal fees and expenses
(which are expected to decline in the future) and severance costs.
<PAGE>
The 1997 quarter includes an unusual charge of $.5 million to provide
for costs to vacate an office as part of the Company's further consolidation of
its operations. The 1996 quarter included $.7 million related to the Company's
1996 headquarters reorganization and $.3 million to settle the last disputed
matter from the Company's 1993 restructuring. (See Note B for a description.)
After taxes, unusual charges contributed $.01 to the loss in 1997 and $.02 to
the loss in 1996.
While debt levels were lower in 1997 (the Company paid down $56 million
of debt with proceeds from the sale of its IMSAMET subsidiary in the first
quarter), interest expense remained comparable primarily because $.9 million of
interest expense was allocated to discontinued operations in the 1996 quarter
and also because the Company's average effective interest rate was slightly
higher in 1997.
Current income tax expense includes state and Canadian income taxes.
The Company recorded deferred federal income tax expense of $2.1 million in 1997
and $1.2 million in 1996 (contributing $.05 per share to the quarterly loss in
1997 and $.03 per share to the quarterly loss in 1996) to reduce the benefit
recorded in the first six months of each year, due to lower expected earnings in
each year.
The Company sold its IMSAMET subsidiary in January 1997. In the
quarter, a purchase price adjustment increased the pre-tax gain by $2 million.
After a deferred income tax charge, the additional gain amounted to $1.3 million
or $.03 per share. The gain from the sale in 1997 and IMSAMET's 1996 results
have been classified as discontinued operations.
Due to the factors described above, the 1997 net loss was $2.6 million
as compared with the 1996 net loss of $1.8 million.
There was virtually no Class G preferred stock dividend requirement in
1996 because almost all of the Class G stock was retired in the first quarter of
that year.
<PAGE>
Results of Operations for the Nine Months Ended September 30
Nine months 1997
ended better/(worse)
September 30, than 1996
------------- --------------
1997 1996 Amount %
---- ---- ------ -
(Dollars in millions)
Revenues
Industrial Environmental Services $ 137,086 $ 136,410 $ 676 .5 %
Treatment & Disposal Services 31,891 23,745 8,146 34.3 %
------ ------ -----
$ 168,977 $ 160,155 $ 8,822 5.5 %
========= ========= =======
Gross Profit
Industrial Environmental Services $ 31,343 $ 36,198 $(4,855) (13.4)%
Treatment & Disposal Services 4,236 960 3,276 341.3 %
----- --- -----
$ 35,579 $ 37,158 $(1,579) (4.2)%
========= ========= =======
Operating Income
Industrial Environmental Services $ 19,657 $ 25,213 $(5,556) (22.0)%
Treatment & Disposal Services 591 (2,941) 3,532 -
Corporate headquarters (3,230) (1,895) (1,335) (70.4)%
Unusual charges (500) (5,600) 5,100 91.1
---- ------ -----
$ 16,518 $ 14,777 $ 1,741 11.8 %
========= ========= =======
Industrial Environmental Services revenues for the nine month period of
1997 were comparable to the same period in 1996. Most steel industry customer
sites reported strong production. Alexander Mill Services, Inc., acquired in May
1996, contributed $7.5 million to revenues in the first nine months as compared
to $4 million in the prior year. However, revenue increases were largely offset
by a revenue reduction resulting from a strike (settled in mid-August) by a
major steel industry customer's employees and the mid-1996 loss of a steel
industry customer that accounted for $4.5 million of revenues in the nine month
period of 1996. Treatment & Disposal Services revenues increased significantly
in the nine month period of 1997 as compared to the same period in 1996 due to a
sharp increase in the volume of electric arc furnace dust stabilized at the
Company's Ohio and Idaho treatment facilities.
Industrial Environmental Services gross profit decreased for the
reasons outlined above and because an ownership change disrupted production at
another customer's steel mill. Treatment & Disposal Services gross profit
increased due to the increase in electric arc furnace dust disposal volume.
Selling, general and administrative expenses increased as compared to
the same period of 1996. Cost savings realized as a result of the 1996
reorganization (discussed in the next paragraph) were partially offset by an
increase in legal fees and expenses (which are expected to decline in future),
severance and other costs.
<PAGE>
The unusual charge of $.5 million in 1997 was provided for costs to
vacate an office as part of the Company's further consolidation of its
operations. Unusual charges in 1996 totaling $5.6 million included $4.4 million
for the Company's 1996 headquarters reorganization and $1.2 million to settle
the last disputed matter from the Company's 1993 restructuring. (See Note B for
a description.) After taxes, unusual charges contributed $.01 to the loss in
1997 and $.14 to the loss in 1996.
Even though debt levels were lower in 1997 (the Company paid down $56
million of debt with proceeds from the sale of its IMSAMET subsidiary in the
first quarter), interest expense increased $1 million primarily because $2.5
million of interest expense was allocated to discontinued operations in the
prior year and also because the Company's average effective interest rate was
slightly higher in 1997.
Current income tax expense includes state and Canadian income taxes
payable.
The Company sold its IMSAMET subsidiary in January 1997. Including the
third quarter purchase price adjustment, the Company realized an after-tax gain
of $9.6 million or $.24 per share. The gain from the sale in 1997 and IMSAMET's
1996 results have been classified as discontinued operations.
Due to the factors described above, including discontinued operations,
1997 net income was $4.4 million compared with the 1996 net loss of $4.9
million.
Class G preferred stock dividend requirements in 1996 were reduced due
to the retirement of almost all of the outstanding shares in the 1996 first
quarter, which resulted in a $.3 million retirement gain.
DEFERRED INCOME TAXES
- ---------------------
The Company has determined that it is more likely than not that it will
earn enough taxable income to realize the $14.3 million of deferred tax assets
in its balance sheet over the next several years. Realization of this amount
will require cumulative taxable earnings of approximately $41 million. When the
consolidated results of continuing operations for the three most recent fiscal
years and current nine month period are adjusted by (1) excluding unusual items,
and (2) adding back goodwill amortization (which is not deductible for tax
purposes), the pre-tax earnings, as adjusted, total over $32 million and average
$8.6 million annually. On this basis, the Company would realize $14.3 million of
deferred tax assets within approximately five years. On the other hand, because
<PAGE>
its net operating loss carryforwards expire well into the future, the Company
would also realize $14.3 million of deferred tax assets if, counting only
profitable years, it earns $41 million of taxable income during the fifteen year
period ending in 2012, so long as the cumulative amount of such earnings reaches
at least $8 million by 2005, $19 million by 2006, $28 million by 2008, $37
million by 2009, and $40 million by 2010.
In making its determination that it is more likely than not that it
will earn enough taxable income to realize $14.3 million of net deferred tax
assets, the Company considered (1) its cumulative consolidated results of
operations for the three most recent fiscal years and the first nine months of
1997, (2) the reduction in interest expense obtained by applying the IMSAMET net
proceeds to reduce debt, (3) ongoing cost savings achieved with its 1996
reorganization, and (4) profit improvements from treating increased volumes of
electric arc furnace dust with its proprietary Super Detox(R) technology.
Factors which could negatively affect this determination would include (1) loss
of a major customer or customers, (2) prolonged work stoppages at major
customers, (3) a major decline in United States steel industry production, and
(4) a material decrease in the level of electric arc furnace dust currently
treated with the Company's proprietary Super Detox(R) technology.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's liquidity requirements arise primarily from the funding
of capital expenditures, Treatment & Disposal Services trust fund payments,
working capital needs and debt service obligations. Historically, the Company
has met such requirements with cash flows generated by operations and with
additional debt financing.
The Company expects 1997 capital expenditures of $30 to $35 million,
primarily for equipment replacements, new services, development of additional
landfill capacity and improvements to waste treatment facilities. Through
September 30, 1997, the Company spent $21.6 million for capital additions and is
committed for an additional $12 million, some of which will not be spent until
1998.
Treatment & Disposal Services' landfill permits require the Company to
fund closure and post-closure monitoring and maintenance obligations by making
essentially non-refundable trust fund payments. Based on current regulations,
planned improvements to waste treatment facilities and permitted capacity, such
payments are expected to be approximately $1.7 million in 1997 and $2.7 million
in 1998, including the reinvestment of Idaho trust fund earnings that the
Company includes in interest income. Thereafter, such payments are not expected
to exceed the reinvestment of trust fund earnings, based on current
requirements.
<PAGE>
On September 30, 1997, the Company issued $50 million of 9 3/4% Senior
Notes due 2003, Series B, having substantially the same terms as the Company's
existing $220 million of 9 3/4% Senior Notes due 2003. The Company used most of
the net proceeds to pay off the outstanding balance on its bank credit facility.
The effective interest rate on the new Senior Notes is approximately 11.1%,
including amortization of issuance costs. In conjunction with that transaction,
the borrowing capacity under the bank credit facility was reduced by $15 million
and various financial covenants, requiring the Company to meet certain financial
ratios and tests, were modified. As of September 30, 1997, $6.6 million of
standby letters of credit and no revolving credit borrowings were outstanding
under this $50 million facility.
During the third quarter, the Company paid $7.9 million of obligations,
including resolution of a disputed matter, related to the 1988 acquisition of IU
International Corporation.
Cash on hand, funds from operations and borrowing capacity under the
bank credit facility are expected to satisfy the Company's normal operating and
debt service requirements.
Because its businesses are environmentally-oriented, and therefore
highly regulated, the Company is subject to violations alleged by environmental
regulators and, occasionally, fines. Such violations and fines have not had, and
are not expected to have, a material adverse impact on the Company's business.
It is possible that the future imposition of additional environmental compliance
requirements could have a material adverse effect on the Company's results of
operations or financial condition, but the Company is unable to predict any such
future requirements.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 5. Other Information
- ------- -----------------
The Company has entered into a long-term arrangement with another
corporation that provides the Company with substantial additional electric arc
furnace dust treatment and disposal capacity in the eastern United States.
ITEM 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
(a) Exhibits.
--------
3.1 - Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Appendix A (pages A-1 to A-3) to
the Company's Proxy Statement filed April 29, 1996, in respect of its
1996 Annual Meeting of Stockholders (File No. 1- 1363)).
3.2 - Amendment of Amended and Restated Certificate of Incorporation
(incorporated herein by reference to Page 2 to the Company's Proxy
Statement filed April 30, 1997, in respect of its 1997 Annual Meeting
of Stockholders (File No. 1-1363))
3.3 - By-Laws of the Company (incorporated herein by reference to Exhibit
C (pages C-1 to C-9) to the Company's Proxy Statement filed April 24,
1987, in respect of its 1987 Annual Meeting of Stockholders (File No.
1-1363)).
3.4 - Amendment to the By-Laws of the Company (incorporated herein by
reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987 (File No.1-1363)).
3.5 - By-Law Amendment Adopted March 26, 1997 By Unanimous Written Consent
Consent of the Board of Directors, Effective June 19, 1997
(incorporated by reference to Exhibit 3.5 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1997 (File No. 1-1363)).
4.1 - Loan and Security Agreement, dated as of April 6, 1993, between IMS
Funding Corporation and Greyhound Financial Corporation. (The Company
agrees to furnish a copy of such agreement to the Commission upon
request).
<PAGE>
4.2 - Agreement Amending Loan and Security Agreement and Corporate
Guarantee Agreement, dated as of December 8, 1995, between FINOVA
Capital Corporation ( formerly known as Greyhound Financial
Corporation), IMS Funding Corporation, and International Mill
Service, Inc. (The Company agrees to furnish a copy of such
agreement to the Commission upon request).
4.3 - Indenture, dated as of July 1, 1993, between the Company and United
States Trust Company of New York, as Trustee, relating to the
Company's 9-3/4% Senior Notes due 2003, including the form of such
Notes attached as Exhibit A thereto ( incorporated herein by
reference to Exhibit 4.10 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1993 (File No. 1-1363)).
4.4 - First Supplemental Indenture, dated as of November 2, 1995, between
the Company and United States Trust Company of New York, as Trustee,
relating to the Company's 9-3/4% Senior Notes due 2003 (incorporated
herein by reference to Exhibit 4.15 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 1995 (File
No. 1-1363)).
4.5* - Second Supplemental Indenture, dated as of September 24, 1997,
between the Company and United States Trust Company of New York, as
Trustee, relating to the Company's 9-3/4% Senior Notes due 2003.
4.6* - Indenture, dated as of September 30, 1997, between the Company and
United States Trust Company of New York, as Trustee, relating to the
Company's 9- 3/4% Senior Notes due 2003, Series B, including the form
of such Notes attached as Exhibit A thereto.
4.7* - Registration Rights Agreement, dated as of September 30, 1997, among
the Company and Morgan Stanley & Co. Incorporated, Jefferies &
Company, Inc. and NationsBanc Capital Markets, Inc.
4.8 - Registration Rights Agreement, dated as of May 13, 1993, among the
Company, FS Equity Partners II, L.P., The IBM Retirement Plan Trust
Fund and Enso Partners, L.P. (incorporated herein by reference to
Exhibit 4.29 to Amendment No. 1 to the Company's Registration
Statement on Form S-1, filed June 14, 1993 (File No. 33-62050)).
4.9 - Warrant to purchase shares of Common Stock of the Company issued to
FS Equity Partners II, L.P., dated as of May 13, 1993 (incorporated
<PAGE>
herein by reference to Exhibit 4.30 to Amendment No. 1 to the
Company's Registration Statement on Form S-1, filed June 14, 1993
(File No. 33-62050)).
4.10 - Warrant to purchase shares of Common Stock of the Company issued to
The IBM Retirement Plan Trust Fund, dated as of May 13, 1993
(incorporated herein by reference to Exhibit 4.31 to Amendment No. 1
to the Company's Registration Statement on Form S-1, filed June 14,
1993 (File No. 33-62050)).
4.11 - Warrant to purchase shares of Common Stock of the Company issued to
Enso Partners, L.P., dated as of May 13, 1993 (incorporated herein by
reference to Exhibit 4.32 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June 14, 1993 (File No.
33-62050)).
4.12 - Loan Agreement, dated as of June 1, 1994, between the Industrial
Development Corporation of Owyhee County, Idaho and Envirosafe
Services of Idaho, Inc. relating to $8,500,000 Industrial Revenue
Bonds, Series 1994. (The Company agrees to furnish a copy of such
agreement to the Commission upon request).
4.13 - Credit Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais as
Syndication Agent (incorporated herein by reference to Exhibit 4.14
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (File No. 1-1363)).
4.14 - Assignment and Acceptance, dated as of February 8, 1996, between
NationsBank, N.A. and Banque Paribas; and Assignment and Acceptance,
dated as of February 8, 1996, between Credit Lyonnais New York Branch
and Banque Paribas (incorporated herein by reference to Exhibit 4.13
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 (File No. 1-1363)).
4.15 - First Amendment, dated as of May 15, 1996, to the Credit Agreement,
dated as of December 19, 1995, among the Company, International Mill
Service, Inc., the lenders parties thereto, NationsBank, N.A., as
Administrative Agent, and Credit Lyonnais as Syndication Agent
(incorporated herein by reference to Exhibit 4.15 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1996 (File No. 1-1363)).
<PAGE>
4.16 - Second Amendment, dated as of December 23, 1996, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais as
Syndication Agent (incorporated herein by reference to Exhibit 4.13
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (File No. 1-1363)).
4.17 - Third Amendment, dated effective as of June 30, 1997, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais as
Syndication Agent (incorporated herein by reference to Exhibit 4.14
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 (File No. 1-1363)).
4.18*- Fourth Amendment, dated as of September 23, 1997, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais as
Syndication Agent.
10.1 - Restated Incentive Stock Option Plan of the Company, as amended
(incorporated herein by reference to Exhibit A to the Company's
Registration Statement on Form S-8, filed January 17, 1989 (File No.
33-26633)).
10.2 - Promissory Note of Louis A. Guzzetti, Jr., dated March 31, 1993,
payable to the Company, amending and replacing the Promissory Notes
dated October 15, 1987, March 31, 1991 and March 31, 1992 and the
Letter Amendments dated April 13, 1991 and May 12, 1992(incorporated
herein by reference to Exhibit 10.13 to Post-Effective Amendment No.1
to the Company's Registration Statement on Form S-1, filed September
16, 1993 (File No. 33-46930)).
10.3 - Promissory Notes of Aarne Anderson, George E. Fuehrer and Mr.
Guzzetti, dated as of April 1, 1993, payable to the Company, amending
and replacing the Promissory Notes dated January 13, 1989, April 1,
1991 and April 1, 1992(incorporated herein by reference to Exhibit
10.17 to Post-Effective Amendment No. to the Company's Registration
Statement on Form S-1, filed September 16, 1993 (File No. 33-46930)).
<PAGE>
10.4 - Stock Option Agreement, dated March 18, 1992, between the Company
and Raymond P. Caldiero (incorporated herein by reference to Exhibit
10.20 to the Company's Annual Report on Form 10- K for the fiscal
year ended December 31, 1992 (File No. 1-1363)).
10.5 - Stock Option Agreement, dated March 18, 1992, between the Company
and Jeffrey G. Miller (incorporated herein by reference to Exhibit
10.21 to the Company's Annual Report on Form 10- K for the fiscal
year ended December 31, 1992 (File No. 1-1363)).
10.6 - Amendment, dated August 5, 1993, to the Stock Option Agreement,
dated March 18, 1992, between the Company and Jeffrey G. Miller
(incorporated herein by reference to Exhibit 10.22 to Post-Effective
Amendment No. 1 to the Company's Registration Statement on Form S-1,
filed September 16, 1993 (File No. 33-46930)).
10.7 - Stock Option Agreement, dated August 5, 1993, between the Company
and Wallace B. Askins (incorporated herein by reference to Exhibit
10.23 to Post-Effective Amendment No. 1 to the Company's Registration
Statement on Form S-1, filed September 16, 1993 (File No. 33-46930)).
10.8 - 1993 Stock Option Plan of the Company (incorporated herein by
reference to Exhibit 10.21 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June 14, 1993 (File No. 33-
62050)).
10.9 - EnviroSource, Inc. Stock Option Plan for NonAffiliated Directors,
dated as of January 1, 1995 (incorporated herein by reference to
Exhibit 10.14 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (File No. 1- 1363)).
10.10- Supplemental Executive Retirement Plan of the Company, effective
January 1, 1995 (incorporated herein by reference to Exhibit 10.19 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-1363)).
<PAGE>
10.11- Employment Agreement, dated November 5, 1996, between the Company and
Aarne Anderson (incorporated herein by reference to Exhibit 10.12 to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1996 (File No. 1-1363)).
10.12- Employment Agreement, dated November 5, 1996, between the Company and
William B. Davis (incorporated herein by reference to Exhibit 10.13
to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1996 (File No. 1-1363)).
10.13- Employment Agreement, dated November 5, 1996, between the Company and
James C. Hull (incorporated herein by reference to Exhibit 10.14 to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1996 (File No. 1-1363))
10.14- Stock Purchase Agreement, dated November 26, 1996, by and among IMCO
Recycling Inc., IMSAMET, Inc. and EnviroSource, Inc. (incorporated
herein by reference to Exhibit 10.1 to the Company's Form 8-K filed
January 21, 1997(File No. 1-1363)).
10.15- Amendment No. 1, dated as of January 21, 1997, to Stock Purchase
Agreement, dated November 26, 1996, by and among IMCO Recycling Inc.,
IMSAMET, Inc. and EnviroSource, Inc.(incorporated herein by reference
to Exhibit 10.2 to the Company's Form 8-K filed January 21, 1997
(File No. 1-1363))
* Filed Herewith
(b) Reports on Form 8-K.
During the quarter ended September 30, 1997, the Company filed no
current reports on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 14, 1997
ENVIROSOURCE, INC.
By:/s/James C. Hull
----------------
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Number Exhibit Page
4.5 Second Supplemental Indenture, dated EXHIBIT 1
as of September 24, 1997, between the
Company and United States Trust Company
of New York, as Trustee, relating to
the Company's 9-3/4% Senior Notes due 2003.
4.6 Indenture, dated as of September 30, 1997, EXHIBIT 2
between the Company and United States
Trust Company of New York, as Trustee,
relating to the Company's 9-3/4% Senior
Notes due 2003, Series B, including the
form of such Notes attached as Exhibit A
thereto.
4.7 Registration Rights Agreement, dated as of EXHIBIT 3
September 30, 1997, among the Company and
Morgan Stanley & Co. Incorporated, Jefferies
& Company, Inc. and NationsBanc Capital
Markets, Inc.
4.18 Fourth Amendment, dated as of September 23, EXHIBIT 4
1997, to the Credit Agreement, dated as of
December 19, 1995, among the Company,
International Mill Service, Inc., the lenders
parties thereto, NationsBank, N.A., as
Administrative Agent, and Credit Lyonnais as
Syndication Agent.
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of September 24, 1997 (this
"Second Supplement") between EnviroSource, Inc., a Delaware corporation (the
"Company"), and United States Trust Company of New York, a New York banking
corporation, as trustee (the "Trustee") under the Indenture (defined below).
RECITALS OF THE COMPANY
-----------------------
A. The Company and the Trustee have heretofore executed and delivered
an Indenture dated as of July 1, 1993 (the "Original Indenture") relating to the
Company's 9 3/4% Senior Notes due 2003.
B. The Company and the Trustee have heretofore executed and delivered a
First Supplemental Indenture dated as of November 2, 1995 (the "First
Supplement"; and the Original Indenture as amended by the First Supplement, the
"Indenture") in accordance with the terms of Section 9.02 of the Indenture.
C. The Company desires to amend and supplement the Indenture in accordance
with the terms of Section 9.01 thereof and has requested the Trustee to join in
the execution of this Second Supplement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth in the Indenture and herein, the Company and the Trustee
hereby amend and supplement the Indenture as follows:
AGREEMENTS
----------
1. All defined terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Indenture.
2. Clause (i) of Section 4.11(b) of the Indenture is hereby amended by:
(a) deleting such clause in its entirety and (b) inserting, in lieu thereof, the
following new clause (i):
(i) Refinancing Indebtedness; provided, however, that the
characterization of Indebtedness as Refinancing Indebtedness may not cause or
permit Indebtedness Incurred under clauses (ii), (iii), (v) or (vii) below to
exceed the maximum amounts allowed by the terms of each such clause, and, to
that end (x) if Refinancing Indebtedness is Incurred to refinance any
Indebtedness originally Incurred under either of clauses (ii) or (iii) then the
amount of Indebtedness permitted under such clause in question shall be reduced
by the amount of such Refinancing Indebtedness (and any Refinancing Indebtedness
that directly or indirectly refinances
<PAGE>
such Refinancing Indebtedness) outstanding at the time of determination, and (y)
if Refinancing Indebtedness is Incurred to refinance any Indebtedness originally
Incurred under either of clauses (v) or (vii) then the amount of Indebtedness
permitted under such clause in question shall be reduced permanently by the
amount of such Refinancing Indebtedness;
3. This Second Supplement shall be governed by the laws of the State of
New York and shall become effective as of the date first above written.
4. Except as provided in this Second Supplement, the terms and
provisions of the Indenture shall continue to remain in full force and effect
from and after the date hereof.
5. The Recitals set forth above shall be construed as the statement of
the Company and, in accordance with Section 7.04 of the Indenture, the Trustee
assumes no responsibility as to the validity or adequacy of this Second
Supplement.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed and delivered this Second Supplement as of the day and
year first above written.
ENVIROSOURCE, INC.
By:/s/James C. Hull
----------------
Title: Vice President & Chief Financial
Officer
ATTEST:
/s/Leon Z. Heller
--------------
Title: Secretary & General Counsel
UNITED STATES TRUST COMPANY
OF NEW YORK
By:/s/Patricia Stermer
-------------------
Title: Assistant Vice President
ATTEST:
/s/Cynthia Chaney
--------------
Title: Assistant Vice President
<PAGE>
ENVIROSOURCE, INC.
$50,000,000
9 3/4% SENIOR NOTES DUE 2003, SERIES B
INDENTURE
Dated as of September 30, 1997
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS...................................1
SECTION 1.02. OTHER DEFINITIONS........................... 17
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT............................... 17
SECTION 1.04. RULES OF CONSTRUCTION....................... 18
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING............................. 18
SECTION 2.02. RESTRICTIVE LEGENDS......................... 19
SECTION 2.03. EXECUTION AND AUTHENTICATION................ 21
SECTION 2.04. REGISTRAR AND PAYING AGENT.................. 22
SECTION 2.05. LISTS OF HOLDERS OF THE NOTES............... 22
SECTION 2.06. TRANSFER AND EXCHANGE....................... 22
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES...... 23
SECTION 2.08. SPECIAL TRANSFER PROVISIONS................. 25
SECTION 2.09. REPLACEMENT NOTES........................... 28
SECTION 2.10. PAYING AGENT TO HOLD MONEY IN TRUST......... 29
SECTION 2.11. OUTSTANDING NOTES........................... 29
SECTION 2.12. TREASURY NOTES.............................. 29
SECTION 2.13. TEMPORARY NOTES............................. 30
SECTION 2.14. CANCELLATION................................ 30
SECTION 2.15. DEFAULTED INTEREST.......................... 30
SECTION 2.16. RECORD DATE................................. 31
SECTION 2.17. CUSIP NUMBER................................ 31
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.......................... 31
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED........... 32
SECTION 3.03. NOTICE OF REDEMPTION........................ 32
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.............. 33
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE................. 33
SECTION 3.06. NOTES REDEEMED IN PART...................... 34
SECTION 3.07. OPTIONAL REDEMPTION......................... 34
SECTION 3.08. MANDATORY REDEMPTION........................ 34
<PAGE>
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES............................ 34
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY............. 35
SECTION 4.03. REPORTS..................................... 35
SECTION 4.04. COMPLIANCE CERTIFICATE...................... 36
SECTION 4.05. TAXES....................................... 37
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.............. 37
SECTION 4.07. CORPORATE EXISTENCE......................... 37
SECTION 4.08. MAINTENANCE OF PROPERTIES AND INSURANCE..... 37
SECTION 4.09. LIMITATION ON RESTRICTED PAYMENTS........... 38
SECTION 4.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES......... 40
SECTION 4.11. LIMITATION ON INCURRENCE OF INDEBTEDNESS.... 41
SECTION 4.12. ASSET SALES................................. 43
SECTION 4.13. TRANSACTIONS WITH AFFILIATES................ 47
SECTION 4.14. LIMITATION ON LIENS......................... 47
SECTION 4.15. LIMITATION ON ISSUANCE OF CAPITAL STOCK BY
SUBSIDIARIES................................ 47
SECTION 4.16. CHANGE OF CONTROL........................... 47
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.... 49
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED........... 51
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT........................... 51
SECTION 6.02. ACCELERATION................................ 53
SECTION 6.03. OTHER REMEDIES.............................. 53
SECTION 6.04. WAIVER OF PAST DEFAULTS..................... 54
SECTION 6.05. CONTROL BY MAJORITY......................... 54
SECTION 6.06. LIMITATION ON SUITS......................... 54
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE
PAYMENT..................................... 55
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.................. 55
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM............ 55
SECTION 6.10. PRIORITIES.................................. 56
SECTION 6.11. UNDERTAKING FOR COSTS....................... 56
<PAGE>
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE........................... 56
SECTION 7.02. RIGHTS OF TRUSTEE........................... 58
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE................ 58
SECTION 7.04. TRUSTEE'S DISCLAIMER........................ 58
SECTION 7.05. NOTICE OF DEFAULTS.......................... 58
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE
NOTES....................................... 59
SECTION 7.07. COMPENSATION AND INDEMNITY.................. 59
SECTION 7.08. REPLACEMENT OF TRUSTEE...................... 60
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC............ 61
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION............... 61
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY..................................... 61
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES;
DEFEASANCE.................................. 61
SECTION 8.02. TERMINATION OF COMPANY'S OBLIGATIONS........ 62
SECTION 8.03. DEFEASANCE AND DISCHARGE OF INDENTURE....... 63
SECTION 8.04. DEFEASANCE OF CERTAIN OBLIGATIONS........... 65
SECTION 8.05. APPLICATION OF TRUST MONEY.................. 67
SECTION 8.06. REPAYMENT TO COMPANY........................ 67
SECTION 8.07. REINSTATEMENT............................... 67
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES......... 68
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES............ 69
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT......... 70
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS........... 70
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES............ 71
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC............. 71
<PAGE>
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS................ 71
SECTION 10.02. NOTICES..................................... 71
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH
OTHER HOLDERS OF NOTES...................... 72
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT................................... 72
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION..................................... 73
SECTION 10.06. RULES BY TRUSTEE AND AGENTS................. 73
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS,
OFFICERS, EMPLOYEES AND STOCKHOLDERS........ 73
SECTION 10.08. GOVERNING LAW............................... 74
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS.................................. 74
SECTION 10.10. SUCCESSORS.................................. 74
SECTION 10.11. SEVERABILITY................................ 74
SECTION 10.12. COUNTERPART ORIGINALS....................... 74
SECTION 10.13. OTHER PROVISIONS............................ 74
SECTION 10.14. TABLE OF CONTENTS, HEADINGS, ETC............ 74
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS PURSUANT TO REGULATION S
Exhibit C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
Exhibit D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS PURSUANT TO REGULATION S
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture
Act Section Indenture Section
310 (a)(1)................................................................7.10
(a)(2)................................................................7.10
(a)(3)................................................................N.A.
(a)(4)................................................................N.A.
(a)(5)................................................................7.10
(b)...................................................................7.10
(c)...................................................................N.A.
311 (a)...................................................................7.11
(b)...................................................................7.11
(c)...................................................................N.A.
312 (a)...................................................................2.05
(b)..................................................................10.03
(c)..................................................................10.03
313 (a)...................................................................7.06
(b)(1)................................................................N.A.
(b)(2)................................................................7.06
(c).............................................................7.06;10.02
(d)...................................................................7.06
314 (a).............................................................4.03;10.02
(b)...................................................................N.A.
(c)(1)...............................................................10.04
(c)(2)...............................................................10.04
(c)(3)................................................................N.A.
(d)...................................................................N.A.
(e)..................................................................10.05
(f)...................................................................N.A.
315 (a)...................................................................7.01
(b).............................................................7.05;10.02
(c)...................................................................7.01
(d)...................................................................7.01
(e)...................................................................6.11
316 (a) (last sentence)...................................................N.A.
(a)(1)(A).............................................................6.05
(a)(1)(B).............................................................6.04
(a)(2)................................................................N.A.
(b)...................................................................6.07
(c)...................................................................2.16
317 (a)(1)................................................................6.08
(a)(2)................................................................6.09
(b)...................................................................2.10
318 (a)..................................................................10.01
<PAGE>
(b)...................................................................N.A.
(c)..................................................................10.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
INDENTURE dated as of September 30, 1997 between EnviroSource,
Inc., a Delaware corporation (the "Company"), and United States Trust Company of
New York, a New York banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 9 3/4%
Senior Notes due 2003, Series B (the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
-----------
"Additional Assets" means (i) any property or assets related
to the primary businesses of the Company and its Subsidiaries; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary or (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.12 and 4.13 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale leaseback transactions, but
excluding (except as provided for in the provisions described in the last
paragraph of Section 4.12(b)) those permitted by the provisions described under
Article 5) by the Company or any Subsidiary to any Person other than the Company
or any Wholly Owned Subsidiary, of (i) all or any of the Capital Stock of any
Restricted Subsidiary, (ii) all or substantially all of the assets of any
division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Subsidiary outside of the ordinary
<PAGE>
course of business of the Company or such Subsidiary; provided, however, the
term "Asset Sale" shall not include any sale, transfer or disposition of assets
in any fiscal year which, when taken individually or combined with other sales,
transfers or dispositions of assets during such fiscal year, constitutes less
than the sum of (x) 5% of the Company's Tangible Net Assets as determined on the
consolidated balance sheet of the Company as of the end of the most recent
fiscal quarter for which financial statements are available plus (y) $5 million.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or scheduled redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by (ii) the sum of
all such payments.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation or any and all equivalent ownership interests in a Person (other
than a corporation).
"Capitalized Lease Obligation" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with such principles; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Equivalent" means (a) Government Securities having
maturities of not more than one year from the date of acquisition, (b)
certificates of deposit of any commercial bank incorporated under the laws of
the United States, or any state, territory or commonwealth thereof, of
recognized standing having capital and unimpaired surplus in excess of $100
million and whose short-term commercial paper rating at the time of acquisition
is at least A-2 or the equivalent by Standard & Poor's Corporation or at least
P-2 or the equivalent by Moody's Investors Services, Inc. (any such bank, an
"Approved Bank"), which certificates of deposit have maturities of not more than
one year from the date of acquisition, (c) repurchase obligations with a term of
not more than 31 days for underlying securities of the types described in
clauses (a), (b) and (d) of this definition entered into with any Approved Bank,
(d) commercial paper or finance company paper issued by any Person incorporated
under the laws of the United States, or any state thereof, and rated at least
A-2 or the equivalent by Standard & Poor's Corporation or at least P-2 or the
<PAGE>
equivalent by Moody's Investors Services, Inc., and in each case maturing not
more than one year from the date of acquisition, and (e) investments in money
market funds that are registered under the Investment Company Act of 1940, which
have net assets of at least $100 million and at least 85% of whose assets
consist of investments or other obligations of the type described in clauses (a)
through (d) above.
"Change of Control" means any of the following events: (i) the
liquidation or dissolution of the Company, (ii) the acquisition by any "Person"
or related group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, or any successor provision to either of the foregoing,
including any "group" acting for the purpose of acquiring, holding or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act),
other than the Principals, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of more than (x) 30% of the total
voting power entitled to vote in the election of the Board of Directors of the
Company or such other Person surviving the transaction and (y) the total voting
power (entitled to vote in the election of the Board of Directors of the Company
or such other Person surviving the transaction) of the Principals; (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Company's Board of Directors (together with any new
directors whose election or appointment by such board or whose nomination for
election or appointment by the shareholders of the Company 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 for any reason to constitute a
two-thirds majority of the Company's Board of Directors then in office; or (iv)
the sale, transfer, conveyance or other disposition of all or substantially all
of the assets of IMS, Conversion Systems and TDS, taken as a whole.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for which financial statements are
available to (ii) the Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or (2) if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is (x) an Incurrence of Indebtedness
or (y) a transaction covered under the provisions described under Article 5 or
any combination of the foregoing, both EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro forma basis to
(A) any new Indebtedness Incurred during such period as if such Indebtedness had
been Incurred on the first day of such period and (B) the repayment, redemption,
repurchase, defeasance or discharge of any Indebtedness repaid, redeemed,
repurchased, defeased or discharged during such period with the proceeds of new
Indebtedness (including the Indebtedness giving rise to the need to calculate
the Consolidated Coverage Ratio) or from the sale of any Capital Stock (other
<PAGE>
than Redeemable Stock or Exchangeable Stock) as if such repayment, redemption,
repurchase, defeasance or discharge had been made on the first day of such
period; provided, further, that if within the period during which EBITDA or
Consolidated Interest Expense is measured, the Company or any of its Restricted
Subsidiaries shall have made any Asset Sales, (1) the EBITDA for such period
shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets or Capital Stock which are the subject of such Asset
Sales for such period, or increased by an amount equal to the EBITDA (if
negative), directly attributable thereto for such period and (2) the
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness for which neither the Company nor any Restricted Subsidiary shall
continue to be liable as a result of any such Asset Sale or repaid, redeemed,
defeased, discharged or otherwise retired in connection with or with the
proceeds of the assets or Capital Stock which are the subject of such Asset
Sales for such period; and provided, further, that if the Company or any
Restricted Subsidiary shall have made any acquisition of assets or Capital Stock
(occurring by merger or otherwise) since the beginning of such period (including
any acquisition of assets or Capital Stock occurring in connection with a
transaction causing a calculation to be made hereunder) the EBITDA and
Consolidated Interest Expense for such period shall be calculated, after giving
pro forma effect thereto (and without regard to clause (ii) of the proviso to
the definition of "Consolidated Net Income"), as if such acquisition of assets
or Capital Stock took place on the first day of such period. For purposes of
this definition, whenever pro forma effect is to be given to an acquisition of
assets or Capital Stock, the amount of income or earnings relating thereto, and
the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, shall be determined in good faith by a
responsible financial or accounting Officer of the Company.
"Consolidated Interest Expense" means, for any period, the sum
of, without duplication, (a) the total interest expense of the Company and its
consolidated subsidiaries (other than Unrestricted Subsidiaries), determined on
a consolidated basis in accordance with GAAP, including (i) interest expense
attributable to capital leases, (ii) amortization of debt discount and debt
issuance cost, (iii) non-cash interest payments, (iv) amortization of
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (v) interest actually paid by the
Company or any such subsidiary under any guarantee of Indebtedness or other
obligation of any other Person and (vi) net costs incurred during such period
under interest rate swaps, caps, collars, options and similar arrangements and
foreign exchange hedges (including amortization of fees); (b) the product of (x)
the aggregate amount for such period of Preferred Stock dividends paid (in cash)
during such period in respect of all Preferred Stock of the Company and its
consolidated subsidiaries (other than Unrestricted Subsidiaries) excluding any
such dividends paid to the Company or any Wholly Owned Subsidiary and (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory income tax
rate, expressed as a decimal; and (c) the cash contributions to any employee
stock ownership plan to the extent such contributions are used by such employee
stock ownership plan to pay interest or fees to any person (other than the
<PAGE>
Company or a Restricted Subsidiary) in connection with loans incurred by such
employee stock ownership plan to purchase Capital Stock of the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Restricted Subsidiary, except that (A) the
Company's equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Subsidiary as a dividend or other distribution and (B) the Company's equity in a
net loss of any such Person for such period shall be included in determining
such Consolidated Net Income (other than with respect to an Unrestricted
Subsidiary in which case the Company's equity in any such net loss shall not be
so included); (ii) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any gains in excess of losses
realized upon the sale or other disposition of any property, plant or equipment
of the Company or its Restricted Subsidiaries (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gains in excess of losses realized upon
the sale or other disposition by the Company or any Restricted Subsidiary of any
Capital Stock of any Person; (iv) any reduction applicable to a charge in lieu
of income taxes resulting from (x) the application of the Company's tax loss
carry forwards attributable to periods prior to the confirmation of the
Reorganization Plan or (y) the payment of liabilities recorded in conjunction
with the Company's 1988 acquisition of IU International Corporation; and (v) the
cumulative effect of a change in accounting principles; and (vi) any
extraordinary losses resulting from the Recapitalization.
"Consolidated Net Worth" of the Company means the total of the
amounts shown on the consolidated balance sheet of the Company and its
consolidated subsidiaries (other than Unrestricted Subsidiaries), determined on
a consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company for which financial statements are available prior
to the taking of any action for the purpose of which the determination is being
made, as (i) the par or stated value of all outstanding Capital Stock of such
person plus (ii) paid-in capital or capital surplus relating to such Capital
Stock plus (iii) any retained earnings or earned surplus less (A) any
accumulated deficit to the extent, if any, not reflected in retained earnings or
earned surplus, (B) any amounts attributable to Redeemable Stock issued by the
Company (to the extent otherwise included) and (C) any amounts attributable to
Exchangeable Stock issued by the Company (to the extent otherwise included).
"Conversion Systems" means Conversion Systems, Inc., a
Delaware corporation.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 10.02 or such other address as to
which the Trustee may give notice to the Company.
<PAGE>
"Credit Agreement" means that certain Credit Agreement, dated
as of June 24, 1993, by and among the Company, IMS and the several lenders from
time to time parties thereto, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, in each case as amended or modified, and further including any
agreement or agreements (including that certain Credit Agreement, dated as of
December 19, 1995, by and among the Company, IMS and the several lenders from
time to time parties thereto, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as amended or modified) that renew, refund, replace or refinance the
same.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees,
and their respective successors, until a successor Depositary shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder.
"EBITDA" for any period means the sum of Consolidated Net
Income (but without giving effect to adjustments, accruals, deductions or
entries resulting from purchase accounting for transactions which occur after
the date of the 1993 Indenture, extraordinary losses or gains and any gains or
losses from any transaction of the type described in clause (iii) of the
definition of "Consolidated Net Income"), plus the following to the extent
includable in calculating Consolidated Net Income: (a) all tax expense relating
to taxes based on income or profit, (b) Consolidated Interest Expense, (c)
depreciation expense, and (d) amortization expense (including any permit and
closure costs amortization and accruals relating to landfills) in each case for
such period.
"Envirosafe Companies" means, collectively, Envirosafe
Services of Ohio, Inc., and Envirosafe Services of Idaho, Inc..
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any securities of the Company
containing terms identical to the Notes (except that such Exchange Notes shall
be registered under the Securities Act) that are issued and exchanged for the
Notes pursuant to the Registration Rights Agreement and this Indenture.
"Exchangeable Stock" means any Capital Stock which by its
terms is exchangeable or convertible at the option of any Person other than the
Company into another security (other than Capital Stock of the Company which is
neither Exchangeable Stock nor Redeemable Stock).
<PAGE>
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which were in effect on the date of the 1993 Indenture.
"Global Notes" has the meaning provided in Section 2.01.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" is defined to mean any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"IMS" means International Mill Service, Inc., a Pennsylvania
corporation.
"Incur" means, as applied to any obligation, to create, incur,
issue, assume, guarantee or in any other manner become liable with respect to,
contingently or otherwise, such obligation, and "Incurred," "Incurrence" and
"Incurring" shall each have a correlative meaning; provided, however, that any
Indebtedness or Capital Stock of a Person existing at the time such Person
becomes (after the date of the Indenture) a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary; and provided further, that any
amendment, modification or waiver of any provision of any document pursuant to
which Indebtedness was previously Incurred shall not be deemed to be an
Incurrence of Indebtedness as long as (i) such amendment, modification or waiver
does not (A) if such Indebtedness is contractually subordinated in right of
payment to the Notes, change to an earlier date the Stated Maturity thereof or
the date of any scheduled or required principal payment thereon or the time or
circumstances under which such Indebtedness may or shall be redeemed, (B) if
<PAGE>
such Indebtedness is contractually subordinated in right of payment to the
Notes, modify or affect, in any manner adverse to the Holders, such
subordination, (C) if the Company is the obligor thereon, provide that a
Restricted Subsidiary shall be an obligor or (D) violate, or cause the
Indebtedness to violate, Section 4.10 and 4.14 and (ii) such Indebtedness would,
after giving effect to such amendment, modification or waiver as if it were an
Incurrence, comply with the provisions of clause (i) of the first proviso to the
definition of "Refinancing Indebtedness."
"Indebtedness" of any Person means, without duplication, (i)
the principal of and premium (if any such premium is then due and owing) in
respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all
Capitalized Lease Obligations of such Person; (iii) all obligations of such
Person Incurred as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement; (iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the tenth Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) the amount of all obligations of such Person with respect
to the scheduled redemption, repayment or other repurchase prior to the Stated
Maturity of the Notes of any Redeemable Stock and, with respect to any
Subsidiary (other than a Wholly Owned Subsidiary), any other Preferred Stock
(but excluding in each case any accrued dividends, provided that for purposes of
the definition of "Refinancing Indebtedness", such accrued dividends shall not
be excluded); (vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee, the amount of any such obligation to be the maximum amount of such
Person's responsibility or liability for the guaranteed obligation; and (vii)
all obligations of the type referred to in clauses (i) through (vi) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured; provided, however, that Indebtedness shall
not include trade accounts payable arising in the ordinary course of business.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
<PAGE>
"Investment" in any Person means any loan or advance to, any
acquisition of Capital Stock, equity interest, obligation or other security of,
or capital contribution or other investment in, or any Guarantee with respect
to, such Person. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.09 only, (i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary at the time that such Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary of the Company; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
by the Board of Directors in good faith.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Lien" means any mortgage, lien, pledge, charge, or other
security interest or encumbrance of any kind.
"Net Available Cash" means the cash payments received by the
Company or a Subsidiary in connection with an Asset Sale (including any cash
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received) net of (i)
all legal, title and recording tax expenses, commissions and other fees and
expenses Incurred, and all federal, state, local and foreign taxes required to
be paid, or accrued as a liability under GAAP, as a consequence of such Asset
Sale, (ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Sale, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset Sale, or
by applicable law be repaid out of the proceeds from such Asset Sale, (iii) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries as a result of such Asset Sale, and (iv) any liabilities
associated with the assets sold pursuant to such Asset Sale and retained by the
Company or any Subsidiary after such Asset Sale, and any reasonable amount
reserved for indemnification obligations relating to such Asset Sale, in each
case as determined in accordance with GAAP.
"Net Cash Proceeds" means, with respect to any issuance or
sale of Capital Stock, the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultancy and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
<PAGE>
"1993 Indenture" means that certain Indenture, dated as of
July 1, 1993, between the Company and United States Trust Company of New York,
as trustee, as amended or modified.
"1993 Notes" means the $220 million aggregate principal amount
of 9 3/4% Senior Notes due 2003 issued under the 1993 Indenture, as amended or
modified.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any Capital Stock of such corporation which is not convertible into
another security (other than non-convertible common stock of such corporation);
provided, however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"Notes" means the Notes described in the second paragraph of
this Indenture and issued hereunder.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
Controller, Secretary, any Assistant Secretary or any Vice-President of such
Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, principal financial officer, treasurer or principal
accounting officer of the Company.
"Offshore Global Note" has the meaning provided in Section
2.01.
"Offshore Physical Note" has the meaning provided in Section
2.01.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company, any Subsidiary of the Company or the
Trustee.
"Permitted Liens" means, with respect to any Person, (a)
pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States Government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of business; (b)
Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens in
each case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person shall then be prosecuting appeal or
other proceedings for review; (c) Liens for taxes not yet subject to penalties
<PAGE>
for nonpayment or which are being contested in good faith and by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however that such letters of credit
may not constitute Indebtedness; (e) minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real properties or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness or other extensions of credit and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person; (f) Liens securing
Indebtedness Incurred to finance the construction or purchase of, or repairs,
improvements or additions to, property; provided, however, that such property
can be pledged to secure only such Indebtedness which is permitted under Section
4.11 reduced dollar-for-dollar by the outstanding principal amount of
Indebtedness in excess of $60 million secured in reliance on clause (g) of this
definition; provided further, however, that the Lien may not extend to any
property (other than the property purchased, constructed, repaired or improved
or contracts relating to the use of such property and/or revenues generated by
such property) owned by the Company or any Restricted Subsidiary at the time the
Lien is Incurred, and the Indebtedness secured by the Lien may not be Incurred
more than 365 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of full operation of
the property subject to the Lien; and provided, further, however, that subject
to clause (o) below, any such Lien securing such Indebtedness Incurred after
October 13, 1995 may extend only to property purchased, constructed, repaired or
improved after October 13, 1995 and contracts relating to the use of such
property and revenues generated by such property after such date; (g) Liens to
secure Indebtedness under the Credit Agreement of up to $100 million in
aggregate principal amount outstanding at any one time and all Guarantees
thereof; (h) Liens existing on the date of the 1993 Indenture; (i) Liens on
property or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, that any such Lien may not extend to any other
property owned by the Company or any Restricted Subsidiary; (j) Liens on
property at the time the Company or a Subsidiary acquires the property,
including any acquisition by means of a merger or consolidation with or into the
Company or a Subsidiary; provided, however, that (x) the Lien may not extend to
any other property owned by the Company or any Restricted Subsidiary and (y) in
the case of a merger or consolidation, the Lien was in existence prior to the
contemplation of such merger or consolidation; (k) Liens securing Indebtedness
or other obligations of a Subsidiary owing to the Company or a Wholly Owned
Subsidiary; (l) Liens Incurred by a Person other than the Company or any
Subsidiary on assets that are the subject of a Capitalized Lease Obligation to
which the Company or a Subsidiary is a party; provided, however, that any such
Lien may not secure Indebtedness of the Company or any Subsidiary (except by
virtue of clause (vii) of the definition of "Indebtedness") and may not extend
to any other property owned by the Company or any Restricted Subsidiary; (m)
Liens to secure Indebtedness permitted under clause (vii) of Section 4.11(b),
provided that such Liens may not extend to any property other than (i) property
owned by Envirosafe Services of Idaho, Inc. and (ii) property used to secure the
<PAGE>
Indebtedness permitted under clause (vii) of Section 4.11(b); (n) Liens by which
the Notes are secured equally and ratably with other Indebtedness of the Company
pursuant to the provisions described under Section 4.14 and (o) Liens to secure
any refinancing, refunding, extension, renewal or replacement (or successive
refinancings, refundings, extensions, renewals or replacements) as a whole, or
in part, of any Indebtedness secured by any Lien referred to in the foregoing
clauses (f), (g), (h), (i) and (j); provided, however, that (x) such new Lien
shall be limited to all or part of the same property that secured the original
Lien (plus improvements on such property), except that in the case of
Indebtedness secured by Liens otherwise permitted under clause (f), such Liens
may extend to the property contemplated by clause (f) so long as such Liens
would otherwise be permitted thereunder, and (y) the Indebtedness secured by
such Lien at such time is not increased (other than by an amount necessary to
pay fees and expenses, including premiums, related to the refinancing,
refunding, extension, renewal or replacement of such Indebtedness).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal" means (i) Freeman Spogli & Co., a California
general partnership, and any of its affiliates and (ii) any member of the
executive management of the Company prior to the occurrence of the circumstance
constituting a potential Change of Control.
"Private Placement Legend" means the legend initially set
forth on the Notes in the form set forth in Section 2.02.
"Recapitalization" means the following transactions effected
by the Company: (i) an investment in equity securities of the Company by certain
affiliates of Freeman Spogli & Co. and certain other Persons in May 1993, (ii)
the public offering and sale of the 1993 Notes, and (iii) the repayment,
repurchase or defeasance of certain Indebtedness of the Company substantially
contemporaneously with the sale of the 1993 Notes.
"Redeemable Stock" means any Capital Stock that by its terms
or otherwise is required to be redeemed (other than upon a Change of Control or
Asset Sale) on or prior to the first anniversary of the Stated Maturity of the
Notes or is redeemable at the option of the holder thereof (other than upon a
Change of Control or Asset Sale) at any time on or prior to the first
anniversary of the Stated Maturity of the Notes.
<PAGE>
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," with "refinanced" having a
correlative meaning) any Indebtedness existing on the date of the 1993 Indenture
or Incurred in compliance with the Indenture (or, if Incurred prior to the date
of this Indenture, with the 1993 Indenture) (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness is contractually subordinated in right of payment to the Notes and
the 1993 Notes to at least the same extent (if any) as the Indebtedness being
refinanced or such refinancing is permitted under Section 4.09 (ii) where the
Indebtedness being refinanced is not Senior Indebtedness, the Refinancing
Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness
being refinanced or (b) after the Stated Maturity of the Notes, (iii) the
Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced and (iv) such Refinancing Indebtedness is in
an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted value)
then outstanding (plus fees and expenses, including any premium and defeasance
costs) under the Indebtedness being refinanced; provided, that Refinancing
Indebtedness shall not include Indebtedness of a Subsidiary that refinances
Indebtedness of the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of September 30, 1997, between the Company and Morgan
Stanley & Co., Incorporated, Jefferies & Company, Inc. and NationsBanc Capital
Markets, Inc., and certain permitted assigns specified therein.
"Registration Statement" means an Exchange Offer Registration
Statement as defined and described in the Registration Rights Agreement.
"Regulation S" means Regulation S under the Securities Act.
"Reorganization Plan" means the reorganization plan of White
Motor Corporation, the Company's predecessor corporation, pursuant to which it
emerged from its reorganizational proceedings in 1983.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Division of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
<PAGE>
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in Capital Stock or rights to acquire Non-Convertible Capital
Stock and dividends or distributions payable solely to the Company or a
Restricted Subsidiary, and other than pro rata dividends or other distributions
made by a Subsidiary that is not a Wholly Owned Subsidiary, if such Subsidiary
was not a Wholly Owned Subsidiary on the date of the 1993 Indenture, to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Company or
any Subsidiary or other Affiliate of the Company (other than any Capital Stock
owned by the Company or any Wholly Owned Subsidiary), or the exercise by the
Company of any option to exchange any Capital Stock that by its terms is
exchangeable solely at the option of the Company (other than into Capital Stock
of the Company which is neither Exchangeable Stock nor Redeemable Stock),
provided that the issuance by the Company of Capital Stock (other than
Redeemable Stock or Exchangeable Stock) upon the conversion by its terms of any
convertible Capital Stock or other security or the exercise of any option or
warrant to purchase Capital Stock shall not constitute a Restricted Payment,
(iii) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (iv) the making of any Investment in any Unrestricted Subsidiary or any
Affiliate of the Company other than a Restricted Subsidiary or a Person which
will become a Restricted Subsidiary as a result of any such Investment.
"Restricted Subsidiary" shall mean IMS, Conversion Systems and
the Envirosafe Companies, any intermediate holding company between such
Restricted Subsidiary and the Company and any other Subsidiary that is not an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means other senior Indebtedness of the
Company, including Indebtedness under the Credit Agreement and 1993 Notes,
ranking pari passu with the Notes.
"Shelf Registration Statement" has the meaning provided in the
Registration Rights Agreement.
<PAGE>
"Significant Subsidiary" means any Subsidiary (other than an
Unrestricted Subsidiary) that would be a "Significant Subsidiary" of the Company
within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the date hereof or hereafter Incurred) which is
contractually subordinate or junior in right of payment to the Notes and the
1993 Notes.
"Subsidiary" means (i) a corporation at least a majority of
whose Capital Stock with voting power, under ordinary circumstances, to elect a
majority of the Board of Directors of such corporation is at the time, directly
or indirectly, owned or controlled by the Company, by a Subsidiary or
Subsidiaries of the Company, or by the Company and a Subsidiary or Subsidiaries
of the Company or (ii) any other Person (other than a corporation) in which the
Company, a Subsidiary or Subsidiaries of the Company, directly or indirectly, at
the date of determination, has at least a majority ownership interest.
"TDS" means EnviroSource Treatment & Disposal Services, Inc.
"Tangible Net Assets" with respect to any Person means the
consolidated assets of such Person determined in accordance with GAAP, except
that there shall be deducted therefrom all intangible assets (including goodwill
and any other intangibles determined in accordance with GAAP but which shall not
include landfill permits, closure trust funds and deferred charges and
unamortized debt issuance costs).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
<PAGE>
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable before the maturity thereof.
"U.S. Physical Notes" has the meaning provided in Section 2.01
"Unrestricted Subsidiary" means (i) any Subsidiary that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company or any other Subsidiary that is not a
subsidiary of the Subsidiary to be so designated; provided, however, that either
(A) the Subsidiary to be so designated has total assets of $1,000 or less or (B)
if such Subsidiary has assets greater than $1,000, that such designation would
be permitted under Section 4.09. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary of the Company; provided,
however, that immediately after giving effect to such designation (x) to the
extent that the Unrestricted Subsidiary has any Indebtedness (other than
Indebtedness that could be Incurred under clauses (ii)-(vi) under Section
4.11(b)), the Company could Incur $1.00 of additional Indebtedness pursuant to
Section 4.11(a) after giving pro forma effect to such Unrestricted Subsidiary's
Indebtedness as if it had been Incurred at the beginning of the applicable
four-quarter period and (y) no Default shall have occurred and be continuing.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the board resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions; provided, however, that the
failure to so file such resolution and/or Officers' Certificate with the Trustee
shall not impair or affect the validity of such designation.
"Voting Stock" with respect to any Person means the Capital
Stock normally entitled to vote in elections of the Board of Directors.
"Wholly Owned Subsidiary" means a Subsidiary (other than an
Unrestricted Subsidiary) all the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. OTHER DEFINITIONS.
-----------------
Term Defined in Section
"Affiliate Transaction".......................... 4.13
"Application Period"............................. 4.12
"Asset Sale Offer"............................... 4.12
"Authenticating Agent"........................... 2.02
"Bankruptcy Law"................................. 4.01
"Change of Control Offer"........................ 4.16
<PAGE>
"Change of Control Payment"...................... 4.16
"Change of Control Payment Date"................. 4.16
"Custodian"...................................... 6.01
"Event of Default"............................... 6.01
"Offer Amount"................................... 4.12
"Offer Period"................................... 4.12
"Paying Agent"................................... 2.03
"Purchase Date".................................. 4.12
"Registrar"...................................... 2.03
"Restricted Payments"............................ 1.01
"Successor Corporation".......................... 5.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
-----------------------------------------------
ACT. Whenever this Indenture refers to a provision of the TIA, the provision is
- ---
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context
---------------------
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
<PAGE>
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING. The Notes and the Trustee's
---------------
certificate of authentication shall be substantially in the form of Exhibit A
hereto, the terms of which are incorporated in and made a part of this
Indenture. The Notes may have notations, legends or endorsements approved as to
form by the Company and required by law, stock exchange rule, agreements to
which the Company is subject or usage. Each Note shall be dated the date of its
authentication. The Notes shall be issuable only in registered form without
coupons and only in denominations of $1,000 or integral multiples thereof.
Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Notes in registered
form, substantially in the form set forth in Exhibit A (the "U.S. Global
Notes"), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the U.S. Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, and the Registrar, as
hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global Notes in registered form substantially in the form set forth in Exhibit A
(the "Offshore Global Notes") deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Offshore Global
Notes may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, and the
Registrar, as hereinafter provided.
Notes offered and sold in reliance on Regulation D under the
Securities Act shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "U.S.
Physical Notes"). Notes issued pursuant to Section 2.07 in exchange for
interests in the Offshore Global Notes shall be in the form of permanent
certificated Notes in registered form substantially in the form set forth in
Exhibit A (the "Offshore Physical Notes").
<PAGE>
The Offshore Physical Notes and U.S. Physical Notes are
sometimes collectively herein referred to as the "Physical Notes". The U.S.
Global Note and the Offshore Global Note are sometimes referred to herein as the
"Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. RESTRICTIVE LEGENDS. Unless and until a Note is
-------------------
exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, (i) each U.S. Global
Note and each U.S. Physical Note shall bear the legend, set forth below on the
face thereof and (ii) each Offshore Physical Note and each Offshore Global Note
shall bear the legend set forth below on the face thereof until at least the
41st day after the Closing Date and receipt by the Company and the Trustee of a
certificate substantially in the form of Exhibit B hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
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, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) 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 "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE
INITIAL SALE OF THE NOTES, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
<PAGE>
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED
TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY 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
RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED PURSUANT TO SUCH
TRANSFER, EXCHANGE OR PAYMENT IS REGISTERED IN THE NAME OF CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
Section 2.08 OF THE INDENTURE.
SECTION 2.03. EXECUTION AND AUTHENTICATION. An Officer of the
----------------------------
Company shall sign the Notes for the Company by manual or facsimile signature.
The Company's seal shall be reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall nevertheless
be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee or the Authenticating Agent. The signature of the
Trustee shall be conclusive evidence that the Note has been authenticated under
this Indenture. The form of Trustee's certificate of authentication to be borne
by the Notes shall be substantially as set forth in Exhibit A hereto.
The Trustee or the Authenticating Agent shall, upon a written
order of the Company signed by two Officers of the Company, authenticate Notes
for original issue up to an aggregate principal amount stated in paragraph 4 of
the Notes. The aggregate principal amount of Notes outstanding at any time shall
not exceed the amount set forth herein except as provided in Section 2.09.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes (the "Authenticating Agent"). Unless limited
by the terms of such appointment, an Authenticating Agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
Authenticating Agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.04. REGISTRAR AND PAYING AGENT. The Company shall
---------------------------
maintain (i) an office or agency where Notes may be presented for registration
of transfer or for exchange (including any co-registrar, the "Registrar") and
(ii) an office or agency where Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent. The Company may change any Paying Agent, Registrar or co-registrar
without prior notice to any Holder of a Note. The Company shall notify the
Trustee and the Trustee shall notify the Holders of the Notes of the name and
address of any Agent not a party to this Indenture. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-registrar. The Company
<PAGE>
shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.05. LISTS OF HOLDERS OF THE NOTES. 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 of the Notes and shall
otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least seven Business Days before each
Interest Payment Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders of the Notes, including the
aggregate principal amount of the Notes held by each thereof, and the Company
shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE. When Notes are presented
---------------------
to the Registrar with a request to register the transfer or to exchange them for
an equal principal amount of Notes of other denominations, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met; provided, however, that any Note presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar and
the Trustee duly executed by the Holder thereof or by his attorney duly
authorized in writing. To permit registrations of transfer and exchanges, the
Company shall issue and the Trustee shall authenticate Notes at the Registrar's
request, subject to such rules as the Trustee may reasonably require.
Neither the Company nor the Registrar shall be required to
issue, register the transfer of or exchange (i) any Note for a period beginning
at the opening of business 15 days before any repurchase of Notes permitted by
this Indenture and ending at the close of business on the day of repurchase,
(ii) any Note 15 days before the day of any selection of Notes for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part or (iii) any Note between a record date and the next succeeding Interest
Payment Date.
No service charge shall be made to any Holder of a Note for
any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge payable
upon exchanges pursuant to Sections 2.13, 3.06 or 9.05 hereof, which shall be
paid by the Company).
<PAGE>
Prior to due presentment for registration of transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Note and for all other purposes whatsoever, whether or not such Note is
overdue, and neither the Trustee, any Agent nor the Company shall be affected by
notice to the contrary. Furthermore, any Holder of a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Note may be effected only through a book-entry system maintained by
the Holder of such Global Note (or its agent) and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book entry. When
Notes are presented to the Registrar or a co-Registrar with a request to
register the transfer or to exchange them for an equal principal amount of Notes
of other authorized denominations (including an exchange of Notes for Exchange
Notes), the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; provided that no
exchanges of Notes for Exchange Notes shall occur until a Registration Statement
shall have been declared effective by the SEC (confirmed in an Officers'
Certificate delivered to the Trustee) and that any Notes that are exchanged for
Exchange Notes shall be cancelled by the Trustee.
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES. (a) The
--------------------------------------
U.S. Global Notes and Offshore Global Notes initially shall (i) be registered in
the name of the Depositary for such Global Notes or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary, or the Trustee as its custodian, or
under the Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Note may
be transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, respectively, if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and iscontinuing and the Registrar has received a request
to the foregoing effect from the Depositary.
<PAGE>
(c) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Note will, upon transfer, cease to be an interest in such Global
Note and become an interest in the other Global Note and, accordingly, will
thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) In connection with any transfer of a portion of the
beneficial interests in a U.S. Global Note or Offshore Global Note to beneficial
owners pursuant to paragraph (b) of this Section, the Registrar shall reflect on
its books and records the date and a decrease in the principal amount of the
U.S. Global Note or Offshore Global Note, as the case may be, in an amount equal
to the principal amount of the beneficial interest in such Global Notes to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the
case may be, of like tenor and amount.
(e) In connection with the transfer of an entire U.S. Global
Note or Offshore Global Note to beneficial owners pursuant to paragraph (b) of
this Section, such U.S. Global Note or Offshore Global Note, as the case may be,
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in such U.S. Global Note or Offshore Global Note, as the case may be,
an equal aggregate principal amount of U.S. Physical Notes or Offshore Physical
Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an
interest in a U.S. Global Note pursuant to paragraph (b), (d) or (e) of this
Section shall, except as otherwise provided by paragraph (e) of Section 2.08,
bear the legend regarding transfer restrictions applicable to the U.S. Physical
Note set forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an
interest in an Offshore Global Note pursuant to paragraph (b), (d) or (e) of
this Section shall, except as otherwise provided by paragraph (e) of Section
2.08, bear the legend regarding transfer restrictions applicable to the Offshore
Physical Note set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies
and otherwise authorize any person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
<PAGE>
(i) Beneficial owners of interests in a U.S. Global Note may
receive U.S. Physical Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the Depositary.
In connection with the execution, authentication and delivery of such U.S.
Physical Notes, the Registrar shall reflect on its books and records a decrease
in the principal amount of the relevant U.S. Global Note equal to the principal
amount of such U.S. Physical Notes and the Company shall execute and the Trustee
shall authenticate and deliver one or more U.S. Physical Notes having an equal
aggregate principal amount.
SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a
---------------------------
Note is exchanged for an Exchange Note in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) Transfers to Non - QIB Institutional Accredited
---------------------------------------------
Investors. The following provisions shall apply with respect to the registration
- ---------
provisions shall apply with respect to the registration of any proposed transfer
of a Note to any Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act as in effect with respect to such transfer or
(y) the proposed transferee has delivered to the Registrar (A) a
certificate substantially in the form of Exhibit C hereto and (B) if
the aggregate principal amount of the Notes being transferred is less
than $100,000 at the time of such transfer, an Opinion of Counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and
(y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of a U.S.
Global Note in an amount equal to the principal amount of the
beneficial interest in such U.S. Global Note to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
-----------------
with respect to the registration of any proposed transfer of a U.S. Physical
Note, an interest in a U.S. Global Note or an interest in an Offshore Global
Note prior to the removal of the Private Placement Legend to a QIB (excluding
Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) either (A)
an interest in an Offshore Global Note prior to the removal of the
Private Placement Legend or (B) U.S. Physical Notes, the Registrar
shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the form of
Note stating, or has otherwise advised the Company and the Registrar in
<PAGE>
writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided
for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that it is purchasing the Note for its
own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it
is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A or (y) an interest in a U.S. Global Note, the
transfer of such interest may be effected only through the book-entry
system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Note to be transferred consists of U.S. Physical Notes, upon receipt by
the Registrar of the documents referred to in clause (i) and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar and the Trustee shall reflect on
their books and records the date and an increase in the principal
amount of the U.S. Global Notes in an amount equal to the principal
amount of the U.S. Physical Notes, to be transferred, and the Trustee
shall cancel the U.S. Physical Notes so transferred.
(c) Transfers of Interests in the Offshore Global Note or
---------------------------------------------------------
Offshore Physical Notes. The following provisions shall apply with respect to
- ------------------------
any transfer of interests in the Offshore Global Notes or Offshore Physical
Notes:
(i) prior to the removal of the Private Placement Legend from
an Offshore Global Note or Offshore Physical Note pursuant to Section
2.02, the Registrar shall refuse to register such transfer unless such
transfer complies with Section 2.08(b) or Section 2.08(d), as the case
may be; and
(ii) after such removal, the Registrar shall register the
transfer of any such Note without requiring any additional
certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Physical Note
or an interest in the U.S. Global Note only upon receipt of a
certificate substantially in the form of Exhibit D from the proposed
transferor.
(ii) (a) If the proposed Transferor is an Agent Member holding
a beneficial interest in a U.S. Global Note, upon receipt by the
Registrar of (x) the documents
<PAGE>
required by paragraph (i) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Note in an amount equal to the
principal amount of the beneficial interest in the U.S. Global Note to
be transferred, and (b) if the proposed transferee is an Agent Member,
upon receipt by the Registrar of instructions given in accordance with
the Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Offshore Global Note in an amount equal to the
principal amount of the U.S. Physical Notes or the U.S. Global Note, as
the case may be, to be transferred, and the Trustee shall cancel the
Physical Note, if any, so transferred or decrease the amount of the
U.S. Global Note.
(e) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the circumstances contemplated by paragraphs (a)(i)(x) or
(c)(ii) of this Section 2.08 exist or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(f) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes, each Holder agrees by
its acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may conclusively rely on a determination made by the Company with
respect to) the sufficiency of any such certifications, legal opinions or other
information.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.07 or this Section
2.08 until the earlier of the Maturity Date or five years after the transfer of
the Notes as set forth herein. The Company shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Registrar.
SECTION 2.09. REPLACEMENT NOTES. If any mutilated Note is
-----------------
surrendered to the Trustee, or the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Note, the Company
<PAGE>
shall issue and the Trustee, upon the written order of the Company signed by two
Officers of the Company, shall authenticate a replacement Note if the Trustee's
requirements for replacements of Notes are met. If required by the Trustee or
the Company, an indemnity bond must be supplied by the Holder that is sufficient
in the judgment of the Trustee and the Company to protect the Company, the
Trustee, any Agent or any Authenticating Agent from any loss which any of them
may suffer if a Note is replaced. Each of the Company and the Trustee may charge
for its expenses in replacing a Note.
The Company shall not be required to issue a replacement Note
for (i) any Note for a period beginning at the opening of business 15 days
before the repurchase of Notes permitted by this Indenture and ending at the
close of business on the day of such repurchase, (ii) any Note 15 days before
the day of any selection of Notes for redemption in whole or in part, except the
unredeemed portion of any note being redeemed in part or (iii) any Note between
a record date and the next succeeding Interest Payment Date.
Every replacement Note is an additional obligation of the
Company.
SECTION 2.10. PAYING AGENT TO HOLD MONEY IN TRUST. The Company
-----------------------------------
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent shall hold in trust for the benefit of the Holders of the Notes
or the Trustee all money held by the Paying Agent for the payment of principal
of, premium, if any, and interest on the Notes, and shall notify the Trustee of
any Default by the Company in making any such payment. While any such Default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the
money delivered to the Trustee. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders of the Notes all money held by it as Paying Agent.
Notwithstanding any provision herein to the contrary, an installment
(including, without limitation, any redemption or repurchase of Notes pursuant
to this Indenture) of principal or interest on any Note shall be considered paid
on the date due if the Trustee or Paying Agent (other than the Company or any
Subsidiary or Affiliate of the Company) holds on that date money in immediately
available funds designated for and sufficient to pay the installment, provided
that the Trustee or Paying Agent is not legally prohibited from making any
payment of such installment on such Notes.
SECTION 2.11. OUTSTANDING NOTES. The Notes outstanding at any
-----------------
time are all the Notes authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding.
<PAGE>
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.12 hereof, a Note does not cease to be
outstanding because the Company, a Subsidiary of the Company or an Affiliate of
the Company holds the Note.
SECTION 2.12. TREASURY NOTES. In determining whether the
---------------
Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company, any Subsidiary of the
Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
which a Responsible Officer knows to be so owned shall be so considered. The
Company shall notify the Trustee, in writing, when it or any of its Subsidiaries
repurchases or otherwise acquires Notes and of the aggregate principal amount so
repurchased or acquired. Notwithstanding the foregoing, Notes that are to be
acquired by the Company, any Subsidiary of the Company or an Affiliate of the
Company pursuant to an exchange offer, tender offer or other agreement shall not
be deemed to be owned by the Company, such Subsidiary of the Company or an
Affiliate of the Company until legal title to such Notes passes to the Company,
such Subsidiary or Affiliate, as the case may be.
SECTION 2.13. TEMPORARY NOTES. Until definitive Notes are
----------------
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company and the Trustee
consider appropriate for temporary Notes. Without unreasonable delay, the
Company shall prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate definitive
Notes in exchange for temporary Notes. Until such exchange, temporary Notes
shall be entitled to the same rights, benefits and privileges as definitive
Notes.
SECTION 2.14. CANCELLATION. The Company at any time may
------------
deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee shall cancel all Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act), unless the Company directs them to be returned to it. The
Company may not issue new Notes to replace Notes that it has redeemed or paid or
that have been delivered to the Trustee for cancellation. All cancelled Notes
held by the Trustee shall be destroyed and certification of their destruction
delivered to the Company, unless by a written order, signed by two Officers of
the Company, the Company shall direct that cancelled Notes be returned to it.
<PAGE>
SECTION 2.15. DEFAULTED INTEREST. If the Company defaults in a
------------------
payment of interest on the Notes and if such interest payment is not made within
the grace period provided by Section 6.01(a), it shall pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on
the defaulted interest, to the Persons who are Holders of the Notes on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least five Business Days prior to the payment date, in
each case at the rate provided in the Notes and in Section 4.01 hereof. The
Company shall, with the consent of the Trustee, fix or cause to be fixed each
such special record date and payment date. At least 15 days before the special
record date, the Company (or the Trustee if requested in writing by the Company,
in the name of and at the expense of the Company) shall mail to Holders of the
Notes a notice that states the special record date, the related payment date and
the amount of such interest to be paid. Any interest which is paid prior to the
expiration of the grace period provided in Section 6.01(a) hereof shall be paid
to Holders of the Notes as of the regular record date for the Interest Payment
Date for which interest has not been paid. Notwithstanding the foregoing, the
Company may make payment of any defaulted interest in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange.
SECTION 2.16. RECORD DATE. The record date for purposes of
------------
determining the identity of Holders of the Notes entitled to vote or consent to
any action by vote or consent authorized or permitted under this Indenture shall
be determined as provided for in TIA ss. 316(c).
SECTION 2.17. CUSIP NUMBER. The Company in issuing the Notes
------------
may use "CUSIP", "CINS" and "ISIN" numbers and, if it does so, the Trustee shall
use the CUSIP, CINS and ISIN numbers in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP, CINS and
ISIN numbers printed in the notice or on the Notes and that reliance may be
placed only on the other identification numbers printed on the Notes. The
Company will promptly notify the Trustee of any change in the CUSIP, CINS and
ISIN numbers.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
------------------
redeem Notes pursuant to the optional redemption provisions of Section 3.07
hereof, it shall furnish to the Trustee, at least 30 days but not more than 60
days before a redemption date (or such shorter period as may be agreed to by the
Trustee in writing), an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
<PAGE>
If the Company is required to make an offer to redeem Notes
pursuant to the provisions of Section 4.12 or 4.16 hereof, it shall furnish to
the Trustee at least 30 days but not more than 60 days before a redemption date
(or such shorter period as may be agreed to by the Trustee in writing), an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Notes to be redeemed, (iv) the redemption price and (v) a
statement to the effect that (a) the Company or one of its Subsidiaries has
effected an Asset Sale and the conditions set forth in Section 4.12 have been
satisfied or (b) a Change of Control has occurred and the conditions set forth
in Section 4.16 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If less than all of
---------------------------------
the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed
among the Holders of the Notes on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate (and in such manner
as complies with applicable legal and stock exchange requirements, if if any),
provided that no Notes of $1,000 or less shall be redeemed in part. In the event
of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of them selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
In the event the Company is required to make an offer to
redeem Notes pursuant to Section 4.12 hereof and the amount of the Net Available
Cash from the Asset Sale for such offer is not evenly divisible by $1,000, the
Trustee shall promptly refund to the Company any remaining excess proceeds.
SECTION 3.03. NOTICE OF REDEMPTION. Subject to the provisions
--------------------
of Section 4.12(c) hereof, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Notes are to be redeemed at
its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
<PAGE>
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date and the only remaining right of
the Holder is to receive payment of the redemption price upon surrender
to the Paying Agent of the Notes to be redeemed;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP, CINS and ISIN numbers, if any, listed in such
notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 35 days but not more than
60 days prior to the redemption date (or such shorter period as may be agreed to
by the Trustee in writing), an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
as provided in the preceding paragraph. In any case, failure to give such notice
or any defect in the notice to the Holder of any Note shall not affect the
validity of the proceeding for the redemption of any other Note.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
------------------------------
redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become due and payable on the redemption date at the redemption
price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to the
---------------------------
redemption date, the Company shall deposit with the Trustee or with the Paying
Agent money in immediately available funds sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
On and after the redemption date, interest shall cease to
accrue on the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
<PAGE>
Interest Payment Date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Note was registered at the close of business on such
record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note
----------------------
that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the Holder of the Notes at the expense of the Company a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION. The Company may not redeem
-------------------
the Notes prior to June 15, 1998. On and after such date, the Company may redeem
the Notes at any time as a whole, or from time to time in part, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
interest to the redemption date, if redeemed during the 12-month period
beginning June 15 of the years indicated below:
Year Redemption Price
---- ----------------
1998............................................... 104.875%
1999............................................... 103.250%
2000............................................... 101.625%
2001 and thereafter................................ 100.000%
SECTION 3.08. MANDATORY REDEMPTION. The Company shall not be
--------------------
required to make mandatory redemption payments with respect to the Notes. There
are no sinking fund payments with respect to the Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause
----------------
to be paid the principal of, premium, if any, and interest on the Notes on the
dates and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Trustee or the Paying
Agent, if other than the Company, holds on the due date money deposited by the
Company in immediately available funds designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Trustee or such Paying
Agent shall return to the Company, no later than five days following the date of
payment, any money (including accrued interest) that exceeds such amount of
principal, premium, if any, and interest paid on the Notes.
<PAGE>
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to the applicable interest rate on the Notes to the extent lawful; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
The term "Bankruptcy Law" means title 11, U.S. Code or any
similar federal or state law for the relief of debtors.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company
--------------------------------
shall maintain in the Borough of Manhattan, the City of New York, an office or
agency (which may be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-registrar) where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The 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 Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes 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 designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.04.
SECTION 4.03. REPORTS. (a) So long as any of the Notes remain
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outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act to be filed with the Trustee
and mailed to the Holders at their addresses appearing in the register of Notes
maintained by the Registrar, in each case, within 15 days of filing with the
SEC. If the Company is not subject to the requirements of such Section 13 or
15(d) of the Exchange Act, the Company shall nevertheless continue to cause the
annual and quarterly financial statements, including any notes thereto (and,
with respect to annual reports, an auditors' report by an accounting firm of
established national reputation) and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations," comparable to that which would
have been required to appear in annual or quarterly reports filed under Section
<PAGE>
13 or 15(d) of the Exchange Act to be so filed with the SEC for public
availability and the Trustee and mailed to the Holders within 120 days after the
end of the Company's fiscal years and within 60 days after the end of each of
the first three quarters of each such Fiscal year. The Company shall also comply
with the provisions of TIA ss. 314(a).
(b) The Company shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information that the
Trustee may be required to deliver to the Holders of the Notes under this
Section 4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall
-----------------------
deliver to the Trustee, within 120 days after the end of each fiscal year, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether each has
kept, observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to each such Officer signing such certificates, that to
the best of his or her knowledge each entity has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action each is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action each is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
which would lead them to believe that the Company has violated any provisions of
Sections 4.01, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, or
4.16 hereof or of Article 5 of this Indenture or that any Event of Default has
occurred under Article 6 or, if any such violation or Event of Default has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee. promptly upon any Officer becoming aware of
(and in no event later than 30 days after the occurrence of) (i) any Default or
Event of Default, (ii) any event of default under any Indebtedness referred to
in Section 6.01(d) hereof and the acceleration thereof, or (iii) any Default
that could mature into an Event of Default described in clauses (c) through (g)
of Section 6.01, an Officers' Certificate specifying such Default, Event of
<PAGE>
Default or default and acceleration and what action the Company is taking or
proposes to take with respect thereto.
SECTION 4.05. TAXES. The Company shall pay, and shall cause
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each of its Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except as contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company
--------------------------------
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. CORPORATE EXISTENCE. Subject to Article 5
--------------------
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence, and the
corporate, partnership or other existence of any Subsidiary, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.08. MAINTENANCE OF PROPERTIES AND INSURANCE. (a) The
---------------------------------------
Company shall cause all properties used or useful in the conduct of its business
or the business of each Restricted Subsidiary and material to the Company and
the Restricted Subsidiaries taken as a whole to be maintained and kept in normal
condition, repair and working order and supplied with all necessary equipment;
provided, however, that nothing in this Section 4.08 shall prevent the Company
or any Restricted Subsidiary from discontinuing the use, operation or
maintenance of any such properties or disposing of any of them, if such
discontinuance or disposal is, in the judgment of an Officer (or other employee
of the Company of any Restricted Subsidiary) of the Company or such Restricted
Subsidiary having managerial responsibilities for any such property,
appropriate.
(b) The Company shall provide or cause to be provided, for
itself and the Restricted Subsidiaries, insurance against loss or damage of the
kinds customarily insured against by corporations similarly situated and owning
<PAGE>
by corporations similarly situated and owning like properties and as are prudent
and customary in the businesses in which they are engaged, with reputable
insurers or with the government of the United States of America, or an agency of
instrumentality thereof, of such kind, and in such amounts, with such
deductibles and by such methods as the Company in good faith shall determine to
be reasonable and appropriate in the circumstances.
SECTION 4.09. LIMITATION ON RESTRICTED PAYMENTS. (a) So long
---------------------------------
as any of the Notes are outstanding, the Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, make any Restricted
Payment, unless:
(i) no Default under the Indenture shall have occurred
and be continuing (or would result therefrom);
(ii) upon giving effect, as if paid, to the proposed
Restricted Payment, the Company would be permitted to Incur an
additional $1.00 of Indebtedness pursuant to Section 4.11(a); and
(iii) upon giving effect, as if paid, to the proposed
Restricted Payment, the aggregate amount of all such Restricted
Payments subsequent to the date of the 1993 Indenture shall not exceed
the sum of:
(A) 50% of aggregate Consolidated Net Income accrued
during the period (treated as one accounting period) from the
beginning of the fiscal quarter beginning after the date of
the 1993 Indenture to the end of the most recent fiscal
quarter for which financial statements are available, (or if
such Consolidated Net Income is a deficit, minus 100% of such
deficit), and minus 100% of the amount of any write-downs,
write-offs and other negative revaluations not otherwise
reflected in Consolidated Net Income during such period;
(B) the aggregate Net Cash Proceeds received by the
Company after the date of the 1993 Indenture from the issue or
sale (other than to a Subsidiary or an employee stock
ownership plan) of Capital Stock (other than Redeemable Stock
or Exchangeable Stock) of the Company and warrants, options or
other rights to acquire such Capital Stock;
(C) the amount by which the principal amount of and
any accrued interest on Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's
consolidated balance sheet upon the conversion or exchange
(other than by a Subsidiary) subsequent to the date of the
1993 Indenture of any Indebtedness of the Company or any
Restricted Subsidiary convertible or exchangeable for Capital
Stock (other than Redeemable Stock or Exchangeable Stock) of
the Company (less the amount of any cash, or the value of any
other property, distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange); and
<PAGE>
(D) an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from
payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case
to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries, or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case
as provided in the definition of "Investments"), or resulting
from the receipt of proceeds from the sale or other
disposition of an Unrestricted Subsidiary, not to exceed in
the case of any Unrestricted Subsidiary the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary and which was
treated as a Restricted Payment under the Indenture or the
1993 Indenture (excluding the amount of any such Investment
made pursuant to the provisions described in clause (iv) of
paragraph (c) of Section 4.09 of the 1993 Indenture).
(b) Notwithstanding the limitations set forth under clauses
(ii) and (iii) of paragraph (a) above (and in addition to the amount (if any) of
Restricted Payments permitted to be made under such clause (iii)) and as long as
no Default shall have occurred and be continuing (or would result therefrom),
the Company and the Restricted Subsidiaries may make Restricted Payments which
in the aggregate while any of the Notes remain outstanding do not exceed $3.0
million.
(c) The failure to satisfy the conditions set forth in clauses
(ii) and (iii) of Section 4.09(a) will not prohibit any of the following as long
as the condition set forth in clause (i) of Section 4.09(a) (except as set forth
below) is satisfied (and payments made in accordance with the following will not
(except as set forth in clause (iii) below) be included in the calculation of
Restricted Payments described in clause (iii) of Section 4.09(a) and will not be
taken into account for purposes of paragraph (b) above:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for,
conversion of, or in an amount not in excess of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than (x) Redeemable Stock or Exchangeable Stock, and (y) Capital Stock
issued or sold to a Subsidiary or an employee stock ownership plan);
provided, however, that notwithstanding clause (i) of Section 4.09(a),
the occurrence or existence of a Default shall not prohibit the making
of such purchase or redemption, and provided, further, the Net Cash
Proceeds from such sale shall be excluded from subclause (B) of clause
(iii) of Section 4.09(a);
(ii) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or in an amount not in excess of the
proceeds of the substantially concurrent Incurrence of, Indebtedness of
the Company; provided, however, that such Indebtedness (A) shall be
contractually subordinated in right of payment to the Notes and the
1993 Notes to at least the same extent as the Subordinated Obligations
so exchanged, purchased or redeemed, (B) shall be scheduled to mature
<PAGE>
either (x) no earlier than such Subordinated Obligations or (y) after
the Stated Maturity of the Notes and (C) shall have an Average Life
equal to or greater than the Average Life of such Subordinated
Obligations;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with the provisions of the Indenture; provided, however,
that notwithstanding clause (i) of Section 4.09(a), the occurrence or
existence of a Default at such time of payment shall not prohibit the
payment of such dividends; and provided, further that such dividends
shall be included in the calculation of the amount of Restricted
Payments described in clause (iii) of Section 4.09(a);
(iv) Investments in Unrestricted Subsidiaries in an aggregate
amount not to exceed $5 million in any fiscal year; provided, however,
any portion thereof not utilized under this Indenture or the 1993
Indenture since the date of the 1993 Indenture may be utilized in any
subsequent year;
(v) any repurchase of the Company's Common Stock required to
be repurchased by the Company's Reorganization Plan as in effect on the
date of the 1993 Indenture;
(vi) loans to employees of the Company or its Subsidiaries
extended in connection with purchases of Capital Stock of the Company
not to exceed $3 million in the aggregate at any time outstanding; or
(vii) the redemption from time to time of all or any part of
the Company's Subordinated Notes due 1998 or the other retirement of
such Subordinated Notes called for redemption in 1993.
SECTION 4.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT
---------------------------------------------
RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit
- -----------------------------------
any Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends to or make any other distributions on
its Capital Stock to, or pay any Indebtedness or other obligations owed to, the
Company or any Restricted Subsidiary, (ii) make any loans or advances to the
Company or (iii) transfer any of its property or assets to the Company;
provided, however, that the foregoing shall not apply to:
(a) any encumbrance or restriction pursuant to this Indenture,
the 1993 Indenture or any other agreement or instrument in effect at or
entered into on the date of the 1993 Indenture;
<PAGE>
(b) any encumbrance or restriction with respect to a
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Subsidiary on or prior to the date on which such
Subsidiary becomes a Subsidiary and outstanding on such date;
(c) any encumbrance or restriction pursuant to an agreement
effecting (1) a refinancing of Indebtedness referred to in clause (a)
or (b) above or contained in any amendment or modification with respect
to such Indebtedness or (2) any other Indebtedness Incurred pursuant to
the provisions described in clause (iii) of Section 4.11(b); provided,
however, that the encumbrances and restrictions contained in any such
agreement, amendment or modification are no more restrictive in any
material respect with respect to the matters referred to in clauses
(i), (ii) and (iii) above than the encumbrances and restrictions with
respect to (x) the Indebtedness being refinanced, amended or modified
in the case of clause (1), or (y) the Credit Agreement, in the case of
clause (2);
(d) in the case of clause (iii) above, customary
non-assignment provisions of any leases governing a leasehold interest
or of any supply, license or other agreement entered into in the
ordinary course of business of the Company or any Subsidiary;
(e) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of
all or substantially all of the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition;
(f) in the case of clause (iii) above. restrictions contained
in security agreements securing Indebtedness of a Subsidiary to the
extent such restrictions restrict the transfer of the property subject
to such security agreements; or
(g) any encumbrance or restriction existing by reason of
applicable law.
SECTION 4.11. LIMITATION ON INCURRENCE OF INDEBTEDNESS. (a)
-----------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur any Indebtedness (other than the Notes and any
other Indebtedness outstanding as of the date of this Indenture) unless, in the
case of Indebtedness Incurred by the Company, after giving effect thereto, the
Consolidated Coverage Ratio determined at the time of such Incurrence is greater
than or equal to 2.25 to 1.
(b) Notwithstanding the foregoing, this Section shall not
limit the ability of the Company or any Restricted Subsidiary to Incur the
following Indebtedness:
(i) Refinancing Indebtedness; provided, however, that the
characterization of Indebtedness as Refinancing Indebtedness may not
cause or permit Indebtedness Incurred under clauses (ii), (iii), (v) or
(vii) below to exceed the maximum amounts allowed by the terms of each
such clause, and, to that end (x) if Refinancing Indebtedness is
<PAGE>
Incurred to refinance any Indebtedness originally Incurred under either
of clauses (ii) or (iii) then the amount of Indebtedness permitted
under such clause in question shall be reduced by the amount of such
Refinancing Indebtedness (and any Refinancing Indebtedness that
directly or indirectly refinances such Refinancing Indebtedness)
outstanding at the time of determination, and (y) if Refinancing
Indebtedness is Incurred to refinance any Indebtedness originally
Incurred under either of clauses (v) or (vii) then the amount of
Indebtedness permitted under such clause in question shall be reduced
permanently by the amount of such Refinancing Indebtedness;
(ii) in addition to any Indebtedness otherwise permitted to be
Incurred under the Indenture, up to $30 million in aggregate principal
amount of such Indebtedness of the Company and its Restricted
Subsidiaries at any one time outstanding; provided that the amount of
such Indebtedness Incurred by Restricted Subsidiaries shall not exceed
$15 million in aggregate principal amount at any one time outstanding;
(iii) in addition to any Indebtedness otherwise permitted to
be Incurred under the Indenture, Indebtedness under the Credit
Agreement of up to $60 million in aggregate principal amount
outstanding at any one time and all Guarantees thereof;
(iv) Indebtedness of the Company which is owed to and held by
a Wholly Owned Subsidiary and Indebtedness of a Wholly Owned Subsidiary
which is owed to and held by the Company or a Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock which results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any transfer of such Indebtedness
(other than to the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness
by the Company or by a Wholly Owned Subsidiary, as the case may be;
(v) Indebtedness solely to finance capital expenditures of the
Company or any Restricted Subsidiary in an aggregate principal amount
not to exceed in any fiscal year $30 million; provided, however, that
if in any fiscal year ended after the date of the 1993 Indenture the
amount of Indebtedness Incurred solely to finance capital expenditures
of the Company or any Restricted Subsidiary was or is less than $30
million, such unused portion may be utilized in any subsequent year;
and provided further that in calculating the amount of Indebtedness
Incurred under this clause (v) in any fiscal year, there shall also be
included any Indebtedness Incurred under clause (vii) of this Section
4.11(b) in such fiscal year;
(vi) Guarantees by the Company, or by any Restricted
Subsidiary, of Indebtedness of any Restricted Subsidiary or the
Company; provided that such Indebtedness is permitted to be Incurred by
the Company or such Restricted Subsidiary pursuant to the provisions of
this Section; and
<PAGE>
(vii) Indebtedness not to exceed $12 million in aggregate
principal amount Incurred since the date of the 1993 Indenture as
industrial development financing by Envirosafe Services of Idaho, Inc.;
provided that no Indebtedness may be Incurred under this clause (vii)
unless at the time of Incurrence, and after giving effect thereto, the
Company and its Restricted Subsidiaries could Incur $1.00 of
Indebtedness under clause (v) of this Section 4.11(b).
(c) Notwithstanding Sections 4.11(a) and 4.11(b), the Company
or any Restricted Subsidiary shall not Incur any Indebtedness if the proceeds
thereof are used, directly or indirectly, to repay, prepay, redeem, defease,
retire, refund or refinance any Subordinated Obligations unless such repayment,
prepayment, redemption, defeasance, retirement, refunding or refinancing is not
prohibited by Section 4.09 or unless such Indebtedness shall be subordinated to
the Notes and the 1993 Notes to at least the same extent as such Subordinated
Obligations.
SECTION 4.12. ASSET SALES. (a) Neither the Company nor any
-----------
Restricted Subsidiary shall consummate any Asset Sale unless
(i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the fair
market value, as determined in good faith by the Board of Directors, of
the shares or assets subject to such Asset Sale (including the value of
any noncash consideration),
(ii) at least 80% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash and
(iii) an amount equal to 100% of the Net Available Cash is
applied by the Company (or such Subsidiary, as the case may be) as set
forth herein.
For purposes of this Section, the following are deemed to be cash: (x) any
Indebtedness (as reflected on the Company's consolidated balance sheet) of the
Company or any Restricted Subsidiary for which neither the Company nor any
Restricted Subsidiary will continue to be liable, directly or indirectly, as a
result of such Asset Sale, and (y) securities received by the Company or any
Restricted Subsidiary from such transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash. Nothing in this Section shall
prohibit the Company or any Subsidiary from transferring assets, properties or
Capital Stock of any Subsidiary to any Wholly Owned Subsidiary or to the
Company, nor shall the provisions of this Section be applicable to any such
transfer. The Company shall not permit any Unrestricted Subsidiary to make any
Asset Sale unless such Unrestricted Subsidiary receives consideration at the
time of such Asset Sale at least equal to the fair market value of the shares or
assets so disposed of as determined in good faith by the Board of Directors.
<PAGE>
(b) Within 365 days (such period being the "Application
Period") following the consummation of an Asset Sale (or in the case of Net
Available Cash from the conversion of securities, within such number of days
after the receipt of such cash), the Company or such Restricted Subsidiary shall
apply the Net Available Cash from such Asset Sale as follows: (i) first, to the
extent the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary); (ii) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (i), and to the
extent the Company or such Restricted Subsidiary elects, to prepay, repay or
purchase Senior Indebtedness (other than any Preferred Stock) of the Company or
its Restricted Subsidiaries (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company), (iii) third, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(i) and (ii), to make an offer to purchase the Notes at a purchase price of 100%
of principal amount plus accrued interest to the Purchase Date (as defined in
Section 4.12(c)) pursuant to and subject to the conditions set forth in Section
4.12(c). To the extent that any Net Available Cash of Asset Sales remains after
the application of such Net Available Cash in accordance with this paragraph,
the Company or such Restricted Subsidiary may utilize such remaining Net
Available Cash in any manner not otherwise prohibited by the Indenture.
If Indebtedness of the Company issued on or after the date of
the 1993 Indenture and ranking pari passu in right of payment with the Notes is
at the time outstanding, and the terms of such Indebtedness provide that a
similar offer is to be made with respect thereto, then the offer to purchase the
Notes shall be made concurrently with such other offer, and the Notes and such
other Indebtedness shall be accepted pro rata in proportion to the aggregate
principal amounts which the holders of Notes and such Indebtedness,
respectively, elect to have redeemed.
The Company shall not be required to make an offer to purchase
the Notes if the Net Available Cash available from an Asset Sale (after
application of the proceeds as provided in clauses (i) and (ii) of the first
paragraph of this Section 4.12(b)) is less than $10 million for any particular
Asset Sale (which lesser amounts shall be carried forward for purposes of
determining whether an offer is required with respect to the Net Available Cash
from any subsequent Asset Sale).
Notwithstanding the foregoing, this Section shall not apply
to, or prevent an Asset Sale that also constitutes a Change of Control provided
the Company has complied with its obligations under Section 4.16, and in such
case no violation of this provision shall be deemed to have occurred as a
consequence thereof.
In the event of the transfer of substantially all (but not
all) of the property and assets of the Company as an entirety to a Person in a
transaction permitted under Article 5, the Successor Corporation shall be deemed
to have sold the properties and assets of the Company not so transferred for
<PAGE>
not so transferred for purposes of this Section 4.12, and shall comply with the
provisions of this Section 4.12 with respect to such deemed sale as if it were
an Asset Sale.
(c) In the event of an Asset Sale that requires the Company to
commence an offer to all Holders of the Notes to purchase Notes (the "Asset Sale
Offer") under clause (iii) of Section 4.12(b), the Company shall follow the
procedures specified below:
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to this Section 4.12(b) hereof (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Notes tendered
in response to the Asset Sale Offer.
If the Purchase Date is on or after an interest record date
and on or before the related Interest Payment Date, any accrued interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Promptly, and in any event prior to the 365th day after the
later of the date of each Asset Sale as to which the Company must make an Asset
Sale Offer or the receipt of Net Available Cash therefrom, the Company shall
send, by first class mail, a notice to each of the Holders of the Notes, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The notice, which shall govern the terms of the Asset Sale Offer, shall
state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 4.12 and the length of time the Asset Sale Offer shall remain
open;
(ii) the Offer Amount, the purchase price and the Purchase
Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after the Purchase Date;
(v) that Holders electing to have a Note purchased (in whole
or in part) pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three Business Days before the
Purchase Date;
<PAGE>
(vi) that Holders shall be entitled to withdraw their election
if the Company, depositary or Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have the Note purchased;
(vii) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(viii) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes or
portion thereof tendered, and deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 4.12(c). The Company,
depository or Paying Agent, as the case may be, shall promptly (but in any case
not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Note tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee shall authenticate and mail or
deliver such new Note to such Holder equal in principal amount to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 4.12(c),
any redemption pursuant to this Section 4.12(c) shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of the Notes pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.13. TRANSACTIONS WITH AFFILIATES. The Company shall
----------------------------
not, and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including, the
<PAGE>
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") on terms
that are less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those which might be obtained at the time of such transaction
in arms-length dealings with a Person who is not such an Affiliate; provided
that with respect to any Affiliate Transaction involving aggregate payments in
excess of $5 million, the Company shall deliver to the Trustee a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with the foregoing requirements and such
Affiliate Transaction is approved by a majority of the disinterested members of
the Board of Directors. The foregoing restriction shall not apply to the payment
of any Restricted Payment which is permitted to be paid pursuant to Section 4.09
and transactions between the Company or any Restricted Subsidiary, on the one
hand, and any other Subsidiary, on the other hand, in the ordinary course of
business.
SECTION 4.14. LIMITATION ON LIENS. The Company shall not, and
-------------------
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien of any nature whatsoever on any of its properties
(including, without limitation, Capital Stock of a Restricted Subsidiary),
whether owned at the date of the Indenture or thereafter acquired, other than
Permitted Liens, without effectively providing that the Notes shall be secured
equally and ratably with (or prior to) the obligations so secured for so long as
such obligations are so secured.
SECTION 4.15. LIMITATION ON ISSUANCE OF CAPITAL STOCK BY
----------------------------------------------
SUBSIDIARIES. The Company will not permit any Restricted Subsidiary to issue any
- ------------
Capital Stock to any Person (other than to the Company or a Wholly Owned
Subsidiary) or declare or pay dividends or distributions on or repurchase or
redeem any Capital Stock of any Subsidiary (other than to the Company or a
Wholly Owned Subsidiary), except as otherwise permitted by Section 4.09 hereof
or the definition of "Restricted Payment".
SECTION 4.16. CHANGE OF CONTROL. (a) Upon the occurrence of a
-----------------
Change of Control, the Company shall make an offer to purchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes (the
"Change of Control Offer") at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment") on the terms set forth in this Section. Within
30 days following any Change of Control, the Company shall mail a notice of a
Change of Control Offer to each Holder and the Trustee. The Change of Control
Offer shall remain open from the time of mailing until 5 Business Days before
the date of purchase of the Notes by the Company. The notice shall contain all
instructions and materials necessary to enable such Holders to tender (in whole
or in part) the Notes pursuant to the Change of Control Offer and shall also
state:
(1) that the Change of Control Offer is being made pursuant to
this Section and that all Notes tendered will be accepted for payment;
<PAGE>
(2) the purchase price and the purchase date, which shall be
no earlier than 30 days nor later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased (in
whole or in part) pursuant to a Change of Control Offer will be
required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Notes completed, to the
Paying Agent at the address specified in the notice (or otherwise make
effective delivery of the Notes pursuant to book-entry procedures and
the related rules of the applicable depositories) prior to the close of
business on the fifth Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on
the third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing his election
to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof.
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws and regulations
in connection with the repurchase of the Notes pursuant to this Section. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
<PAGE>
each Holder of Notes so accepted payment in an amount equal to the purchase
price for such Notes, and the Trustee shall promptly authenticate and mail to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Except as described above with respect to a Change of
Control, the Company shall not be required to repurchase or redeem the Notes
from the Holders of the Notes in the event of a takeover, recapitalization or
similar transaction.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The
------------------------------------------
Company shall not consolidate with or merge with or into any other corporation
or transfer all or substantially all of its properties and assets as an entirety
to any Person unless:
(a) either the Company shall be the continuing Person, or the
Person (if other than the Company) formed by such consolidation or into
which the Company is merged or to which the properties and assets of
the Company as an entirety are transferred (the "Successor
Corporation"), shall be a corporation organized and existing under the
laws of the United States or any state thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental to
the Indenture, executed and delivered to the Trustee, in form and
substance reasonably satisfactory to the Trustee, all the obligations
of the Company under the Indenture and the Notes;
(b) immediately before and immediately after giving effect to
such transaction (and treating any Indebtedness which becomes an
obligation of the Successor Corporation or any Restricted Subsidiary as
a result of such transaction as having been Incurred by such Successor
Corporation or such Restricted Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(c) the Company shall have delivered, or caused to be
delivered, to the Trustee an Officers' Certificate and, as to legal
issues, an Opinion of Counsel (which counsel shall not be in-house
counsel to the Company), each in form and substance reasonably
satisfactory to the Trustee stating that such consolidation, merger or
transfer and such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with;
(d) immediately after giving effect to such transaction, the
Successor Corporation shall have Consolidated Net Worth in an amount
which is not less than the Consolidated Net Worth immediately prior to
such transaction; and
<PAGE>
(e) immediately after giving effect to such transaction on a
pro forma basis, the Consolidated Coverage Ratio of the Successor
Corporation is at least 2.00:1, or, if less, at least equal to the
Consolidated Coverage Ratio of the Company immediately prior to such
transaction; provided that, if the Consolidated Coverage Ratio of the
Company immediately prior to such transaction is within the range set
forth in Column (A) below, then the pro forma Consolidated Coverage
Ratio of the Successor Corporation shall be at least equal to the
lesser of (1) the ratio determined by multiplying the percentage set
forth in column (B) below by the Consolidated Coverage Ratio of the
Company immediately prior to such transaction and (2) the ratio set
forth in column (C) below:
(A) (B) (C)
--- --- ---
2.22:1 to 2.99:1........................... 90% 2.4:1
3.00:1 to 3.99:1........................... 80% 2.8:1
4.00:1 or more............................. 70% 2.9:1
and provided, further, that if, immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Coverage Ratio of
the Successor Corporation is 3.00:1 or more, the calculation in the
preceding proviso shall be inapplicable and such transaction shall be
deemed to have complied with the requirements of such provision.
Notwithstanding the foregoing clauses (b), (d) and (e), any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company or any Wholly Owned Subsidiary or
Wholly Owned Subsidiaries so long as the requirements of clauses (a) and (c) are
satisfied in connection therewith.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any such
---------------------------------
assumption by the Successor Corporation, the Successor Corporation shall succeed
to and be substituted for the Company, under this Indenture and the Notes, and
the Company shall thereupon be released from all obligations under this
Indenture and under the Notes and the Company as the predecessor corporation may
thereupon or at any time thereafter be dissolved, wound up or liquidated. The
Successor Corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company, all or any of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and upon the order of the Successor Corporation
instead of the Company and subject to all the terms, conditions and limitations
prescribed in the Indenture, the Trustee shall authenticate and shall deliver
any new Notes which the Successor Corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All the Notes so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Notes theretofore or thereafter issued in accordance with the terms of
this Indenture as though all such Notes had been issued at the date of the
execution hereof.
<PAGE>
In the case of any such consolidation, merger or transfer,
such changes in form (but not in substance) may be made in the Notes thereafter
to be issued as may be appropriate.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs
-----------------
if:
(a) the Company defaults in the payment of interest on any
Note when the same become due and payable and such default continues
for a period of 30 days;
(b) the Company defaults in the payment of principal of any
Note when the same becomes due and payable at maturity or otherwise or
fails to redeem or purchase Notes when required pursuant to this
Indenture or the Notes;
(c) the Company fails to comply with any of its other
covenants or agreements in the Notes or this Indenture and the default
continues for 30 days after the date on which written notice of such
default is given to the Company by the Trustee or to the Company and
Trustee by Holders of at least 25% in principal amount of the Notes
then outstanding hereunder;
(d) the Company defaults under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness (other than Indebtedness
evidenced by the Notes) for money borrowed by the Company or any
Subsidiary, whether or not it exists on the date of the Indenture, the
outstanding aggregate principal amount of which is not less than $10
million (or its foreign currency equivalent), and as a result of such
default either such Indebtedness shall be due or the acceleration of
such Indebtedness shall be declared, or Indebtedness of the Company or
any Subsidiary in an aggregate principal amount of not less than $10
million (or its foreign currency equivalent) is not paid within any
applicable grace period after final maturity, unless such Indebtedness
or declaration, as the case may be, is discharged or rescinded or
annulled within 30 days following the giving of notice to the Company
by the Trustee or to the Company and the Trustee by Holders of not less
than 25% in principal amount of the Notes;
(e) any final judgment or order (not covered by insurance) for
the payment of money shall be rendered against the Company or any
Significant Subsidiary in an amount in excess of $5 million
individually or $5 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) and shall not be
discharged, and there shall be any period of 30 consecutive days
following entry of the final judgment or order in excess of $5 million
individually or in the aggregate during which a stay of enforcement
<PAGE>
of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(f) the Company or any Significant Subsidiary of the Company
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
(iii) consents to the appointment of a Custodian
of it or for all or substantially all of its property;
(iv) makes a general assignment for the benefit
of its creditors;
(v) generally is not paying its debts as they
become due;
(vi) admits in writing its inability to generally
pay its debts as such debts become due; and
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case;
(ii) appoints a Custodian of the Company or any
Significant Subsidiary of the Company or for all or
substantially all of the property of the Company or any
Significant Subsidiary of the Company; or
(iii) orders the liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
Any notice of Default given by the Trustee or Noteholders
under this Section must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
<PAGE>
Subject to the provisions of Sections 6.01 and 6.02, the
Trustee shall not be charged with knowledge of any Event of Default unless
written notice thereof shall have been given to the Trustee by the Company, the
Paying Agent, any Holder or an agent of any Holder.
SECTION 6.02. ACCELERATION. If an Event of Default (other than
------------
an Event of Default specified in clause (f) or (g) of Section 6.01) occurs and
is continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the then outstanding Notes by written
notice to the Company and the Trustee, may declare the unpaid principal of,
premium, if any, and any accrued and unpaid interest on all the Notes to be due
and payable immediately. Upon such declaration the principal, premium, if any,
and interest shall be due and payable immediately. If an Event of Default
specified in clause (f) or (g) of Section 6.01 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs
---------------
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal, premium, if any, and interest on the Notes or to enforce
the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of not less
-----------------------
than a majority in aggregate principal amount of the then outstanding Notes by
written notice to the Trustee may on behalf of the Holders of all of the Notes
waive an existing Default or Event of Default and its consequences, except a
continuing Default or Event of Default in the payment of the principal of,
premium, if any, or interest on, the Notes. Upon any such waiver, such Default
shall be cured and 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 any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority
-------------------
in principal amount of the then outstanding Notes may direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with the law or this
Indenture that the Trustee, in its sole discretion, determines may be unduly
<PAGE>
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability or the Trustee determines that it does not have
adequate indemnification against any loss or expense; provided that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may
-------------------
pursue a remedy with respect to this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction which, in the opinion of the Trustee, is inconsistent with
the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
----------------------------------------------
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal, premium, if any, and interest on the
Note, on or after the respective due dates expressed in the Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of the Holder of the Note.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
----------------------------
Default specified in Section 6.01(a) or (b) occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Company for the whole amount of principal of, premium,
if any, and interest remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee pursuant to the
provisions of Section 7.07.
<PAGE>
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is
--------------------------------
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder of a Note 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 of the Notes, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders of the Notes may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder of a Note any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder of a Note thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder of a Note in any such proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money
----------
pursuant to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the
---------------------
enforcement of any right or remedy under this Indenture or in any suit against
<PAGE>
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07, or a
suit by Holders of more than 10% in principal amount of the then outstanding
Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If 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 his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 6.05 hereof.
SS_NYL3A/31316 4
<PAGE>
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may
-----------------
conclusively rely upon any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both, which shall
conform to Section 10.05 hereof. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(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) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.
<PAGE>
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
---------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of
-------------------
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
---------------------------------------------
Within 60 days after the reporting date stated in Section 10.13, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Notes are listed. The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall
---------------------------
pay to the Trustee from time to time reasonable compensation for its acceptance
of this Indenture and services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it
harmless against any and all losses, liabilities or expenses (including
reasonable attorneys' fees) incurred by it arising out of or in connection with
the acceptance or administration of its duties under this Indenture, except as
set forth below. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
such failure shall have prejudiced the Company. The Company shall defend the
<PAGE>
claim and the Trustee shall cooperate in the defense. If the Trustee is advised
by counsel that it may have available to it defenses which are in conflict with
defenses available to the Company, then the Trustee may have separate counsel,
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture and the resignation or
removal of the Trustee.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
vent of Default specified in Section 6.01 (f) or (g) hereof occurs, the expenses
and the compensation for the services (including the reasonable fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal
----------------------
of the Trustee and appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in this
Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or 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
<PAGE>
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder of a Note
who has been a Holder of a Note for at least six months fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
--------------------------------
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at
------------------------------
all times be a Trustee hereunder which shall be a corporation organized and
doing business under the laws of the United States of America or of any state
thereof authorized under such laws to exercise corporate trustee power, shall be
subject to supervision or examination by federal or state authority and shall
have a combined capital and surplus of at least $100 million as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
---------------------------------------------
COMPANY. The Trustee is subject to 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 therein.
<PAGE>
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE. If
-------------------------------------------
(i) the Company delivers to the Trustee all outstanding Notes (other than Notes
replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding
Notes have become due and payable and the Company irrevocably deposits with the
Trustee as trust funds solely for the benefit of the Holders for that purpose
funds sufficient to pay at maturity the principal of and all accrued interest on
all outstanding Notes (other than Notes replaced pursuant to Section 2.09), and
if in either case the Company pays all other sums payable hereunder by the
Company, then, subject to Sections 8.02 and 8.07, this Indenture shall cease to
be of further effect. The Trustee shall at the cost and expense of the Company
acknowledge satisfaction and discharge of this Indenture on demand of the
Company following delivery by the Company of an Officers' Certificate and an
Opinion of Counsel stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with.
SECTION 8.02. TERMINATION OF COMPANY'S OBLIGATIONS. Except
------------------------------------
as otherwise provided in this Section 8.02, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption,
(ii) the Company irrevocably deposits in trust with the
Trustee or Paying Agent during such one-year period, under the terms of
an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or U.S. Government Obligations sufficient (in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee), without consideration of any reinvestment of such
interest, to pay principal and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder,
(iii) no Default shall have occurred and be continuing on the
date of such deposit,
(iv) such deposit will not result in or constitute a Default
or result in a breach or violation of, or constitute a default under,
any other material agreement or instrument to which the Company is a
party or by which it is bound, and
(v) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the satisfaction
and discharge of this Indenture have been complied with.
<PAGE>
With respect to the foregoing, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.09, 2.10, 4.01, 4.02, 7.07, 7.08, 8.05 and
8.06 shall survive until the Notes are no longer outstanding. Thereafter, only
the Company's obligations in Sections 7.07 and 8.06 shall survive. After any
such irrevocable deposit, the Trustee upon request shall acknowledge in writing
the discharge of the Company's obligations under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.03. DEFEASANCE AND DISCHARGE OF INDENTURE. The
----------------------------------------
Company will be deemed to have paid and will be discharged from any and all
obligations in respect of the Notes on the 123rd day after the date of the
deposit referred to in clause (d) hereof, and the provisions of this Indenture
will no longer be in effect with respect to the Notes; and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the same,
except as to (i) rights of registration of transfer and exchange, (ii)
substitution of apparently mutilated, defaced, destroyed, lost or stolen Notes,
(iii) rights of Holders to receive payments of principal thereof and interest
thereon, (iv) the Company's obligations under Section 4.02, (v) the rights,
obligations and immunities of the Trustee hereunder and (vi) the rights of the
Holders as beneficiaries of this Indenture with respect to the property so
deposited with the Trustee payable to all or any of them; provided that the
following conditions shall have been satisfied:
(a) with reference to this Section 8.03, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirement of Section 7.10)
or Paying Agent and conveyed all right, title and interest for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders, in and to, (1) money in an
amount, (2) U.S. Government Obligations that, through the payment of
interest and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (a), money in an amount or (3) a
combination thereof in an amount 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, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee or
Paying Agent, the principal of and interest on the outstanding Notes
when due; provided that the Trustee or Paying Agent shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of such principal and interest
with respect to the Notes;
(b) such deposit will not result in or constitute a default or
result in a breach or violation of, or constitute a default under, any
other material agreement or instrument to which the Company is a party
or by which it is bound;
<PAGE>
(c) no Default shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day after
such date of deposit;
(d) the Company shall have delivered to the Trustee
(1) either (A) a ruling directed to the Trustee
received from the Internal Revenue Service to the effect that
the Holders will not recognize income, gains or loss for
federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.03 and will be
subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case
if such option had not been exercised or (B) an Opinion of
Counsel to the same effect as the ruling described in clause
(A) accompanied by a ruling to that effect published by the
Internal Revenue Service, unless there has been a change in
the applicable federal income tax law since the date of this
Indenture such that a ruling from the Internal Revenue Service
is no longer required and
(2) an Opinion of Counsel to the effect that
(A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940,
(B) after the passage of 123 days following
the deposit (except, with respect to any funds for
the account of any Holder who may be deemed to be an
"insider" for purposes of Title 11 of the United
States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the
Company under either such statute; and
(C) either (x) the trust funds will no
longer remain the property of the Company (and
therefore, will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally)
or (y) if a court were to rule under any such law in
any case or proceeding that the trust funds remained
property of the Company, (I) assuming such trust
funds remained in the possession of the Trustee prior
to such court ruling to the extent not paid to
Holders, the Trustee will hold, for the benefit of
the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in
bankruptcy or otherwise except for the effect of
Section 552(b) of the United States Bankruptcy Code
on interest on the trust funds accruing after the
commencement of a case under such statute and (II)
the Holders will be entitled to receive adequate
<PAGE>
entitled to receive adequate protection of their
interests in such trust funds if such trust funds are
used in such case or proceeding; and
(e) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
Notwithstanding the foregoing clause (a), prior to the end of
the 123-day period referred to in clause (d)(2)(B) above, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.03, the Company's obligations
in Sections 2.03, 2.04, 2.05, 2.06, 2.09, 2.10, 4.01, 4.02, 7.07, 7.08, 8.06 and
8.07 survive until the Notes are no longer outstanding. Thereafter, only the
Company's obligations in Sections 7.07, 8.06 and 8.07 shall survive. If and when
a ruling from the Internal Revenue Service or Opinion of Counsel referred to in
clause (d)(1) above is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
4.01, then the Company's obligations under such Section 4.01 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03.
After any such irrevocable deposit and delivery of the
documents referred to above, the Trustee upon written request shall acknowledge
in writing the discharge of the Company's obligations under the Notes and this
Indenture except for those surviving obligations in the immediately preceding
paragraph.
SECTION 8.04. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company
---------------------------------
may omit to comply with any term, provision or condition set forth in clauses
(d) and (e) of Section 5.01, Sections 4.03 through 4.07, Sections 4.09 through
4.16, and clause (c) of Section 6.01 with respect to Sections 4.03 through 4.07,
Sections 4.09 through 4.16 and clauses (d) and (e) of Section 5.01, and clauses
(d) and (e) of Section 6.01 shall be deemed not to be Events of Default, in each
case with respect to the outstanding Notes if:
(a) with reference to this Section 8.04, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section
7.10) or Paying Agent and conveyed all right, title and interest for
the benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders, in and to, (i) money in amount,
(ii) U.S. Government obligations that, through the payment of interest
and principal in respect thereof in accordance with their terms, will
provide, not later than one day before the due date of any payment
referred to in this clause (a), money in an amount or (iii) a
combination thereof in an amount, 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, without consideration
<PAGE>
of the reinvestment of such interest and after payment of all federal,
state and local taxes or other charges and assessments in respect
thereof payable by the Trustee or Paying Agent, the principal and
interest on the outstanding Notes when due; provided that the Trustee
or Paying Agent shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to the
payment of such principal and interest with respect to the Notes;
(b) such deposit will not result in or constitute a default or
result in a breach or violation of, or constitute default under, any
other material agreement or instrument to which the Company is a party
or by which it is bound;
(c) no Default shall have occurred and be continuing o
the date of such deposit;
(d) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that:
(i) the creation of the defeasance trust does not
violate the Investment Company Act of 1940,
(ii) the Holders have a valid first-priority
security interest in the trust funds,
(iii) the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such
deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred,
(iv) after the passage of 123 days following the
deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year
following the deposit), the trust funds will not be subject to
the effect of Section 547 of the United States Bankruptcy Code
or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against the Company under either such
statute, and
(v) either (1) the trust funds will no longer remain
the property of the Company (and therefore, will not be
subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally) or (2) if a court were to rule
under any such law in any case or proceeding that the trust
funds remained property of the Company, (x) assuming such
trust funds remained in the possession of the Trustee prior to
such court ruling to the extent not paid to Holders, the
Trustee will hold, for the benefit of the Holders, a valid and
<PAGE>
the Holders, a valid and perfected security interest in such
trust funds that is not avoidable in bankruptcy or otherwise
except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after
the commencement of a case under such statute, and (y) the
Holders will be entitled to receive adequate protection of
their interest in such trust funds if such trust funds are
used in such case or proceeding; and
(e) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.04 have been complied with.
SECTION 8.05. APPLICATION OF TRUST MONEY. Subject to Section
--------------------------
8.07 of this Indenture, the Trustee or Paying Agent shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to Sections 8.01, 8.02,
8.03, or 8.04 of this Indenture, as the case may be, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of, and interest on the Notes.
The Trustee shall be under no obligation to invest such money or U.S. Government
Obligations except as it may agree with the Company.
SECTION 8.06. REPAYMENT TO COMPANY. Subject to Sections 7.07,
--------------------
8.02, 8.03 and 8.04 of this Indenture, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess money held by them at any
time and thereupon shall be relieved from all liability with respect to such
money. The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years; provided, however, that the Company shall, if requested
by the Trustee or the Paying Agent, give the Trustee or such Paying Agent
indemnification reasonably satisfactory to it against any and all liability
which may be incurred by it by reason of such paying, and provided, further,
that the Trustee or such Paying Agent before being required to make any payment
may cause to be published at the expense of the Company once in a newspaper of
general circulation in the City of New York or mail to each Holder entitled to
such money at such Holder's address as set forth in the register of Notes notice
that such money remains unclaimed and that after a date specified therein (which
shall be at least 30 days from the date of such Publication or mailing) any
unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is
-------------
unable to apply any money or U.S. Government Obligations in accordance with
Sections 8.01, 8.02, 8.03 or 8.04 of this Indenture, as the case may be, by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
<PAGE>
shall be revived and reinstated as though no deposit had occurred pursuant to
Sections 8.01, 8.02, 8.03 or 8.04 of this Indenture, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Sections 8.01, 8.02, 8.03 or 8.04
of this Indenture, as the case may be; provided that, if the Company has made
any payment of principal of, or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
-------------------------------------------
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may
amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation
pursuant to Article 5 hereof;
(d) to provide for the acceptance of or the appointment of a
successor trustee;
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(f) to make any other change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Notes.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee may but shall not
be obligated to enter into such amended or supplemental Indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.
<PAGE>
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. The Company
--------------------------------
and the Trustee may amend or supplement this Indenture or the Notes or any
amended or supplemental Indenture with the written consent of the Holders of
Notes of not less than a majority in aggregate principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for the Notes), and any existing Default and its consequences
or compliance with any provision of this Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its sole discretion, but shall not
be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment 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 of Notes 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 amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a non-consenting Holder of Notes):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment or supplement;
(b) reduce the principal of or change the Stated Maturity of
any Note or reduce the premium payable upon the redemption of any Note,
or change the time at which any Note may or shall be redeemed;
(c) reduce the rate of or change the time for payment of
interest on any Note;
<PAGE>
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes
and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note;
or
(h) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every
--------------------------------------
amendment or supplement to this Indenture or the Notes shall be set forth in a
amended or supplemental Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an
-----------------------------------
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Note.
The Company may fix a record date for determining which
Holders of the Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the later
of 30 days prior to the first solicitation of such consent or the date of the
most recent list of Holders of Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 or (ii) such other date as the Company
shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee
--------------------------------
may place an appropriate notation about an amendment, supplement or waiver on
any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
<PAGE>
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee
---------------------------------
shall sign any amended or supplemental Indenture authorized pursuant to this
Article 9 if the amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If such amendment or
supplement adversely affects the rights, duties, liabilities or immunities of
the Trustee, the Trustee may, but need not, sign it. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that any waiver, amendment or
supplement is authorized by this Article 9. The Company may not sign an
amendment or supplemental Indenture until the Board of Directors approves it.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS. If any provision
----------------------------
of this Indenture limits, qualifies or conflicts with the duties imposed by TIA
ss. 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES. Any notice or communication by the
-------
Company or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:
If to the Company:
EnviroSource, Inc.
1155 Business Center Drive
Horsham, Pennsylvania 19044-3454
Telecopier No.: (215) 956-5424
Attention: Corporate Secretary
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Telecopier No.: (212) 852-1625
Attention: Corporate Trust Division
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders of Notes) shall be deemed to have been duly given: (i) at the time
delivered by hand, if personally delivered; (ii) five Business Days after being
<PAGE>
deposited in the mail, postage prepaid, if mailed; (iii) when answered back, if
telexed; (iv) when receipt acknowledged, if telecopied; and (v) the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder of a Note shall be
mailed by first class mail, certified or registered, return receipt requested,
or by overnight air courier guaranteeing next day delivery to its address shown
on the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA ss. 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder of a Note or any
defect in it shall not affect its sufficiency with respect to other Holders of
Notes.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders of
Notes, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH
---------------------------------------
OTHER HOLDERS OF NOTES. Holders of the Notes may communicate pursuant to
- -----------------------
TIA ss. 312(b) with other Holders of Notes with respect to their right
under this Indenture or the Notes. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA ss. 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS
---------------------------------------------
PRECEDENT. Upon any request or application by the Company to the Trustee to take
- ---------
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied;
and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR
-------------------------------------
OPINION. Each certificate or opinion with respect to compliance with a condition
- -------
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
<PAGE>
(a) a statement that the person making such certificate or
opinion has read such covenant or condition;
(b) 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;
(c) 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 satisfied; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS. The Trustee may
---------------------------
make reasonable rules for action by or at a meeting of Holders of Notes. The
Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
-----------------------------------------------
EMPLOYEES AND STOCKHOLDERS. No director, officer, employee, agent, manager,
- --------------------------
incorporator, stockholder or other Affiliate of the Company, as such, shall have
any liability for any obligations of the Company under the Notes or this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
SECTION 10.08. GOVERNING LAW. The internal law of the State
-------------
of New York shall govern and be used to construe this Indenture and the Notes.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
----------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.10. SUCCESSORS. All agreements of the Company i
----------
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 10.11. SEVERABILITY. In case any provision in this
------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
<PAGE>
SECTION 10.12. COUNTERPART ORIGINALS. The parties may sign
---------------------
any number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.
SECTION 10.13. OTHER PROVISIONS. The first certificate
----------------
pursuant to Section 4.04 shall be for the fiscal year ending on December 31,
1997.
The reporting date for Section 7.06 is July 1 of each year.
The first reporting date is July 1, 1998.
SECTION 10.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
<PAGE>
SIGNATURES
Dated as of September 30, 1997 ENVIROSOURCE, INC.
By:/s/George E. Fuehrer
--------------------
Title: Senior Vice President -
Planning & Business Development
Attest:/s/ Leon Z. Heller
------------------
(SEAL)
Dated as of September 30, 1997 UNITED STATES TRUST COMPANY OF
NEW YORK as Trustee
By:/s/Patricia Stermer
-------------------
Title: Assistant Vice President
Attest:/s/ Cynthia Chaney
------------------
(SEAL)
<PAGE>
EXHIBIT A
---------
(Face of Note)
9 3/4% Senior Note due 2003, Series B
No. $__________
ENVIROSOURCE, INC.
hereby promises to pay to
- ---------------
or its registered assigns
the principal sum of
Dollars on June 15, 2003.
Interest Payment Dates: June 15 and December 15, commencing December 15, 1997.
Record Dates: June 1 and December 1 (whether or not a Business Day).
Dated: September __, 1997
ENVIROSOURCE, INC.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
(SEAL)
<PAGE>
This is one of the Notes referred to in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By:__________________________
Authorized Signatory
<PAGE>
(Back of Note)
9 3/4% Senior Note due 2003, Series B
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. EnviroSource, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate and in the manner specified below. The Company shall pay interest on the
principal amount of this Note at the rate per annum of 9 3/4%. The Company will
pay interest semiannually on June 15 and December 15 of each year, commencing
December 15, 1997, or if any such day is not a Business Day on the next
succeeding Business Day (each an "Interest Payment Date"). If an exchange offer
registered under the Securities Act is not consummated and a shelf registration
statement under the Securities Act with respect to resales of the Notes is not
declared effective by the Commission, on or before March 30, 1998 in accordance
with the terms of the Registration Rights Agreement dated as of September 30,
1997 between the Company and Morgan Stanley & Co. Incorporated, Jefferies &
Company, Inc. and NationsBanc Capital Markets, Inc., the annual interest rate
borne by the Notes shall be increased by 0.5% from the rate shown above accruing
from March 30, 1998, payable in cash semiannually, in arrears, on each June 15
and December 15, commencing June 15, 1998, until the exchange offer is completed
or the shelf registration statement is declared effective. The Holder of this
Note is entitled to the benefits of such Registration Rights Agreement.
Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from June
15, 1997. To the extent lawful, the Company shall pay interest on overdue
principal at the rate equal to the interest rate on the Notes; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Notes are cancelled after such record date and on or
before such Interest Payment Date. The Holder hereof must surrender this Note to
a Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Notes will be payable both
as to principal and interest at the office or agency of the Company maintained
for such purpose within 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 of Notes
at their respective addresses set forth in the register of Holders of Notes.
<PAGE>
Unless otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such a purpose.
3. Paying Agency and Registrar. Initially, the Trustee will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Holder of a Note. The
Company may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of September 30, 1997 (the "Indenture"), between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. The
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and such act for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are unsecured general obligations of the Company limited to $50,000,000 in
aggregate principal amount.
5. Optional Redemption. The Company shall not have the option
to redeem the Notes prior to June 15, 1998. Thereafter, the Company shall have
the option to redeem the Notes, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on June 15 of the years indicated below:
Year Percentage
---- ----------
1998.................................................... 104.875%
1999.................................................... 103.250%
2000.................................................... 101.625%
2001 and thereafter..................................... 100.000%
6. Mandatory Redemption. The Company will not be required to
make mandatory redemption payments with respect to the Notes. There are no
sinking fund payments with respect to the Notes.
7. 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 Payment Date all outstanding Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest to the Change of Control Payment Date.
Holders of Notes that are subject to an offer to purchase will receive a Change
of Control Offer from the Company prior to any related Change of Control Payment
<PAGE>
Date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
(b) If the Company consummates any Asset Sales, and when the
aggregate amount of Net Available Cash from such Asset Sales (after application
of the proceeds as provided in clauses (i) and (ii) of the first paragraph of
Section 4.12(b) of the Indenture) equals or exceeds $10 million, the Company
shall be required to purchase the maximum principal amount of Notes that may be
purchased out of such Net Available Cash at 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of such Net Available Cash, the Notes to be redeemed shall be selected on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to bc redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder of Notes are to be redeemed. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder of a Note, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed.
10. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent
and the Company may deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
The registered Holder of a Note shall be treated as its owner for all purposes.
11. Amendments, Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
<PAGE>
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits of the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Remedies. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
will become due and payable without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee 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 Trustee;
however, if the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign.
14. No Personal Liabilities of Directors, Officers, Employees
and Stockholders. No director, officer, employee, agent, manager, incorporator,
stockholder or other Affiliate of the Company shall have any liability for any
obligations of the Company under the Notes, the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
<PAGE>
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the
name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
17. CUSIP, CINS and ISIN Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Note Identification Procedures, the
Company has caused CUSIP, CINS and ISIN numbers to be printed on the Notes and
has directed the Trustee to use CUSIP, CINS and ISIN numbers in notices of
redemption as a convenience to Holders of Notes. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Request may be made to:
EnviroSource, Inc.
1155 Business Center Drive
Horsham, Pennsylvania 19044-3454
Telecopier No.: (215) 956-5424
Attention: Corporate Secretary
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to_______________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:______________________
Your Signature:_________________________________
Sign exactly as your name appears on the face of
this Note)
Signature Guarantee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.12 or Section 4.16 of the
Indenture check the appropriate box:
|_| Section 4.12 |_| Section 4.16
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.12 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$------------------
Date:______________
Your Signature:__________________________________
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee:_____________________________
<PAGE>
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing___________________________________attorney to transfer said Note on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date the shelf registration statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
---------
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933 provided by Rule
144A thereunder.
or
--
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the with the
conditions of transfer set forth in this Note and the Indenture.
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:______________ ____________________________________________________
NOTICE: The signature to this assignment must correspond
with the name as written upon the face of the
within-mentioned instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:______________________
-----------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE>
EXHIBIT B
---------
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
----------------------------------
--------------,---
United States Trust Company of New York
144 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Re: EnviroSource, Inc. (the "Company")
9 3/4% Senior Notes due 2003, Series B (the "Notes")
----------------------------------------------------
Dear Sirs:
This letter relates to U.S. $_______________ principal amount of
Notes represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of September 30, 1997 (the "Indenture") relating to the
Notes, we hereby certify that we are (or we will hold such securities on behalf
of) a person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
<PAGE>
EXHIBIT C
---------
Form of Certificate to Be Delivered
in Connection with Transfers to
Non-QIB Institutional Accredited Investors
------------------------------------------
-------------,----
United States Trust Company of New York
144 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Re: EnviroSource, Inc. (the "Company")
9 3/4% Senior Notes due 2003, Series B (the "Notes")
----------------------------------------------------
Dear Sirs:
In connection with our proposed purchase of $
------------------
aggregate principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of September 30, 1997 (the "Indenture"), relating to the Notes, and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should offer or sell any Notes, we will do so only (A) to the
Company or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C) to
an institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter,
(D) outside the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (E) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act, or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
<PAGE>
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:_____________________________________
Authorized Signature
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------
-------------,---
United States Trust Company of New York
144 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Re: EnviroSource, Inc. (the "Company")
9 3/4% Senior Notes due 2003, Series B (the "Notes")
----------------------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S. $______________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of 1933
and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
<PAGE>
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_________________________________
Authorized Signature
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Dated September 30, 1997
between
ENVIROSOURCE, INC.
and
MORGAN STANLEY & CO. INCORPORATED
JEFFERIES & COMPANY, INC.
NATIONSBANC CAPITAL MARKETS, INC.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into September 30, 1997, between ENVIROSOURCE, INC., a Delaware corporation (the
"Company"), and MORGAN STANLEY & CO. INCORPORATED, JEFFERIES & COMPANY, INC. and
NATIONSBANC CAPITAL MARKETS, INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated September
25, 1997, between the Company and the Placement Agents (the "Placement
Agreement"), which provides for the sale by the Company to the Placement Agents
of an aggregate of $50,000,000 principal amount of the Company's 9 3/4% Senior
Notes Due 2003, Series B (the "Securities"). In order to induce the Placement
Agents to enter into the Placement Agreement, the Company has agreed to provide
to the Placement Agents and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
-----------
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
--------
time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
--------
time to time.
"Closing Date" shall mean the Closing Date as defined in the Placement
-------------
Agreement.
"Company" shall have the meaning set forth in the preamble and shall also
-------
include the Company's successors under the Indenture.
"Exchange Offer" shall mean the exchange offer by the Company of Exchange
----------------
Securities for Registrable Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933 Act
----------------------------
effected pursuant to Section 2(a) hereof.
<PAGE>
"Exchange Offer Registration Statement" shall mean an exchange offer
----------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and supplements to such registration statement, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by the Company under the
-------------------
Indenture containing terms identical to the Securities (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Securities or, if no such interest has been paid, from September 30, 1997 and
(ii) the Exchange Securities will not contain terms with respect to securities
law-related transfer restrictions) and to be offered to Holders of Securities in
exchange for Securities pursuant to the Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as they own any
------
Registrable Securities, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers (as
defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities dated as of
---------
September 30, 1997 between the Company and United States Trust Company of New
York, as trustee, and as the same may be amended from time to time in accordance
with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
-----------------
principal amount of outstanding Registrable Securities; provided that whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
any of its affiliates (as such term is defined in Rule 405 under the 1933 Act)
(other than the Placement Agents or subsequent holders of Registrable Securities
if such subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
"Placement Agents" shall have the meaning set forth in the preamble.
----------------
"Placement Agreement" shall have the meaning set forth in the preamble.
-------------------
<PAGE>
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.
"Registrable Securities" shall mean the Securities; provided, however, that
----------------------
the Securities shall cease to be Registrable Securities (i) when a Registration
Statement with respect to such Securities shall have been declared effective
under the 1933 Act and such Securities shall have been disposed of pursuant to
such Registration Statement, (ii) when such Securities have been sold to the
public pursuant to Rule 144 or are capable of being sold to the public pursuant
to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act or (iii) when such Securities shall have ceased to be outstanding
for the purposes of the Indenture.
"Registration Expenses" shall mean any and all expenses incident to
----------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all fees
and expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto and other documents relating to the Company's performance of
and compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee and
its counsel, (vii) the fees and disbursements of counsel for the Company and, in
the case of a Shelf Registration Statement, the fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority Holders
and which counsel may also be counsel for the Placement Agents) and (viii) the
fees and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, but excluding fees and
expenses of counsel to the underwriters (other than fees and expenses set forth
in clause (ii) above) or the Holders, underwriting discounts and commissions and
transfer taxes, if any, and expenses of the underwriters and the Holders (except
as otherwise provided herein) relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
-----------------------
Company that covers any of the Exchange Securities or Registrable Securities
<PAGE>
pursuant to the provisions of this Agreement and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to Section
------------------
2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
-----------------------------
of the Company pursuant to the provisions of Section 2(b) of this Agreement
which covers all of the Registrable Securities (but no other securities unless
approved by the Holders whose Registrable Securities are covered by such Shelf
Registration Statement, and other than those Registrable Securities held by a
Holder who objects to the inclusion thereof in the Registration Statement) on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" shall mean the trustee with respect to the Securities under the
-------
Indenture.
"Underwritten Registration" or "Underwritten Offering" shall mean a
--------------------------- ----------------------
registration in which Registrable Securities are sold to an Underwriter (as
hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act.
-------------------------------
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the Company to the Holders to exchange all of the Registrable Securities for
Exchange Securities and to have such Registration Statement remain effective
until the closing of the Exchange Offer. The Company shall commence the Exchange
Offer promptly after the Exchange Offer Registration Statement has been declared
effective by the SEC and use its best efforts to have the Exchange Offer
consummated not later than 60 days after such effective date. The Company shall
commence the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
<PAGE>
(i) that the Exchange Offer is being made pursuant to this Registration
Rights Agreement and that all Registrable Securities validly tendered will be
accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period of at
least 30 days from the date such notice is mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain outstanding
and continue to accrue interest, but will not retain any rights under this
Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such Registrable
Security, together with the enclosed letters of transmittal, to the institution
and at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the last Exchange
Date; and
(v) that Holders will be entitled to withdraw their election, not later
than the close of business on the last Exchange Date, by sending to the
institution and at the address (located in the Borough of Manhattan, The City of
New York) specified in the notice a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange and a statement that such Holder
is withdrawing his election to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company shall:
(i) accept for exchange Registrable Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for cancellation all
Registrable Securities or portions thereof so accepted for exchange by the
Company and issue, and cause the Trustee to promptly authenticate and mail to
each Holder, an Exchange Security equal in principal amount to the principal
amount of the Registrable Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
<PAGE>
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company determines that the Exchange Offer
Registration provided for in Section 2(a) above is not available or may not be
consummated as soon as practicable after the last Exchange Date because it would
violate applicable law or the applicable interpretations of the Staff of the
SEC, (ii) the Exchange Offer is not for any other reason consummated by March
30, 1998 or (iii) the Exchange Offer has been completed and in the opinion of
counsel for the Placement Agents a Registration Statement (in addition to the
Exchange Offer Registration Statement) must be filed and a non-Exchange Offer
Prospectus must be delivered by the Placement Agents in connection with any
offering or sale of Registrable Securities, the Company shall use its best
efforts to cause to be filed as soon as practicable after such determination,
date or notice of such opinion of counsel is given to the Company, as the case
may be, a Shelf Registration Statement providing for the sale by the Holders of
all of the Registrable Securities and to have such Shelf Registration Statement
declared effective by the SEC. The Company agrees to use its best efforts to
keep the Shelf Registration Statement continuously effective until the second
anniversary of the Closing Date or such shorter period that will terminate when
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement. The Company further
agrees to supplement or amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the 1933 Act or by
any other rules and regulations thereunder for shelf registration or if
reasonably requested by a Holder with respect to information relating to such
Holder, and to use its best efforts to cause any such amendment to become
effective and such Shelf Registration Statement to become usable as soon as
thereafter practicable. The Company agrees to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection with the
registration pursuant to Section 2(a) or Section 2(b). Each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
-------- -------
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. As provided for in the Indenture, in
the event that the Exchange Offer is not consummated and a Shelf Registration
<PAGE>
Statement is not declared effective on or prior to March 30, 1998, the annual
interest rate borne by the Securities will be increased by 0.5% per annum until
the Exchange Offer is consummated or the Shelf Registration Statement is
declared effective. Upon consummation of the Exchange Offer or the effectiveness
of the Shelf Registration Statement, the interest rate on the Securities will
decrease to the original interest rate of 9-3/4% per annum.
(e) Without limiting the remedies available to the Placement Agents and the
Holders, the Company acknowledges that any failure by the Company to comply with
its obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Placement Agents or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Placement Agents or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2(a) and Section
2(b) hereof.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling Holders thereof and (z) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act (to the extent
required thereunder); to keep each Prospectus current during the period
described under Section 4(3) and Rule 174 under the 1933 Act that is applicable
to transactions by brokers or dealers with respect to the Registrable Notes or
Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel for the
Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
<PAGE>
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and the Company consents to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by each of the
selling holders of Registrable Securities and any such Underwriters in
connection with the offering and sale of the Registrable Securities covered by
and in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the Registrable Securities
under all applicable state securities or "blue sky" laws of such jurisdictions
as any Holder of Registrable Securities covered by a Registration Statement
shall reasonably request in writing by the time the applicable Registration
Statement is declared effective by the SEC, to cooperate with such Holders in
connection with any filings required to be made with the NASD do any and all
other acts and things in relation to applicable state securities or blue sky
laws and/or NASD which may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
-------- -------
shall not be required to (i)qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general consent to service of
process or (iii) subject itself to taxation in any such jurisdiction if it is
not so subject;
(e) in the case of a Shelf Registration, notify each Holder of Registrable
Securities, counsel for the Holders and counsel for the Placement Agent promptly
and, if requested by any such Holder or counsel, confirm such advice in writing
(i) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and correct in all
material respects or if the Company receives any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose, (v) of
the happening of any event during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make the
<PAGE>
statements therein not misleading and (vi) of any determination by the Company
that a post-effective amendment to a Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities who so requests, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto, unless
specifically requested);
(h) in the case of a Shelf Registration, cooperate with the selling Holders
of Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and registered
in such names as the selling Holders may reasonably request at least two
business days prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any event
described in Section 3(e)(v) hereof, use its best efforts to prepare and file
with the SEC a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company agrees to notify the Holders
to suspend use of the Prospectus as promptly as practicable after the occurrence
of such an event, and the Holders hereby agree to suspend use of the Prospectus
until the Company has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or any document which is to be incorporated by
reference into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the Placement Agent
and its counsel (and, in the case of a Shelf Registration Statement, the Holders
and their counsel) and make such of the representatives of the Company as shall
be reasonably requested by the Placement Agent or its counsel (and, in the case
of a Shelf Registration Statement, the Holders or their counsel) available for
discussion of such document, and shall not at any time file or make any
amendment to the Registration Statement, any Prospectus or any amendment of or
<PAGE>
supplement to a Registration Statement or a Prospectus or any document which is
to be incorporated by reference into a Registration Statement or a Prospectus,
of which the Placement Agent and its counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have previously
been advised and furnished a copy or to which the Placement Agent or its counsel
(and, in the case of a Shelf Registration Statement, the Holders or their
counsel) shall object;
(k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for inspection by a
representative of the Holders of the Registrable Securities, any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
and attorneys and accountants designated by the Holders, at reasonable times and
in a reasonable manner, all financial and other records (collectively,
"Inspectors"), pertinent documents and properties of the Company, and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by any such Inspector as shall be reasonably
necessary to enable them to exercise their relevant due diligence
responsibilities in connection with a Shelf Registration Statement (and in
connection therewith each Inspector shall, as a condition to its participation
in such investigation and information receipt, agree in writing not to disclose
any records, documents, properties or information that the Company determines,
in good faith, to be confidential and that it notifies the Inspectors in writing
are confidential unless such disclosure is required for compliance with (i) any
applicable securities laws, (ii) a court order or (iii)the public disclosure
requirements);
(n) in the case of a Shelf Registration, use its best efforts to cause all
Registrable Securities to be listed on any securities exchange or any automated
quotation system on which similar securities issued by the Company are then
listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;
<PAGE>
(o) use its best efforts to cause the Exchange Securities or Registrable
Securities, as the case may be, to be rated by two nationally recognized
statistical rating organizations (as such term is defined in Rule 436(g)(2)
under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Securities covered
by a Shelf Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as the Company has received notification of the matters to be
incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those reasonably requested by the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities including, but not limited to, an Underwritten
Offering and in such connection, (i) to the extent possible, make such
representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the representative of the
Holders, if any, or otherwise to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii)obtain "cold comfort" letters from the
independent certified public accountants of the Company (and, if necessary, any
other certified public accountant of any subsidiary of the Company, or of any
business acquired by the Company for which financial statements and financial
data are or are required to be included in the Registration Statement) addressed
to each selling Holder and Underwriter of Registrable Securities, such letters
to be in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings, and (iv)
deliver such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Securities being
sold or the Underwriters, and which are customarily delivered in underwritten
offerings, to evidence the continued validity of the representations and
warranties of the Company made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may require each
Holder of Registrable Securities to furnish to the Company such information
<PAGE>
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing. The Company shall not be required to include in such Registration
Statement any Registrable Securities of any Holder pursuant to this Agreement if
such Holder fails to furnish to the Company, within 20 business days after
receipt by such Holder of a request therefor, such information as the Company
may reasonably request for use in such Shelf Registration Statement.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice to suspend the
disposition of Registrable Securities pursuant to a Registration Statement, the
Company shall extend the period during which the Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions. The Company may give
any such notice only twice during any 365 day period and any such suspensions
may not exceed 30 days for each suspension and there may not be more than two
suspensions in effect during any 365 day period.
The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
-------------------------------------------------
(a) The Staff of the SEC has taken the position that any broker-dealer that
receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities, without
<PAGE>
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Securities for their own accounts, so
long as the Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker- Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the Prospectus
contained in the Exchange Offer Registration Statement, as would otherwise be
contemplated by Section 3(i), for a period exceeding 180 days after the last
Exchange Date (as such period may be extended pursuant to the penultimate
paragraph of Section 3 of this Agreement) and Participating Broker-Dealers shall
not be authorized by the Company to deliver and shall not deliver such
Prospectus after such period in connection with the resales contemplated by this
Section 4; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the extent not
required by the positions of the Staff of the SEC or the 1933 Act and the rules
and regulations thereunder, will be in conformity with the reasonable request to
the Company by the Placement Agent or with the reasonable request in writing to
the Company by one or more broker-dealers who certify to the Placement Agents
and the Company in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such application
--------- -------
of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer
Registration, the Company shall be obligated (x) to deal only with the entity
representing the Participating Broker-Dealers, which shall be the Placement
Agents unless they elects not to act as such representative, (y) to pay the fees
and expenses of only one counsel representing the Participating Broker-Dealers,
which shall be counsel to the Placement Agents unless such counsel elects not to
so act and (z) to cause to be delivered only one, if any, "cold comfort" letter
and one set of opinions of counsel with respect to the Prospectus in the form
existing on the last Exchange Date and with respect to each subsequent amendment
or supplement, if any, effected during the period specified in clause (i) above.
(c) The Placement Agent shall have no liability to the Company or any
Holder with respect to any request that it may make pursuant to Section 4(b)
above.
<PAGE>
5. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Placement Agents,
each Holder and each person, if any, who controls the Placement Agents or any
Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act, or is under common control with, or is controlled by, the
Placement Agents or any Holder, from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the Placement Agents, any Holder or any such controlling
or affiliated person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment thereto)
pursuant to which Exchange Securities or Registrable Securities were registered
under the 1933 Act, including all documents incorporated therein by reference,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Placement
Agents or any Holder furnished to the Company in writing by the Placement Agents
or any selling Holder expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary Prospectus shall not inure to the
benefit of any Holder from whom the person asserting any such losses, claims,
damages or liabilities purchased Securities, or any person controlling such
Holder, if a copy of the final Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Holder to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Securities to such person, and if the final Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability. In connection with any Underwritten Offering permitted by
Section 3, the Company will also indemnify the Underwriters, if any, selling
brokers, dealers and similar securities industry professionals participating in
the distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act and the Exchange Act) to the
same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Placement Agents and the other selling Holders, and
each of their respective directors, officers who sign the Registration Statement
and each Person, if any, who controls the Company, the Placement Agents and any
other selling Holder within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company to the Placement Agents and the Holders, but only with reference to
<PAGE>
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to either paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
persons, if any, who control the Placement Agents within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section and (c) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving the Placement Agents and persons who control the Placement Agents,
such firm shall be designated in writing by the Placement Agents. In such case
involving the Holders and such persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm
shall be designated by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but,
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
<PAGE>
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph (b)
of this Section 4 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective number of Registrable Securities of such Holder
that were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Securities
were sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the Placement
Agents, any Holder or any person controlling the Placement Agents or any Holder,
<PAGE>
or by or on behalf of the Company, its officers or directors or any person
controlling the Company, (iii) acceptance of any of the Exchange Securities and
(iv) any sale of Registrable Securities pursuant to a Shelf Registration
Statement.
6. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not entered into, and on or
after the date of this Agreement will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including the
----------------------
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or consent;
provided, however, that no amendment, modification, supplement, waiver or
consents to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.
(c) Notices. All notices and other communications provided for or permitted
-------
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 6(c),
which address initially is, with respect to the Placement Agent, the address set
forth below; and (ii) if to the Company, initially at the Company's address set
forth below and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c):
To the Company:
EnviroSource, Inc.
1155 Business Center Drive
Horsham, PA 19044-3454
Attention: President
Telephone: (215) 956-5500
Facsimile: (215) 956-5415
with a copy to:
<PAGE>
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Attention: Claude A. Baum
Telephone: (212) 698-3500
Facsimile: (212) 698-3599
To the Placement Agents:
Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Attention: High Yield New Issues Group
Telephone: (212) 761-4000
Facsimile: (212) 761-0265
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Jerry V. Elliott
Telephone: (212) 848-4000
Facsimile: (212) 848-7179
or to such other address of which written notice is given to the others.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of
<PAGE>
Registrable Securities in violation of the terms of the Placement Agreement or
Final Memorandum (as defined in the Placement Agreement). If any transferee of
any Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement
and such person shall be entitled to receive the benefits hereof. The Placement
Agent (in its capacity as Placement Agent) shall have no liability or obligation
to the Company with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.
(e) Purchases and Sales of Notes. The Company shall not, and shall use its
----------------------------
best efforts to cause its affiliates (as defined in Rule 405 under the 1933 Act)
not to, purchase and then resell or otherwise transfer any Notes.
(f) Third Party Beneficiary. The Holders shall be third party beneficiaries
-----------------------
to the agreements made hereunder between the Company, on the one hand, and the
Placement Agent, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws of the State of New York.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ENVIROSOURCE, INC.
By/s/George E. Fuehrer
-----------------
Title: Senior Vice President -
Planning & Business Development
Confirmed and accepted as of the date first above written:
Morgan Stanley & Co. Incorporated
Jefferies & Company, Inc.
NationsBanc Capital Markets, Inc.
By: MORGAN STANLEY & CO. INCORPORATED
By/s/ James Runde
-----------
Title: Managing Director
<PAGE>
FOURTH AMENDMENT, dated as of
------ ----------
September 23, 1997, to the Credit Agreement,
dated as of December 19, 1995 (as amended to
the date hereof, the "Credit Agreement"),
-----------------
among International Mill Service, Inc., a
Pennsylvania corporation (the "Borrower"),
--------
EnviroSource, Inc., a Delaware corporation
(the "Parent"), the several banks and other
------
financial institutions parties thereto (the
"Lenders"), NationsBank, N.A., as
-------
administrative agent for the Lenders (in
such capacity, the "Administrative Agent"),
---------------------
and Credit Lyonnais New York Branch, the New
York branch of a banking organization
organized under the laws of the Republic of
France, as syndication agent for the
Lenders.
PRELIMINARY STATEMENTS:
-----------------------
(1) The Borrower has requested that the Lenders agree to make various
changes in the Credit Agreement.
(2) The parties hereto have agreed, subject to the terms and conditions
hereof, to grant the requests of the Borrower and to amend the Credit Agreement
as provided herein.
(3) Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement (the Credit
Agreement, as amended by, and together with, this Fourth Amendment, and as
hereinafter amended, modified, extended or restated from time to time, being
called the "Amended Agreement").
-----------------
Accordingly, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENTS TO SECTION 1.1. (a) Section 1.01 of the Credit
------------ -------------------------
Agreement is hereby amended by deleting the definitions of "Indenture" and
"Senior Notes" and substituting in lieu thereof the following:
""Indenture": collectively, the 1997 Indenture and
---------
the 1993 Indenture.
"Senior Notes": collectively, the 1993 Notes and the
------------
Series B 1997 Notes."
<PAGE>
(b) Section 1.01 of the Credit Agreement is hereby amended by adding
the following definitions thereto in the appropriate alphabetical order:
""1997 Indenture": the Indenture dated as of
----------------
September 30, 1997, between the Parent and United States Trust Company
of New York, as trustee, which indenture governs the terms of the
Series B 1997 Notes, and as further amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof and
thereof.
"1993 Indenture": the Indenture dated as of July
--------------
1, 1993, between the Parent and United States Trust Company of New
York, as trustee, which indenture governs the terms of the 1993 Notes,
and as further amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof and thereof.
"1993 Notes": the 9-3/4% Senior Notes due 2003
------------
issued by the Parent pursuant to the 1993 Indenture or
any refinancing thereof permitted hereunder.
"Series B 1997 Notes": the 9-3/4% Senior Notes
-------------------
due 2003 in an aggregate face amount of $50,000,000 issued by the
Parent pursuant to the 1997 Indenture, or any refinancing thereof
permitted hereunder."
(c) Schedule 1.1(b) to the Credit Agreement is hereby deleted in its
entirety and Annex A attached hereto and made a part hereof for all purposes is
substituted in lieu thereof.
SECTION 1.02. AMENDMENTS TO SECTION 2. (a) Section 2.6 of the Credit
------------- -----------------------
Agreement is hereby amended by adding the following paragraph to the end
thereof:
"(e) Notwithstanding anything in Section 2.6(a) to the
contrary, as soon as practical (but in no event later than one (1)
Business Day) after the issuance of the Series B 1997 Notes, the entire
amount of the Net After-Tax Cash Proceeds with respect to such
Prepayment Event shall be paid to the Administrative Agent and applied
to prepay the Loans together with the payment in full of all accrued
interest thereon to and including the date of such prepayment, together
with any additional amounts owing pursuant to Section 2.17. Upon the
earlier of (i) receipt by the Administrative Agent of such proceeds or
<PAGE>
(ii) 5:00 P.M., Charlotte, North Carolina time on the first Business
Day following the issuance of the Series B 1997 Notes, the Revolving
Credit Commitments shall automatically be reduced to $50,000,000."
(b) Section 2 of the Credit Agreement is hereby amended by adding the
following section thereto:
"2.18 Increase in Commitments. (a) Subject to the conditions
------------------------
set forth in this Section 2.18 and provided no Default or Event of
Default shall have occurred and be continuing, the Revolving Credit
Commitments may be increased from time to time, upon the request of the
Borrower, if an existing Lender agrees to increase its Revolving Credit
Commitment or any other financial institution or bank (a "New Lender")
agrees to provide additional Revolving Credit Commitments. In no event
shall the aggregate principal amount of the Revolving Credit
Commitments exceed $65,000,000. Increases in the Revolving Credit
Commitments shall be in increments of $1,000,000 and the initial
minimum commitment of any New Lender shall not be less than $5,000,000.
(b) If any such additional Revolving Credit Commitments are
provided by a New Lender, then such New Lender shall execute a joinder
or other agreement, in form and substance reasonably satisfactory to
the Administrative Agent, wherein the New Lender agrees to be bound by
all the terms and conditions of the Credit Agreement, as amended,
applicable to Lenders and the New Lender shall thereafter be a "Lender"
for all purposes of the Credit Agreement, as amended. Neither the
Administrative Agent nor any of the existing Lenders shall have any
obligation to provide additional Revolving Credit Commitments or to
provide or identify any New Lender willing to provide additional
Revolving Credit Commitments.
(c) Prior to the effectiveness of the increase in or addition
to, as the case may be, the Revolving Credit Commitments, the Borrower
shall deliver to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, in its sole discretion, a
certificate of a Responsible Officer of the Parent stating that the
Borrower and the Parent are in pro forma compliance with all covenants
contained in Section 7.1 of the Credit Agreement, before and after
giving effect to the increase in or addition to, as the case may be,
the Revolving Credit Commitments."
<PAGE>
SECTION 1.03. AMENDMENTS TO SECTION 6. Section 6.11 of the Credit
------- ----- -------------------------
Agreement is hereby amended by deleting the date "October 31, 1997" in the first
and third sentences thereof and substituting the date "November 30, 1997" in
lieu thereof.
SECTION 1.04. AMENDMENTS TO SECTION 7. (a) Section 7.1 of the Credit
------- ----- ------------------------
Agreement is hereby amended by deleting subclause (a) in its entirety and
substituting the following in lieu thereof:
"(a) Interest Coverage. Permit the ratio of (i) EBITDA for the
-----------------
Reference Period with respect to the last day of any fiscal quarter of
the Parent referred to below to (ii) Consolidated Interest Expense for
such Reference Period to be less than the ratio set forth below
opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth quarter of fiscal 1995
through and including first quarter of fiscal 1996
2.35:1.00
<PAGE>
Fiscal quarters from and including second quarter of fiscal 1996
through and including third quarter of fiscal 1996
2.25:1.00
Fiscal quarters from and including fourth quarter of fiscal 1996
through and including first quarter of fiscal 1997
1.95:1.00
Fiscal quarters from and including second quarter of fiscal 1997
through and including third quarter of fiscal 1997
1.75:1.00
Fiscal quarters from and including fourth quarter of fiscal 1997
through and including third quarter of fiscal 1998
1.85:1.00
Fiscal quarters from and including fourth quarter of fiscal 1998
through and including third quarter of fiscal 1999
2.05:1.00
Fiscal quarters from and including fourth quarter of fiscal 1999
through and including third quarter of fiscal 2000 2.25:1.00
Fourth quarter of fiscal 2000 and all fiscal quarters
thereafter 2.40:1.00"
(b) Section 7.1 of the Credit Agreement is hereby amended by
deleting subclause (c) in its entirety and substituting the following in lieu
thereof:
"(c) Debt Service Coverage. Permit the ratio of (i) EBITDA for
---------------------
the Reference Period with respect to the last day of any fiscal quarter
of the Parent referred to below, plus any income tax refunds received
----
<PAGE>
by the Parent and its Subsidiaries during such Reference Period, plus
----
(without duplication) IU Cash Inflows received by the Parent and its
Subsidiaries during such Reference Period, less (without duplication)
----
IU Cash Outflows from the Parent and its Subsidiaries during such
Reference Period, less Cash Taxes for such Reference Period, less
---- ----
(without duplication) Landfill Permit Expenditures during such
Reference Period, less Closure Trust Fund Payments during such
----
Reference Period to (ii) Consolidated Interest Expense for such
Reference Period, plus scheduled principal payments under Indebtedness
----
of the Parent and its Subsidiaries for such Reference Period to be less
than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth
quarter of fiscal 1995 through and including
third quarter of fiscal 1996 1.35:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1996 through and including
first quarter of fiscal 1997 1.40:1.00
Fiscal quarters from and including second
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 1.05:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1998 through and including
first quarter of fiscal 1999 1.60:1.00
Second quarter of fiscal 1999 and all fiscal
quarters thereafter 2.00:1.00"
(c) Section 7.1 of the Credit Agreement is hereby amended by
deleting subclause (d) in its entirety and substituting the following
in lieu thereof:
"(d) Debt to EBITDA Ratio. Permit the ratio of (i)
------------------------
Consolidated Total Debt as of the last day of any fiscal quarter of the
Parent referred to below to (ii) EBITDA for the Reference Period with
respect to such day to be more than the ratio set forth below opposite
such fiscal quarter:
<PAGE>
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth
quarter of fiscal 1995 through and including
first quarter of fiscal 1996 4.75:1.00
Fiscal quarters from and including second
quarter of fiscal 1996 through and including
third quarter of fiscal 1996 5.00:1.00
Fourth quarter of fiscal 1996 5.50:1.00
First quarter of fiscal 1997 4.80:1.00
Fiscal quarters from and including second
quarter of fiscal 1997 through and including
fourth quarter of fiscal 1997 5.70:1.00
Fiscal quarters from and including first
quarter of fiscal 1998 through and including
third quarter of fiscal 1999 4.70:1.00
Fourth quarter of fiscal 1999 and all fiscal
quarters thereafter 4.50:1.00"
(d) Section 7.2 of the Credit Agreement is hereby amended by
adding to the end thereof the following subsection:
"(l) Indebtedness of the Parent evidenced by
the Series B 1997 Notes, in an aggregate principal
amount of up to $50,000,000."
SECTION 1.05. REPRESENTATIONS AND WARRANTIES. The Parent and the
------------ --------------------------------
Borrower hereby represent and warrant to each Lender that:
(a) The representations and warranties set forth in Section 4
of the Amended Agreement, and in each other Loan Document, are true and
correct in all material respects on and as of the date hereof and on
and as of the Fourth Amendment Effective Date (as defined in Section
1.06) with the same effect as if made on and as of the date hereof or
the Fourth Amendment Effective Date, as the case may be, except to the
extent such repre sentations and warranties expressly relate solely to
an earlier date (in which case such representations and warranties
shall have been true and correct in all material respects on and as of
such earlier date).
<PAGE>
(b) Each of the Loan Parties is in compliance with all the
terms and conditions of the Amended Agreement and the other Loan
Documents on its part to be observed or performed and no Default or
Event of Default has occurred or is continuing.
(c) The execution, delivery and performance by each of the
Borrower and the Parent of this Fourth Amendment have been duly
authorized by such party.
(d) This Fourth Amendment constitutes the legal, valid and
binding obligation of each of the Borrower and the Parent, enforceable
against it in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors' rights generally.
(e) The execution, delivery and performance by each of the
Borrower and the Parent of this Fourth Amendment (i) do not conflict
with or violate (A) any provision of law, statute, rule or regulation,
or of the certificate of incorporation or by-laws of the Borrower or
the Parent, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which the
Borrower or the Parent is a party or by which it or any of its property
may be bound and (ii) do not require any consents under, result in a
breach of or constitute (with notice or lapse of time or both) a
default under any such indenture, agreement or instrument.
SECTION 1.06. EFFECTIVENESS. This Fourth Amendment shall become
------------- -------------
effective only upon satisfaction of the following conditions precedent on or
prior to September 23, 1997 (the first date upon which each such condition has
been satisfied being herein called the "Fourth Amendment Effective Date"):
-------------------------------
(a) The Administrative Agent shall have received duly executed
counterparts of this Fourth Amendment which, when taken together, bear
the authorized signatures of the Borrower, the Parent and the Required
Lenders.
(b) (i) The representations and warranties set forth in
Section 1.05 shall be true and correct on and as of the Fourth
Amendment Effective Date, (ii) no Default or Event of Default has
occurred or is continuing and (iii) there shall not be any action
pending or any judgment, order or decree in effect which is likely to
restrain, prevent or impose materially adverse conditions upon
performance by any Loan Party of its obligations under the Loan
Documents.
<PAGE>
(c) The Borrower shall have paid in full all fees and
reasonable expenses payable as of the Fourth Amendment Effective Date
in connection with the Amended Agreement and the other Loan Documents.
(d) The Administrative Agent shall have received from each of
the Guarantors duly executed Consents, in the form attached hereto as
Exhibit A, which bear the authorized signatures of such Guarantors.
---------
(e) The Administrative Agent shall have received an opinion of
counsel to the Borrower, the Parent and the other Loan Parties in form
and substance satisfactory to the Administrative Agent.
(f) The Administrative Agent shall have received such other
documents, legal opinions, instruments and certificates as it shall
reasonably request and such other documents, legal opinions,
instruments and certificates shall be satisfactory in form and
substance to the Administrative Agent and its counsel. All corporate
and other proceedings taken or to be taken in connection with this
Fourth Amendment and all documents incidental thereto, whether or not
referred to herein, shall be satisfactory in form and substance to the
Administrative Agent and its counsel.
SECTION 1.07. CONDITION SUBSEQUENT. This Fourth Amendment shall be null
------------ --------------------
and void and of no force and effect if the Series B 1997 Notes are not issued on
or before November 1, 1997 and all of the Net After-Tax Cash Proceeds from such
issuance, which amount shall not be less than $44,000,000, shall have been paid
to the Administrative Agent for application as set forth herein.
SECTION 1.08. APPLICABLE LAW. THIS FOURTH AMENDMENT SHALL BE
------------ --------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 1.09. EXPENSES. The Borrower shall pay all reasonable
------------- --------
out-of-pocket expenses incurred by the Agents in connection with the
preparation, negotiation, execution and delivery and the Agents' and the
Lenders' enforcement of this Fourth Amendment, including, but not limited to,
the reasonable fees and disbursements of counsel. The agreements set forth in
this Section 1.09 shall survive the termination of this Fourth Amendment and the
Amended Agreement.
<PAGE>
SECTION 1.10. COUNTERPARTS. This Fourth Amendment may be executed in
------------ ------------
any number of counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one agreement.
SECTION 1.11. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) On and
------------ ---------------------------------------------
after the Fourth Amendment Effective Date, each reference in the Amended
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Amended Agreement as amended by this Fourth Amendment.
(b) Each of the amendments provided herein shall apply and be
effective only with respect to the provisions of the Amended Agreement
specifically referred to by such amendment. Except as specifically
amended above, the Amended Agreement and the Revolving Credit Notes,
and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) Except as specifically provided above, the execution,
delivery and effectiveness of this Fourth Amendment shall not operate
as a waiver of any right, power or remedy of any Lender, any Agent or
any Secured Party under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be duly executed by their duly authorized officers, all as of the
date first above written.
INTERNATIONAL MILL SERVICE, INC.
By:/s/ William B. Davis
--------------------
Title: Treasurer
ENVIROSOURCE, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
NATIONSBANK, N.A., as Administrative
Agent, as Issuing Lender, as Swingline
Lender and as a Lender
By:/s/Thomas J. Kane
-----------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH, as
Syndication Agent and as a Lender
By:/s/Attila Koc
-------------
Title: First Vice President
BANQUE PARIBAS, as a Lender
By:/s/Pierre-Jean de Filippis
--------------------------
Title: General Manager
By:/s/Deanna C. Walker
-------------------
Title: Assistant Vice President
<PAGE>
EXHIBIT A
CONSENT
-------
Dated as of September 23, 1997
Each of the undersigned, as a Guarantor under one of the Guarantees,
dated as of December 19, 1995 (each, a "Guarantee") in favor of the Agent for
---------
the Lenders parties to the Credit Agreement referred to in the foregoing Fourth
Amendment, hereby consents to the Fourth Amendment and hereby confirms and
agrees that (i) the Guarantee to which such Guarantor is a party is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects except that, upon the effectiveness of, and on and after the date
of, the Fourth Amendment, each reference in such Guarantee to the Loan Documents
or any thereof, "thereunder", "thereof" or words of like import shall mean and
be a reference to the Loan Documents or such Loan Document as amended prior to
the date of and by the Fourth Amendment and (ii) the Security Documents (as
defined in the Credit Agreement referred to in the foregoing Fourth Amendment)
to which such Guarantor is a party and all of the Collateral described therein
do, and shall continue to, secure the payment of all of the Obligations (as
defined therein).
ALEXANDER MILL SERVICES, INC.
By:/s/William B. Davis
-------------------
Title: Vice President & Treasurer
C. BREWER TERMINALS, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
CONVERSION SYSTEMS, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
<PAGE>
ENVIROSOURCE MANAGEMENT SYSTEMS, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ENVIROSOURCE MANAGEMENT CORP.
By:/s/William B. Davis
-------------------
Title: Vice President & Treasurer
ENVIROSOURCE TECHNICAL SERVICES, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ENVIROSAFE SERVICES OF IDAHO, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ENVIROSAFE SERVICES OF NORTH AMERICA, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
<PAGE>
ENVIROSAFE SERVICES OF OHIO, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ENVIROSAFE SERVICES OF TEXAS, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ENVIROSOURCE CORP.
By:/s/William B. Davis
-------------------
Title: Vice President & Treasurer
ENVIROSOURCE TREATMENT & DISPOSAL
SERVICES, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
ETDS, INC.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
FOX HUNT FARMS, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
<PAGE>
IU INTERNATIONAL CORPORATION
By:/s/Laura M. Sillins
-------------------
Title: Vice President
IU NORTH AMERICA FINANCE, INC.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
IU NORTH AMERICA, INC.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
MARCUS HOOK PROCESSING, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
McGRAW CONSTRUCTION COMPANY, INC.
By:/s/William B. Davis
-------------------
Title: Treasurer
NEOAX INVESTMENT CORP.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
<PAGE>
NOSROC CORP.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
SONCOR CORP.
By:/s/Laura M. Sillins
-------------------
Title: Vice President
WAYLITE CORPORATION
By:/s/William B. Davis
-------------------
Title: Treasurer
<PAGE>
Annex A
Revolving Credit Commitments
Lender Percentage Amount
------ ---------- ------
NationsBank, N.A. 45% $22,500,000
Credit Lyonnais New York Branch 45% $22,500,000
Banque Paribas 10% $ 5,000,000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the financial statements included in EnviroSource's Form 10-Q for
the quarterly period ended September 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,868
<SECURITIES> 0
<RECEIVABLES> 39,343
<ALLOWANCES> 881
<INVENTORY> 0
<CURRENT-ASSETS> 55,096
<PP&E> 286,294
<DEPRECIATION> 142,651
<TOTAL-ASSETS> 420,485
<CURRENT-LIABILITIES> 52,978
<BONDS> 282,316
0
0
<COMMON> 2,036
<OTHER-SE> 42,244
<TOTAL-LIABILITY-AND-EQUITY> 420,485
<SALES> 0
<TOTAL-REVENUES> 168,977
<CGS> 0
<TOTAL-COSTS> 133,398
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,763
<INCOME-PRETAX> (4,430)
<INCOME-TAX> 758
<INCOME-CONTINUING> (5,188)
<DISCONTINUED> 9,600
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,412
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
