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EXECUTION COPY
EXHIBIT 4.7
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Flowserve Corporation
Issuer
The Guarantors named herein
12-1/4% Senior Subordinated Securities Due 2010
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INDENTURE
Dated as of August 8, 2000
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The Bank of New York
Trustee
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CROSS-REFERENCE TABLE
<TABLE>
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TIA Indenture
Section Section
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310(a)(1) ....................................... 7.10
(a)(2) ....................................... 7.10
(a)(3) ....................................... N.A.
(a)(4) ....................................... N.A.
(b) ....................................... 7.08; 7.10
(c) ....................................... N.A.
311(a) ....................................... 7.11
(b) ....................................... 7.11
(c) ....................................... N.A.
312(a) ....................................... 2.05
(b) ....................................... 13.03
(c) ....................................... 13.03
313(a) ....................................... 7.06
(b)(1) ....................................... N.A.
(b)(2) ....................................... 7.06
(c) ....................................... 11.02
(d) ....................................... 7.06
314(a) ....................................... 4.02; 4.11; 13.02
(b) ....................................... N.A.
(c)(1) ....................................... 13.04
(c)(2) ....................................... 13.04
(c)(3) ....................................... N.A.
(d) ....................................... N.A.
(e) ....................................... 13.05
(f) ....................................... 4.10
315(a) ....................................... 7.01
(b) ....................................... 7.05; 13.02
(c) ....................................... 7.01
(d) ....................................... 7.01
(e) ....................................... 6.11
316(a)(last sentence) ................................. 13.06
(a)(1)(A) ....................................... 6.05
(a)(1)(B) ....................................... 6.04
(a)(2) ....................................... N.A.
(b) ....................................... 6.07
317(a)(1) ....................................... 6.08
(a)(2) ....................................... 6.09
(b) ....................................... 2.04
318(a) ....................................... 13.01
N.A. means Not Applicable.
</TABLE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Other Definitions........................................................................31
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.......................................................31
SECTION 1.04. Rules of Construction....................................................................32
SECTION 1.05. Acts of Holders..........................................................................32
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating..........................................................................34
SECTION 2.02. Execution and Authentication.............................................................34
SECTION 2.03. Registrar and Paying Agent...............................................................35
SECTION 2.04. Paying Agent To Hold Money in Trust......................................................35
SECTION 2.05. Securityholder Lists.....................................................................36
SECTION 2.06. Transfer and Exchange....................................................................36
SECTION 2.07. Replacement Securities...................................................................36
SECTION 2.08. Outstanding Securities...................................................................37
SECTION 2.09. Temporary Securities.....................................................................38
SECTION 2.10. Cancellation.............................................................................38
SECTION 2.11. Defaulted Interest.......................................................................38
SECTION 2.12. CUSIP Numbers............................................................................38
SECTION 2.13. Issuance of Additional Securities........................................................39
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.......................................................................39
SECTION 3.02. Selection of Securities To Be Redeemed...................................................40
SECTION 3.03. Notice of Redemption.....................................................................40
SECTION 3.04. Effect of Notice of Redemption...........................................................41
SECTION 3.05. Deposit of Redemption Price..............................................................41
SECTION 3.06. Securities Redeemed in Part..............................................................41
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ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities....................................................................42
SECTION 4.02. SEC Reports..............................................................................42
SECTION 4.03. Limitation on Indebtedness...............................................................42
SECTION 4.04. Limitation on Restricted Payments........................................................47
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Subsidiaries........................................50
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock....................................................52
SECTION 4.07. Limitation on Affiliate Transactions.....................................................57
SECTION 4.08. Limitation on the Sale or Issuance of
Capital Stock of
Restricted Subsidiaries.............................................58
SECTION 4.09. Change of Control........................................................................59
SECTION 4.10. Excess Cash Flow Repurchase Offer........................................................61
SECTION 4.11. Future Guarantors........................................................................64
SECTION 4.12. Compliance Certificate...................................................................64
SECTION 4.13. Further Instruments and Acts.............................................................65
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets..............................................................65
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default........................................................................67
SECTION 6.02. Acceleration.............................................................................70
SECTION 6.03. Other Remedies...........................................................................70
SECTION 6.04. Waiver of Past Defaults..................................................................71
SECTION 6.05. Control by Majority......................................................................71
SECTION 6.06. Limitation on Suits......................................................................71
SECTION 6.07. Rights of Holders to Receive Payment.....................................................72
SECTION 6.08. Collection Suit by Trustee...............................................................72
SECTION 6.09. Trustee May File Proofs of Claim.........................................................72
SECTION 6.10. Priorities...............................................................................73
SECTION 6.11. Undertaking for Costs....................................................................73
SECTION 6.12. Waiver of Stay or Extension Laws.........................................................73
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ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee........................................................................74
SECTION 7.02. Rights of Trustee........................................................................75
SECTION 7.03. Individual Rights of Trustee.............................................................76
SECTION 7.04. Trustee's Disclaimer.....................................................................77
SECTION 7.05. Notice of Defaults.......................................................................77
SECTION 7.06. Reports by Trustee to Holders............................................................77
SECTION 7.07. Compensation and Indemnity...............................................................77
SECTION 7.08. Replacement of Trustee...................................................................78
SECTION 7.09. Successor Trustee by Merger..............................................................79
SECTION 7.10. Eligibility; Disqualification............................................................80
SECTION 7.11. Preferential Collection of Claims
Against Company.....................................................80
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance..............................................80
SECTION 8.02. Conditions to Defeasance.................................................................81
SECTION 8.03. Application of Trust Money...............................................................83
SECTION 8.04. Repayment to Company.....................................................................83
SECTION 8.05. Indemnity for Government Obligations.....................................................83
SECTION 8.06. Reinstatement............................................................................83
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders...............................................................84
SECTION 9.02. With Consent of Holders..................................................................85
SECTION 9.03. Compliance with Trust Indenture Act......................................................86
SECTION 9.04. Revocation and Effect of Consents and
Waivers.............................................................86
SECTION 9.05. Notation on or Exchange of Securities....................................................87
SECTION 9.06. Trustee To Sign Amendments...............................................................87
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate................................................................88
SECTION 10.02. Liquidation, Dissolution, Bankruptcy....................................................88
SECTION 10.03. Default on Senior Indebtedness of the
Company.............................................................88
SECTION 10.04. Acceleration of Payment of Securities...................................................90
SECTION 10.05. When Distribution Must Be Paid Over.....................................................90
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SECTION 10.06. Subrogation.............................................................................90
SECTION 10.07. Relative Rights.........................................................................91
SECTION 10.08. Subordination May Not Be Impaired by
Company.............................................................91
SECTION 10.09. Rights of Trustee and Paying Agent......................................................91
SECTION 10.10. Distribution or Notice to
Representative......................................................92
SECTION 10.11. Article 10 Not To Prevent Events of Default
or Limit Right To Accelerate........................................92
SECTION 10.12. Trust Moneys Not Subordinated...........................................................92
SECTION 10.13. Trustee Entitled To Rely................................................................92
SECTION 10.14. Trustee To Effectuate Subordination. ...................................................93
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company.........................................93
SECTION 10.16. Reliance by Holders of Senior Indebtedness
of the Company on Subordination
Provisions..........................................................93
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties..............................................................................94
SECTION 11.02. Limitation on Liability.................................................................96
SECTION 11.03. Successors and Assigns..................................................................96
SECTION 11.04. No Waiver...............................................................................97
SECTION 11.05. Modification............................................................................97
SECTION 11.06. Release of Subsidiary Guarantor.........................................................97
ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate................................................................98
SECTION 12.02. Liquidation, Dissolution, Bankruptcy....................................................98
SECTION 12.03. Default on Senior Indebtedness of
Subsidiary Guarantor................................................98
SECTION 12.04. Demand for Payment.....................................................................100
SECTION 12.05. When Distribution Must Be Paid Over....................................................100
SECTION 12.06. Subrogation............................................................................100
SECTION 12.07. Relative Rights........................................................................101
SECTION 12.08. Subordination May Not Be Impaired by
Company............................................................101
SECTION 12.09. Rights of Trustee and Paying Agent.....................................................101
SECTION 12.10. Distribution or Notice to
Representative.....................................................102
SECTION 12.11. Article 12 Not To Prevent Events of Default
or Limit Right To Demand Payment...................................102
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SECTION 12.12. Trustee Entitled To Rely...............................................................102
SECTION 12.13. Trustee To Effectuate Subordination....................................................103
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Subsidiary
Guarantor..........................................................103
SECTION 12.15. Reliance by Holders of Senior Indebtedness
of Subsidiary Guarantors on
Subordination Provisions...........................................103
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls...........................................................104
SECTION 13.02. Notices................................................................................104
SECTION 13.03. Communication by Holders with Other
Holders............................................................105
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent..........................................................105
SECTION 13.05. Statements Required in Certificate or
Opinion............................................................105
SECTION 13.06. When Securities Disregarded............................................................105
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar..........................................................106
SECTION 13.08. Legal Holidays.........................................................................106
SECTION 13.09. Governing Law..........................................................................106
SECTION 13.10. No Recourse Against Others.............................................................106
SECTION 13.11. Successors.............................................................................106
SECTION 13.12. Multiple Originals.....................................................................107
SECTION 13.13. Table of Contents; Headings............................................................107
</TABLE>
Rule 144A/Regulation S Appendix
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange Security
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INDENTURE dated as of August 8, 2000, among
Flowserve Corporation, a New York corporation (the
"Company"), the GUARANTORS named herein and The Bank
of New York, a New York banking corporation (the
"Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
Initial Securities, Exchange Securities and Private Exchange Securities
(collectively, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquisition" means the acquisition by the Company, directly
or indirectly, of 100% of the partnership interests of Ingersoll-Dresser Pump
Company.
"Additional Assets" means any:
(1) property, plant or equipment used in a Related
Business;
(2) 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
(3) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.
"Additional Euro Notes" means, subject to the Company's
compliance with Section 4.03, 12-1/4% Senior Subordinated Securities Due 2010
issued from time to time after the Issue Date under the terms of the Euro Notes
Indenture (other than pursuant to Section 2.06, 2.07, 2.09 or 3.06 of the Euro
Notes Indenture and other than Euro Notes Exchange Securities or Euro Notes
Private Exchange Securities (in each case as defined in the Euro Notes
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Indenture) issued pursuant to an exchange offer for other Euro Notes outstanding
under the Euro Notes Indenture).
"Additional Securities" means, subject to the Company's
compliance with Section 4.03, 12-1/4% Senior Subordinated Securities Due 2010
issued from time to time after the Issue Date under the terms of this Indenture
(other than pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and
other than Exchange Securities or Private Exchange Securities issued pursuant to
an exchange offer for other Securities outstanding under this Indenture).
"Affiliate" of any specified Person means: (1) any other
Person, directly or indirectly, controlling or controlled by; or (2) 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 4.04, 4.06 and 4.07 only,
"Affiliate" shall also mean any beneficial owner of Capital Stock 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 Capital 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.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a
Restricted Subsidiary);
(2) all or substantially all the assets of any division or
line of business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or
such Restricted Subsidiary
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(other than, in the case of clauses (1), (2) and (3), (A) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary (or to a Restricted Subsidiary so long
as the aggregate fair market value of all assets transferred to Restricted
Subsidiaries pursuant to this clause (A) does not exceed $50.0 million); (B) for
purposes of Section 4.06 only, a disposition that constitutes a Restricted
Payment permitted by Section 4.04 or a Permitted Investment; (C) sales or other
dispositions of obsolete, worn-out or otherwise unsuitable assets or excess
equipment in the ordinary course of business; and (D) a disposition of assets
with a fair market value of less than $1,000,000).
Notwithstanding anything to the contrary set forth above, (x)
unless, at the time of such disposition, the Company has Investment Grade
Status, a disposition of Receivables and Related Assets shall be deemed to
constitute an Asset Disposition and (y) a disposition of all or substantially
all the assets of the Company and its Restricted Subsidiaries taken as a whole
will be governed by the provisions of Sections 4.09 and/or 5.01 and not by the
provisions of Section 4.06.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (1) the sum of
the products of numbers of years from the date of determination to the dates of
each successive scheduled principal payment of or redemption or similar payment
with respect to such Indebtedness multiplied by the amount of such payment by
(2) the sum of all such payments.
"Bank Indebtedness" means all Obligations pursuant to the
Credit Agreement.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day other than a Saturday, Sunday or
a day on which commercial banking institutions are authorized or required by law
to close in New York City.
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"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital 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 GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
for purposes of this clause (1) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of a majority of the
total voting power of the Voting Stock of the Company (for the purposes
of this clause (1), such other person shall be deemed to beneficially
own any Voting Stock of a Person (the "specified person") held by an
other Person (the "parent entity"), if such other person is the
beneficial owner (as defined in this clause (1)), directly or
indirectly, of a majority of the voting power of the Voting Stock of
such parent entity);
(2) individuals who on the Issue Date constituted the Board of
Directors (together with any new directors whose election by such Board
of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors on the Issue
Date or whose election or nomination for election was previously so
approved)
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cease for any reason to constitute a majority of the Board of Directors
then in office; or
(3) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person, other
than a transaction following which in the case of a merger or
consolidation transaction, securities that represented 100% of the
Voting Stock of the Company immediately prior to such transaction (or
other securities into which such securities are converted as part of
such merger or consolidation transaction) constitute at least a
majority of the voting power of the Voting Stock of the surviving
Person in such merger or consolidation transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means, in respect of a Person, any
forward contract, commodity swap agreement, commodity option agreement or other
similar agreement or arrangement designed to protect such Person against
fluctuations in commodity prices.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the Securities.
"Consent Decree" means the consent decree entered on July 28,
2000 in the U.S. District Court for the District of Columbia in the matter of
United States of America v. Flowserve Corporation, Ingersoll-Dresser Pump
Company and Ingersoll-Rand Company relating to the purchase of Ingersoll-Dresser
Pump Company by the Company.
"Consent Decree Assets" means the assets identified in the
Consent Decree that the Company, Ingersoll-Dresser Pump Company and
Ingersoll-Rand Company have been ordered and directed to divest in connection
with the Acquisition.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of
(x) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for
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which internal financial statements are available ending on or prior to
the date of such determination to
(y) 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 if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day
of such period;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if the
Company or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA
(if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with
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respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company
and its continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the
first day of such period; and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (3) or (4) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect
thereto as if such Asset Disposition, Investment or acquisition
occurred 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, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer (and shall
include any applicable Pro Forma Cost Savings). If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest of
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire
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period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Company or its Restricted Subsidiaries,
without duplication:
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Hedging Obligations;
(7) Preferred Stock dividends in respect of all Preferred
Stock held by Persons other than the Company or a Wholly Owned
Subsidiary (other than dividends payable solely in Capital Stock (other
than Disqualified Stock) of the issuer of such Preferred Stock);
(8) interest incurred in connection with Investments in
discontinued operations;
(9) interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) the Company or any Restricted Subsidiary and there shall
have occurred and continues an event of default under such Indebtedness
or any payment is actually made in respect of such Guarantee;
(10) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust; and
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(11) any premiums, fees, discounts, expenses and losses on the
sale of Receivables and Related Assets (and any amortization thereof)
payable in connection with a Receivables Program, as determined on a
consolidated basis in conformity with GAAP.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (4)
below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid
to a Restricted Subsidiary, to the limitations contained in
clause (3) below); 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;
(2) 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;
(3) any net income of any Restricted Subsidiary that is not a
Subsidiary Guarantor if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that:
(A) subject to the exclusion contained in clause (4)
below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of
cash actually
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distributed by such Restricted Subsidiary during such period
to the Company or another Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or
other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other
disposition of any assets (other than any Consent Decree Assets) of the
Company, its consolidated Subsidiaries or any other Person (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain
(but not loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of the Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under Section 4.04 (a)(3)(C).
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as the sum of:
(1) the par or stated value of all outstanding Capital
Stock of the Company plus
(2) paid-in capital or capital surplus relating to such
Capital Stock plus
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(3) any retained earnings or earned surplus
less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock. In determining "Consolidated Net Worth," the Company shall
exclude the impact of any write-off of deferred financing fees occurring in
connection with any transaction subject to Section 5.01 of this Indenture for
the purpose of which the determination is being made.
"Corporate Trust Office" means the principal office of the
Trustee at which at any time its corporate trust business shall be administered,
which office at the dated hereof is located at 101 Barclay Street, Floor 21
West, New York, New York 10286. Attention: Corporate Trust Administration, or
such other address as the Trustee may designate from time to time by notice to
the Holders and the Company, or the principal corporate trust office of any
successor Trustee (or such other address as a successor Trustee may designate
from time to time by notice to the Holders and the Company).
"Credit Agreement" means the Credit Agreement to be entered
into by and among the Company, certain of its Subsidiaries, the lenders referred
to therein, Credit Suisse First Boston, New York branch, as Syndication Agent,
Bank of America, N.A., as Administrative Agent, Collateral Agent and Swingline
Lender, and ABN-AMRO Bank N.V., Bank One and Salomon Smith Barney, Inc., as
Co-Documentation Agents, together with the related documents thereto (including
the term loans and revolving loans thereunder, any guarantees and security
documents), as amended, extended, renewed, restated, refinanced, supplemented or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time, and any
agreement (and related document) governing Indebtedness incurred to Refinance,
in whole or in part, the borrowings and commitments then outstanding or
permitted to be outstanding under such Credit Agreement or a successor Credit
Agreement, whether by the same or any other lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
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"Designated Senior Indebtedness" with respect to a Person
means (1) the Bank Indebtedness; and (2) any other Senior Indebtedness of such
Person which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $25.0 million and is specifically
designated by such Person in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder
for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the
occurrence of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if (1) the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms applicable to the Securities in Sections 4.06 and
4.09; and (2) any such requirement only becomes operative after compliance with
such terms applicable to the Securities, including the purchase of any
Securities tendered pursuant thereto.
"EBITDA" for any period means the sum of Consolidated Net
Income, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
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<PAGE> 20
(2) Consolidated Interest Expense;
(3) depreciation and amortization expense of the Company and
its consolidated Restricted Subsidiaries (excluding amortization
expense attributable to a prepaid operating activity item that was paid
in cash in a prior period);
(4) all other non-cash charges of the Company and its
consolidated Restricted Subsidiaries (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period); and
(5) cash integration and restructuring charges in connection
with the Acquisition and taken with respect to periods ended on or
prior to December 31, 2001, in an aggregate amount not to exceed $65.0
million;
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Eligible Indebtedness" means any indebtedness other than:
(1) Indebtedness in the form of, or represented by, bonds or
other securities or any guarantee thereof (other than a guarantee of
Indebtedness of the Company in the form of, or represented by, bonds or
other securities); and
(2) Indebtedness that is, or may be, quoted, listed or
purchased and sold on any stock exchange, automated trading system or
over-the-counter or other securities market (including, without
prejudice to the generality of the foregoing, the market for securities
eligible for resale pursuant to Rule 144A under the Securities Act).
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<PAGE> 21
"Euro Equivalent" means with respect to any monetary amount in
a currency other than Euros, at any time of determination thereof, the amount of
Euros obtained by converting such foreign currency involved in such computation
into Euros at the spot rate for the purchase of Euros with the applicable
foreign currency as published in The Wall Street Journal in the "Exchange Rates"
column under the heading "Currency Trading" on the date two Business Days prior
to such determination.
"Euro Notes" means the 12-1/4% Senior Subordinated Notes due
2010 (other than any additional Euro Notes issued thereunder) as defined in the
Euro Notes Indenture.
"Euro Notes Indenture" means the Indenture dated August 8,
2000 among Flowserve Finance B.V., The Bank of New York, Flowserve Corporation
and the guarantors named therein.
"Euro Notes Holder" means the person in whose name a Euro Note
is registered on the Registrar's (as defined in the Euro Notes Indenture) books.
"European Government Obligations" means direct non-callable
obligations of, or non-callable obligations permitted by, any member nation of
the European Union, the payment or guarantee of which is secured by the full
faith and credit of the respective nation, provided that such nation has a
credit rating at least equal to that of the highest rated member nation of the
European Economic Area.
"Excess Cash Flow", with respect to the Company, has the
meaning specified in the Credit Agreement as in effect on the Issue Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the debt securities of the Company
issued pursuant to this Indenture in exchange for, and in an aggregate principal
amount equal to, the Initial Securities, in compliance with the terms of the
Registration Rights Agreement.
"Facilities" means the Term Loan Facilities and the Revolving
Credit Facilities.
"FFBV" means Flowserve Finance B.V., a Netherlands besloten
vennootschap, and indirect wholly owned subsidiary of the Company.
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<PAGE> 22
"Foreign Restricted Subsidiary" means a Restricted Subsidiary
that is incorporated in a jurisdiction other than the United States or a State
thereof or the District of Columbia and with respect to which more than 80% of
any of its sales, earnings or assets (determined on a consolidated basis in
accordance with GAAP) are located in, generated from or derived from operations
located in territories outside of the United States of America and jurisdictions
outside the United States of America.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in:
(1) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board;
(3) such other statements by such other entity as approved by
a significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements
in staff accounting bulletins and similar written statements from the
accounting staff of the SEC.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such Person (whether
arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or
otherwise); or
(2) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of
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<PAGE> 23
the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Guaranty Agreement" means a supplemental indenture, in a form
satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees
the Company's obligations with respect to the Securities on the terms provided
for in this Indenture.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Person at the time it becomes a Restricted Subsidiary. The
term "Incurrence" when used as a noun shall have a correlative meaning. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal 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, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all
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<PAGE> 24
conditional sale obligations of such Person and all obligations of such
Person under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance, bank guaranty
or similar credit transaction (other than obligations with respect
thereto securing obligations (other than obligations described in
clauses (1) through (3) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit, banker's
acceptances, bank guaranties or similar credit transactions are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment
thereon);
(5) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock of such Person or, with respect to any Preferred Stock of any
Subsidiary of such Person, the principal amount of such Preferred Stock
to be determined in accordance with this Indenture (but excluding, in
each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1)
through (5) 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;
(7) all obligations of the type referred to in clauses (1)
through (6) 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 and the amount of the obligation
so secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
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"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. For purposes of the
definition of "Unrestricted Subsidiary", the definition of "Restricted Payment"
and Section 4.04:
(1) "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 of the Company at the time
that such Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have
a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (A) the Company's "Investment" in such
Subsidiary at the time of such redesignation less (B) the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time
of such redesignation; and
(2) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of
Directors.
"Investment Grade Status" means that the credit rating of the
Company's senior unsecured, non-credit-enhanced long-term debt is (a) "BBB-" or
higher according to Standard & Poor's Rating Group or (b) "Baa3" or higher
according to Moody's Investors Service, Inc.
"Issue Date" means August 8, 2000.
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<PAGE> 26
"Lenders" has the meaning specified in the Credit Agreement.
"Leverage Ratio" has the meaning specified in the Credit
Agreement as in effect on the Issue Date.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon 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 Disposition, or by applicable
law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made
to minority interest holders in Restricted Subsidiaries as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Subsidiary
after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such
19
<PAGE> 27
issuance or sale net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"Obligations" means with respect to any Indebtedness all
obligations for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Employee Stock Purchase Loans" means loans, in an
aggregate amount outstanding at any time not to exceed $30.0 million, made by
third parties (other than any Affiliate of the Company) to employees of the
Company and its Subsidiaries who are participants in the Company's stock
purchase program to enable such employees to purchase common stock of the
Company.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that
will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such
Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary
business is a Related Business;
(3) cash and Temporary Cash Investments;
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(4) receivables owing to the Company or any Restricted
Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary
trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course
of business consistent with past practices of the Company or such
Restricted Subsidiary, but in any event not to exceed $5.0 million in
the aggregate outstanding at any one time;
(7) guaranties of Permitted Employee Stock Purchase Loans;
(8) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments;
(9) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition
as permitted pursuant to the covenant described under Section 4.06;
(10) so long as no Default shall have occurred and be
continuing (or result therefrom), in Unrestricted Subsidiaries in an
aggregate amount which, when taken together with the amount of all
other Investments made pursuant to this clause (10) which at such time
have not been repaid, does not exceed $25.0 million;
(11) so long as no Default shall have occurred and be
continuing (or result therefrom), in any Person in an aggregate amount
which, when taken together with the amount of all other Investments
made pursuant to this clause (11) which at such time have not been
repaid, does not exceed $25.0 million; and
(12) a trust, limited liability company, special purpose
entity or other similar entity in connection with a Receivables
Program; provided, however, that (A)
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such Investment is made by a Receivables Subsidiary and (B) the only
assets transferred to such trust, limited liability company, special
purpose entity or other similar entity consist of Receivables and
Related Assets of such Receivables Subsidiary.
"Person" means any individual, corporation, partnership,
limited liability company, 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
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Pro Forma Cost Savings" means, with respect to any period,
the reduction in costs that were (1) directly attributable to an asset
acquisition and calculated on a basis that is consistent with Regulation S-X
under the Securities Act in effect and applied as of the Issue Date; or (2)
implemented by the business that was the subject of any such asset acquisition
within 6 months of the date of such asset acquisition and that are supportable
and quantifiable by the underlying accounting records of such business, in the
case of each of (1) and (2), as if such reduction in costs had been effected as
of the beginning of such period.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Receivables and Related Assets" means accounts receivable,
instruments, chattel paper, obligations, general intangibles and other similar
assets, including interest in merchandise or goods, the sale or lease of which
give rise to the foregoing, related contractual rights, guarantees, insurance
proceeds, collections, other related assets and proceeds of all the foregoing.
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"Receivables Program" means with respect to any Person, any
accounts receivable securitization program pursuant to which such Person
pledges, sells or otherwise transfers or encumbers its accounts receivable,
including a trust, limited liability company, special purpose entity or other
similar entity.
"Receivables Subsidiary" means a Wholly Owned Subsidiary (i)
created for the purpose of financing receivables created in the ordinary course
of business of the Company and its Subsidiaries and (ii) the sole assets of
which consist of Receivables and Related Assets of the Company and its
Subsidiaries and related Permitted Investments.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company, FFBV or any Restricted Subsidiary existing on
the Issue Date or Incurred in compliance with this Indenture, including
Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such 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
(3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or
if Incurred with original issue discount, the aggregate accreted value)
then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness
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of the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated August 3, 2000 among the Company, the Guarantors, Credit Suisse
First Boston Corporation, Banc of America Securities LLC, ABN AMRO Incorporated
and Banc One Capital Markets, Inc.
"Related Business" means any business in which the Company was
engaged on the Issue Date and any business related, ancillary or complementary
to any business of the Company in which the Company was engaged on the Issue
Date or any industrial manufacturing or related services business.
"Representative" means with respect to a Person any trustee,
agent or representative (if any) for an issue of Senior Indebtedness of such
Person.
"Restricted Payment" with respect to any Person means:
(1) 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
such Person) or similar payment to the direct or indirect holders of
its Capital Stock (other than dividends or distributions payable solely
in its Capital Stock (other than Disqualified 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 to minority
stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any
Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Company (other than a Restricted Subsidiary),
including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Company that is not Disqualified
Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment
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<PAGE> 32
or scheduled sinking fund payment of any Subordinated Obligations of
such Person (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 such purchase, repurchase
or other acquisition); or
(4) the making of any Investment (other than a Permitted
Investment) in any Person.
In determining the amount of any Restricted Payment made in
property other than cash, such amount shall be the fair market value of such
property at the time of such Restricted Payment, as determined in good faith by
the Board of Directors.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the revolving credit
facility contained in the Credit Agreement and any other facility or financing
arrangement that Refinances, in whole or in part, any such revolving credit
facility.
"Sale/Leaseback Transaction" means an arrangement relating to
property owned by the Company or a Restricted Subsidiary on the Issue Date or
thereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means with respect to any Person any
Indebtedness of such Person secured by a Lien.
"Senior Indebtedness" means with respect to any Person:
(1) Bank Indebtedness of or guaranteed by such Person, whether
outstanding on the Issue Date or thereafter Incurred;
(2) Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred; and
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(3) accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not a claim for
post-filing interest is allowed or allowable in such proceeding) in
respect of (A) such Bank Indebtedness; (B) indebtedness of such Person
for money borrowed and (C) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person
is responsible or liable
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Securities;
provided, however, that Senior Indebtedness shall not include:
(1) any obligation of such Person to any Subsidiary;
(2) any liability for Federal, state, local or other taxes
owed or owing by such Person;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities);
(4) any Indebtedness of such Person (and any accrued and
unpaid interest in respect thereof) which is subordinate or junior in
any respect to any other Indebtedness or other obligation of such
Person; or
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of the Indenture.
"Senior Subordinated Indebtedness" means, with respect to a
Person, the Securities (in the case of the Company), a Subsidiary Guaranty (in
the case of a Subsidiary Guarantor) and any other Indebtedness of such Person
that specifically provides that such Indebtedness is to rank pari passu with the
Securities or such Subsidiary Guaranty, as the case may be, in right of payment
and is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of such Person which is not Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
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"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
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 unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities,
the Euro Notes, the Company's Guaranty of the Euro Notes or a Subsidiary
Guaranty of such Person, as the case may be, pursuant to a written agreement to
that effect.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, association, partnership or other
business entity of which more than 50% of the total voting power of shares of
Voting Stock is at the time owned or controlled, directly or indirectly, by: (1)
such Person; (2) such Person and one or more Subsidiaries of such Person; or (3)
one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means FFBV, Flowserve International
Limited, each direct or indirect Subsidiary of the Company that is a guarantor
of Senior Indebtedness under the Credit Agreement and each direct or indirect
domestic Restricted Subsidiary that is a guarantor of any other Indebtedness of
the Company.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary
Guarantor of the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States
of America, European Government Obligations or direct obligations of
any other European Union member state in which the Company or any of
its Restricted Subsidiaries has operations, or any agency thereof or
obligations guaranteed by the United States of America or any other
European Union member state in
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which the Company or any of its Restricted Subsidiaries has operations,
or any agency thereof;
(2) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States, and
which bank or trust company has capital, surplus and undivided profits
aggregating in excess of $50,000,000 (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or
such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money-market fund sponsored by a
registered broker-dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1)
above entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws
of the United States of America or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-2" (or higher) according to Moody's
Investors Service, Inc. or "A-2" (or higher) according to Standard and
Poor's Ratings Group; and
(5) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at
least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"Term Loan Facility" means the term loan facility contained in
the Credit Agreement and any other facility or financing arrangement that
Refinances in whole or in part any such term loan facility.
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"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company 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, such designation would be permitted under Section
4.04.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (A) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (B) no Default shall have
occurred and be continuing. Any such
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designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Dollar Equivalent" means with respect to any monetary
amount in a currency other than U.S. dollars, at any time for determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S. dollars with the applicable foreign currency as published in The Wall
Street Journal in the "Exchange Rates" column under the heading "Currency
Trading" on the date two Business Days prior to such determination.
Except as described under Section 4.03, whenever it is
necessary to determine whether the Company has complied with any covenant in the
Indenture or a Default has occurred and an amount is expressed in a currency
other than U.S. dollars, such amount will be treated as the U.S. Dollar
Equivalent determined as of the date such amount is initially incurred in such
currency.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
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SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" .......................................................... 4.07
"Appendix"........................................................................ 2.01
"Bankruptcy Law".................................................................. 6.01
"Blockage Notice" ................................................................ 10.03
"Change of Control Offer"......................................................... 4.09(b)
"covenant defeasance option" ..................................................... 8.01(b)
"Custodian"....................................................................... 6.01
"Event of Default"................................................................ 6.01
"Excess Cash Flow Offer".......................................................... 4.10
"Excess Cash Flow Offer Amount"................................................... 4.10
"Excess Cash Flow Offer Period"................................................... 4.10
"Excess Cash Flow Purchase Date".................................................. 4.10
"Foreign Jurisdiction Merger...................................................... 5.01
"legal defeasance option"......................................................... 8.01(b)
"Legal Holiday"................................................................... 13.08
"Obligations"..................................................................... 11.01
"Offer" .......................................................................... 4.06(b)
"Offer Amount" ................................................................... 4.06(c)(2)
"Offer Period" ................................................................... 4.06(c)(2)
"pay its Subsidiary Guaranty"..................................................... 12.03
"pay the Securities" ............................................................. 10.03
"Paying Agent" ................................................................... 2.03
"Payment Blockage Period"......................................................... 10.03
"Payment Default.................................................................. 10.03
"Purchase Date"................................................................... 4.06(c)(1)
"Registrar" ...................................................................... 2.03
"Successor Company" .............................................................. 5.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
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"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
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;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater; and
(9) all references to the date the Securities were originally
issued shall refer to the Issue Date.
SECTION 1.05. Acts of Holders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
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Holders in person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
The ownership of Securities shall be proved by the Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided, however, that no such authorization, agreement or consent by the
Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.
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ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the
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same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within The
United States of America may act as Paying Agent, Registrar, co-registrar or
transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. On each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. 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 Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section
2.04 the Paying Agent shall have no further liability for the money delivered to
the Trustee.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
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 Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of this Indenture
and Section 8-401(a) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar or a co-registrar with a request to exchange them for
an equal principal amount of Securities of other denominations, the Registrar
shall make the exchange as requested if the same requirements are met.
Notwithstanding the foregoing, the Company is not required to
register the transfer of any certificated Notes:
(1) for a period of 15 calendar days prior to any date fixed
for the redemption of the Securities;
(2) for a period of 15 calendar days immediately prior to the
date fixed for selection of Securities to be redeemed in part;
(3) for a period of 15 calendar days prior to the record date
with respect to any interest payment date; or
(4) which the Holder has tendered (and not withdrawn) for
repurchase in connection with an offer made pursuant to Section 4.06 or
4.09.
Any such transfer will be made without charge to the Holder,
other than any taxes, duties and governmental charges payable in connection with
such transfer.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and
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<PAGE> 44
the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section 2.08 as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue; provided, however, that in
determining whether the holders of the requisite principal amount of outstanding
Securities are present at a meeting of holders of Securities for quorum purposes
or have consented to or voted in favor of any request, demand, authorization,
direction, notice, consent, waiver, amendment or modification hereunder,
Securities held for the account of the Company, any of its subsidiaries or any
of its affiliates shall be disregarded and deemed not to be outstanding, except
that in determining whether the Trustee shall be protected in making such a
determination or relying upon any such quorum, consent or vote, only Securities
which a Trust Officer actually knows to be so owned shall be so disregarded.
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SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and dispose of (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer, exchange,
payment or cancellation in accordance with the Trustee's customary practices to
the Company unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
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SECTION 2.13. Issuance of Additional Securities. The Company
shall be entitled, subject to its compliance with Section 4.03, to issue
Additional Securities under this Indenture which shall have identical terms as
the Initial Securities issued on the Issue Date, other than with respect to the
date of issuance and issue price. The Initial Securities issued on the Issue
Date, any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor shall be treated as a single class for
all purposes under this Indenture.
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to this
Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities; provided, however, that no Additional
Securities may be issued at a price that would cause such Additional
Securities to have "original issue discount" within the meaning of
Section 1273 of the Code; and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as
set forth in the Appendix to this Indenture or shall be issued in the
form of Exchange Securities as set forth in Exhibit A.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section 3.01 at least 60 days before the redemption date unless the
Trustee consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel from the Company to the effect
that such redemption will comply with the conditions herein.
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SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions of them the Trustee selects shall be
in principal amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion
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thereof) called for redemption ceases to accrue on and after the
redemption date;
(7) The CUSIP numbers; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for Cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
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ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC and provide the Trustee and
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and other reports to be so filed and provided at the times specified
for the filing of such information, documents and reports under such Sections.
In addition, the Company shall furnish to the Holder of the Securities and to
prospective investors, upon the requests of such Holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so
long as any Securities are not freely transferable under the Securities Act. The
Company also shall comply with the other provisions of TIA Section 314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company shall be
entitled to Incur Indebtedness, and its Restricted Subsidiaries shall be
entitled to Incur Eligible Indebtedness, in each case if, on the date of such
Incurrence and after giving effect thereto no Default has occurred and is
continuing and, the Consolidated Coverage Ratio exceeds 2.0 to 1 if such
Indebtedness is Incurred
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prior to September 1, 2003 or 2.25 to 1 if such Indebtedness is Incurred
thereafter.
(b) Notwithstanding Section 4.03(a), the Company and the
Restricted Subsidiaries will be entitled to Incur any or all of the following
Indebtedness:
(1) Indebtedness Incurred by the Company pursuant to any
Revolving Credit Facility; provided, however, that, immediately after
giving effect to any such Incurrence, the aggregate principal amount of
all Indebtedness Incurred under this clause (1) and then outstanding
does not exceed the greater of (A) $300.0 million and (B) the sum of
(x) 50% of the book value of the inventory of the Company and its
Restricted Subsidiaries and (y) 50% of the book value of the accounts
receivable of the Company and its Restricted Subsidiaries (other than
any accounts receivable constituting Receivables and Related Assets
pledged, sold or otherwise transferred or encumbered in connection with
a Receivables Program), less the sum of all principal payments made
with respect to such Indebtedness pursuant to Section 4.06(a)(3)(A);
(2) Indebtedness Incurred by the Company pursuant to any Term
Loan Facility; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of all Indebtedness Incurred
under this clause (2) and then outstanding does not exceed $750.0
million less the aggregate sum of all principal payments actually made
from time to time after the Issue Date with respect to such
Indebtedness (other than principal payments made from any permitted
Refinancings thereof);
(3) Indebtedness Incurred by a Receivables Subsidiary pursuant
to a Receivables Program; provided, however, that, after giving effect
to any such Incurrence, the aggregate principal amount of all
Indebtedness Incurred under this clause (3) and then outstanding does
not exceed $400.0 million;
(4) Indebtedness owed to and held by the Company or a Wholly
Owned Subsidiary; provided, however, that (A) 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 subsequent
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 obligor thereon and (B) if the
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Company or FFBV is the obligor on such Indebtedness, such Indebtedness
is expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Securities and the Euro Notes,
respectively;
(5) the Securities and the Euro Notes (other than any
Additional Securities and Additional Euro Notes);
(6) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3), (4) or (5) of this
Section 4.03(b));
(7) Indebtedness of a Person Incurred and outstanding on or
prior to the date on which such Person becomes a Restricted Subsidiary
(including upon merger or consolidation with the Company or any
Restricted Subsidiary) or assumed in connection with the purchase of
assets from another Person (other than Indebtedness Incurred in
connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Person became a Restricted
Subsidiary or such Person or such assets were acquired by the Company);
provided, however, that (A) with respect to any such Indebtedness
Incurred prior to the first anniversary of the Issue Date, such
Indebtedness is in an aggregate principal amount which, when taken
together with all other Indebtedness Incurred pursuant to this clause
(7), does not exceed $50.0 million or (B) on the date of such
acquisition and after giving pro forma effect thereto, the Company
would have been able to Incur at least $1.00 of additional Indebtedness
pursuant to Section 4.03(a);
(8) Indebtedness of the Company or any of its Restricted
Subsidiaries attributable to Capital Lease Obligations, or Incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including any Indebtedness assumed in connection with
the acquisition of any such assets, in an aggregate principal amount
which, when taken together with all other Indebtedness of the Company
or any of its Restricted Subsidiaries Incurred pursuant to this clause
(8) and then outstanding, does not exceed $25.0 million (including any
Refinancing Indebtedness with respect thereto);
(9) Indebtedness under industrial revenue bonds in an
aggregate principal amount which, when taken
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together with all other Indebtedness of the Company or any of its
Restricted Subsidiaries Incurred pursuant to this clause (9) and then
outstanding, does not exceed $20.0 million;
(10) Indebtedness Incurred by Foreign Restricted Subsidiaries
in an aggregate principal amount which, when taken together with all
other Indebtedness of Foreign Restricted Subsidiaries Incurred pursuant
to this clause (10) and then outstanding, does not exceed $25.0
million;
(11) Indebtedness of the Company, whether secured or
unsecured, consisting of Guarantees of Permitted Employee Stock
Purchase Loans;
(12) Indebtedness or other obligations solely in respect of
worker's compensation claims, self-insurance obligations and surety,
appeal and performance bonds entered into in the ordinary course of
business of the Company and its Restricted Subsidiaries;
(13) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (5), (6) or
(7) of this Section 4.03(b) or this clause (13); provided, however,
that to the extent such Refinancing Indebtedness directly or indirectly
Refinances Indebtedness of a Subsidiary Incurred pursuant to clause
(7), such Refinancing Indebtedness shall be Incurred only by such
Subsidiary;
(14) Hedging Obligations under or with respect to Interest
Rate Agreements, Currency Agreements or Commodity Agreements entered
into in the ordinary course of business and not for the purpose of
speculation;
(15) Indebtedness consisting of the Subsidiary Guaranty of a
Subsidiary Guarantor;
(16) Indebtedness of the Company or any Restricted Subsidiary
arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that the Indebtedness is satisfied within
five business days of Incurrence;
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(17) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case incurred in connection with the disposition
of any assets of the Company or any Restricted Subsidiary;
(18) Indebtedness consisting of the Guarantee by (i) the
Company of any Indebtedness of a Restricted Subsidiary that was
permitted to be Incurred by another provision of this Section 4.03 and
(ii) any Restricted Subsidiary of the Company of Indebtedness of the
Company that was permitted to be Incurred by another provision of this
Section 4.03; and
(19) Indebtedness of the Company in an aggregate principal
amount which, when taken together with all other Indebtedness of the
Company outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (1) through (18) of this Section
4.03(b) or Section 4.03(a) does not exceed $25.0 million.
(c) Notwithstanding the foregoing, neither the Company nor any
Subsidiary Guarantor will Incur any Indebtedness pursuant to Section 4.03(b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company or any Subsidiary Guarantor unless such
Indebtedness shall be subordinated to the Securities or the applicable
Subsidiary Guaranty to at least the same extent as such Subordinated
Obligations.
(d) For purposes of determining compliance with this Section
4.03, (1) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Company, in its sole
discretion, will classify such item of Indebtedness at the time of Incurrence
and only be required to include the amount and type of such Indebtedness in one
of the above clauses and (2) the Company will be entitled to divide and classify
an item of Indebtedness in more than one of the types of Indebtedness described
above.
(e) Notwithstanding Section 4.03(a) or 4.03(b), neither the
Company nor any Subsidiary Guarantor will Incur (1) any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness of such Person, unless such Indebtedness is Senior Subordinated
Indebtedness or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Person or (2) any Secured Indebtedness that is
not Senior Indebtedness of such Person unless contemporaneously
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therewith such Person makes effective provision to secure the Securities equally
and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(f) For purposes of determining compliance with any U.S.
dollar or Euro denominated restriction on the Incurrence of Indebtedness where
the Indebtedness Incurred is denominated in a different currency, the amount of
such Indebtedness will be the U.S. Dollar or Euro Equivalent, as the case may
be, determined on the date of the Incurrence of such Indebtedness; provided,
however, that if any such Indebtedness denominated in a different currency is
subject to a Currency Agreement with respect to U.S. dollars or Euros, as the
case may be, covering all principal, premium, if any, and interest payable on
such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars or
Euros will be as provided in such Currency Agreement. The principal amount of
any Refinancing Indebtedness Incurred in the same currency as the Indebtedness
being Refinanced will be the Euro Equivalent or U.S. Dollar Equivalent, as
appropriate, of the Indebtedness Refinanced, except to the extent that (i) such
U.S. Dollar Equivalent or Euro Equivalent was determined based on a Currency
Agreement, in which case the Refinancing Indebtedness will be determined in
accordance with the preceding sentence, and (ii) the principal amount of the
Refinancing Indebtedness exceeds the principal amount of the Indebtedness being
Refinanced, in which case the U.S. Dollar Equivalent or Euro Equivalent of such
excess, as appropriate, will be determined on the date such Refinancing
Indebtedness is Incurred.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not entitled to Incur an additional $1.00
of Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of
(without duplication):
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(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter during which the Issue Date
occurs to the end of the most recent fiscal quarter for which
internal financial statements are available on or prior to the
date of such Restricted Payment (or, in case such Consolidated
Net Income shall be a deficit, minus 100% of such deficit);
plus
(B) 100% of the aggregate Net Cash Proceeds received
by the Company from the issuance or sale of, or cash capital
contribution in respect of, its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than
an issuance or sale to a Subsidiary of the Company and other
than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) and 100% of
the fair market value (as determined in good faith by
resolution of the Board of Directors) of property (other than
cash) that would constitute Temporary Cash Investments or used
in a Related Business and received by the Company or a
Restricted Subsidiary subsequent to the Issue Date in exchange
for or as a contribution in respect of its Capital Stock
(other than Disqualified Stock) subsequent to the Issue Date
(other than (i) an issuance to or a capital contribution by a
Subsidiary of the Company or (ii) an issuance to or a capital
contribution by an employee stock ownership plan or to a trust
established by the Company or any of its subsidiaries for the
benefit of their employees or (iii) property that was financed
with loans from the Company or any Restricted Subsidiary);
plus
(C) an amount equal to the sum of (x) the net
reduction in the Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary
in any Person resulting from repurchases, repayments or
redemptions of such Investments by such Person, proceeds
realized on the sale of such Investments, and proceeds
representing the return of capital (to the extent not included
in Consolidated Net Income), in each case received by the
Company or any Restricted Subsidiary, and (y) to the extent
such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Company's equity interest in
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such Subsidiary) of the fair market value of the net assets of
such Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any such Person or Unrestricted Subsidiary, the amount of
Investments (excluding Permitted Investments) previously made
(and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted
Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds
of the substantially concurrent sale of, or made by exchange for,
Capital Stock of the Company (other than Disqualified Stock and other
than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company
or any of its Subsidiaries for the benefit of their employees) or a
substantially concurrent cash capital contribution received by the
Company in respect of its Capital Stock (other than Disqualified
Stock); provided, however, that (A) such Restricted Payment shall be
excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale or such cash capital
contribution (to the extent so used for such Restricted Payment) shall
be excluded from the calculation of amounts under Section 4.04(a)(3)(B)
and under clause (4) below;
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness which is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted
Payments;
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.04; provided, however, that at the
time of payment of such dividend, no other Default shall have occurred
and be continuing (or result therefrom);
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provided further, however, that such dividend shall be included in the
calculation of the amount of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the
Company or any of its Subsidiaries (A) from employees, former
employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), (B) in the open market to
the extent such shares are acquired to satisfy a current obligation to
deliver shares in connection with the exercise of stock options or
similar rights, in each case pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto)
approved by the Board of Directors under which such individuals
purchase or sell or are granted the option to purchase or sell, shares
of such Capital Stock; provided, however, that the aggregate amount of
such repurchases and other acquisitions shall not exceed in any
calendar year the sum of (x) $5.0 million plus (y) the Net Cash
Proceeds from the sale of Capital Stock to employees or directors of
the Company (including pursuant to the exercise of stock options) that
occur during such calendar year (to the extent such Net Cash Proceeds
are not applied to the payment of a Restricted Payment pursuant to
clause (1) above); provided further, however, that (i) such repurchases
and other acquisitions shall be excluded in the calculation of the
amount of Restricted Payments and (ii) the Net Cash Proceeds from such
sales described in clause (y) shall be excluded from the calculation of
amounts under Section 4.04(a)(3)(B); or
(5) Restricted Payments not exceeding $15.0 million in the
aggregate; provided, however, that (A) at the time of such Restricted
Payments, no Default shall have occurred and be continuing (or result
therefrom) and (B) such Restricted Payments shall be included in the
calculation of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted 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 (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness
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owed to the Company, (b) make any loans or advances to the Company or (c)
transfer any of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including this Indenture,
the Euro Notes Indenture and the Credit Agreement as in effect on the
Issue Date;
(2) any encumbrance or restriction with respect to a
Receivables Subsidiary pursuant to a Receivables Program of such
Receivables Subsidiary;
(3) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary on or prior to the
date on which such Restricted Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration in, or to provide
all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date;
(4) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in Section 4.05 (1), (2), (3) or this clause (4)
or contained in any amendment to an agreement referred to in Section
4.05 (1), (2), (3) or this clause (4); provided, however, that the
encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such refinancing agreement or amendment
are, in the good faith judgment of the Board of Directors, no less
favorable, taken as a whole, to the Securityholders than encumbrances
and restrictions with respect to such Restricted Subsidiary contained
in such predecessor agreements;
(5) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder;
(6) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness, or under
letters of credit or bank
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guarantees, of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of, or the grant of security over, the property
subject to such security agreements, mortgages, letters of credit or
bank guarantees;
(7) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition;
(8) purchase money obligations (including Capital Lease
Obligations) for property acquired in the ordinary course of business
that impose restrictions on the property so acquired of the nature
described in clause (c) above;
(9) provisions with respect to the disposition or distribution
of assets or property in joint venture agreements and other similar
agreements in the ordinary course of business; and
(10) any such encumbrance or restriction with respect to a
Foreign Restricted Subsidiary pursuant to an agreement governing
Indebtedness Incurred by such Foreign Restricted Subsidiary.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless: (1) the
Company or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the fair market value (including as to the
value of all non-cash consideration), as determined in good faith by the Board
of Directors, of the shares and assets subject to such Asset Disposition; (2) at
least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents; and (3) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company elects (or is required by the terms of any
Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the
Company or Indebtedness (other than any Disqualified Stock) of a Restricted
Subsidiary (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within one year from the later of the date of such
Asset Disposition or the receipt of such Net
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Available Cash; (B) second, to the extent of the balance of such Net Available
Cash after application in accordance with clause (A), to the extent the Company
elects, to acquire Additional Assets within one year (or enter into a binding
commitment therefor within such period and acquire such Additional Assets within
18 months) from the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; and (C) third, to the extent of the balance of such
Net Available Cash after application in accordance with clauses (A) and (B), to
make an offer to the holders of the Securities and the Euro Notes (and to
holders of other Senior Subordinated Indebtedness of the Company or FFBV
designated by the Company) to purchase, on a pro rata basis, Securities and Euro
Notes (and such other Senior Subordinated Indebtedness of the Company or FFBV)
pursuant to the conditions of Section 4.06(b); provided, however, that in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (A) or (C) above, the Company or such Restricted Subsidiary shall
permanently retire such Indebtedness and shall cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this
Section 4.06, (i) the Company and the Restricted Subsidiaries shall not be
required to apply any Net Available Cash in accordance with this Section 4.06
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions which are not applied in accordance with this Section 4.06 exceeds
$10.0 million , and (ii) to the extent any Asset Disposition constitutes the
disposition of Consent Decree Assets, the Company shall be required to apply the
Net Available Cash from such Asset Disposition pursuant to Section 4.06
(a)(3)(A) and the Company shall not be required to comply with Section 4.06
(a)(1). Pending application of Net Available Cash pursuant to this Section 4.06,
such Net Available Cash shall be invested in Temporary Cash Investments or
applied to temporarily reduce revolving credit indebtedness.
For the purposes of this Section 4.06, the following are
deemed to be cash or cash equivalents: (1) the assumption of Indebtedness of the
Company or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition; and (2) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
In addition, the Company may elect to deem Additional Assets
(determined based on the fair market value
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of such assets) as cash and cash equivalents for purposes of this Section 4.06;
provided, however, that such Additional Assets were acquired for fair market
value as part of the transaction constituting an Asset Disposition; and provided
further, however, that such Additional Assets will be deemed to have been
acquired in accordance with Section 4.06(a)(3)(B).
(b) In the event of an Asset Disposition that requires the
purchase of the Securities and Euro Notes (and other Senior Subordinated
Indebtedness of the Company or FFBV) pursuant to Section 4.06(a)(3)(C) above,
the Company will purchase, on a pro rata basis, Securities and Euro Notes
tendered pursuant to an offer (the "Offer") by the Company for the Securities
(and such other Senior Subordinated Indebtedness of the Company and FFBV, as
applicable) at a purchase price of 100% of their respective principal amount
(or, in the event such other Senior Subordinated Indebtedness of the Company and
FFBV, as applicable, was issued with significant original issue discount, 100%
of the accreted value thereof), without premium, plus accrued but unpaid
interest (or, in respect of such other Senior Subordinated Indebtedness of the
Company or FFBV, such lesser price, if any, as may be provided for by the terms
of such Senior Subordinated Indebtedness) in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
4.06(c). If the aggregate purchase price of the Securities and Euro Notes (and
other Senior Subordinated Indebtedness of the Company or FFBV, as applicable)
tendered exceeds the Net Available Cash allotted to their purchase, the Company
will select the Securities and Euro Notes (and other Senior Subordinated
Indebtedness of the Company or FFBV, as applicable) to be purchased on a pro
rata basis but in round denominations, which in the case of the Securities will
be denominations of $1,000 principal amount or multiples thereof and in the case
of the Euro Notes will be (E)1,000 principal amount or multiples thereof. The
Company shall not be required to make such an offer to purchase Securities and
Euro Notes (and other Senior Subordinated Indebtedness of the Company and FFBV,
as applicable) pursuant to this Section 4.06 if the Net Available Cash available
therefor is less than $10.0 million (which lesser amount shall be carried
forward for purposes of determining whether such an offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(c)(1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder and Euro Notes Holder, a
written
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notice stating that the Holder and Euro Notes Holder may elect to have his
Securities and Euro Notes purchased by the Company either in whole or in part
(subject to prorating as described in Section 4.06(b) in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount and E1,000
principal amount, respectively, at the applicable purchase price. The notice
shall specify a purchase date not less than 30 days nor more than 60 days after
the date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders and Euro Notes Holders to make an informed decision
(which at a minimum will include (A) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial statements) of the Company,
the most recent subsequently filed Quarterly Report on Form 10-Q and any Current
Report on Form 8-K of the Company filed subsequent to such Quarterly Report
which may be incorporated by reference, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (B) a description of material developments in
the Company's business subsequent to the date of the latest of such Reports, and
(C) if material, appropriate pro forma financial information) and all
instructions and materials necessary to tender Securities and the Euro Notes
pursuant to the Offer, together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), including information as to any other Senior Subordinated
Indebtedness of the Company or FFBV included in the Offer, (B) the allocation of
the Net Available Cash from the Asset Dispositions pursuant to which such Offer
is being made and (C) the compliance of such allocation with the provisions of
Section 4.06(a) and (b). On such date, the Company shall also irrevocably
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust) in Temporary Cash
Investments, maturing on the last day prior to the Purchase Date or on the
Purchase Date if funds are immediately available by open of business, an amount
equal to the Offer Amount to be held for payment in accordance with the
provisions of this Section 4.06. If the Offer includes other Senior Subordinated
Indebtedness, the deposit described in the preceding sentence may be made with
any other paying agent pursuant to arrangements satisfactory to the Trustee.
Upon the expiration of the period for which the Offer
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remains open (the "Offer Period"), the Company shall deliver to the Trustee for
cancellation the Securities or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Trustee shall, on the
Purchase Date, mail or deliver payment (or cause the delivery of payment) to
each tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Securities and Euro Notes delivered by the
Company to the Trustee is less than the Offer Amount applicable to the
Securities and Euro Notes, the Trustee shall deliver the excess to the Company
immediately after the expiration of the Offer Period for application by the
Company in any manner permitted by this Indenture.
(3) Holders and Euro Notes Holders electing to have either a
Security or a Euro Note purchased shall be required to surrender the Security or
Euro Note, with an appropriate form duly completed, to the Company at the
address specified in the notice at least three Business Days prior to the
Purchase Date. Holders and Euro Notes Holders shall be entitled to withdraw
their election if the Trustee or the Company receives not later than one
Business Day prior to the Purchase Date, a telex, facsimile transmission or
letter setting forth the name of the Holder or Euro Notes Holder, the principal
amount of the Security on Euro Note which was delivered for purchase by the
Holder or Euro Notes Holder and a statement that such Holder or Euro Notes
Holder is withdrawing his election to have such Security or Euro Notes
purchased. Holders or Euro Notes Holders whose Securities or Euro Notes are
purchased only in part shall be issued new Securities or Euro Notes equal in
principal amount to the unpurchased portion of the Securities or Euro Notes
surrendered.
(4) At the time the Company delivers Securities or Euro Notes
to the Trustee which are to be accepted for purchase, the Company shall also
deliver an Officers' Certificate stating that such Securities or Euro Notes are
to be accepted by the Company pursuant to and in accordance with the terms of
this Section 4.06. A Security shall be deemed to have been accepted for purchase
at the time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder or Euro Notes Holder.
(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 Securities or Euro
Notes pursuant to this Section 4.06. To the extent that the provisions of any
securities laws or regulations conflict
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with provisions of this Section 4.06, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.06 by virtue of its compliance
with such securities laws or regulations.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction") unless: (1) the terms of the Affiliate Transaction are
no less favorable to the Company or such Restricted Subsidiary than those that
could be obtained at the time of the Affiliate Transaction in arm's-length
dealings with a Person who is not an Affiliate; (2) if such Affiliate
Transaction involves an amount in excess of $10.0 million, the terms of the
Affiliate Transaction are set forth in writing and a majority of the
non-employee directors of the Company disinterested with respect to such
Affiliate Transactions have determined in good faith that the criteria set forth
in clause (1) are satisfied and have approved the relevant Affiliate Transaction
as evidenced by a resolution of the Board of Directors; and (3) if such
Affiliate Transaction involves an amount in excess of $20.0 million, the Board
of Directors shall also have received a written opinion from (A) an investment
banking firm of national prominence or (B) an accounting or appraisal firm
nationally recognized in making such determinations, in each case that is not an
Affiliate of the Company to the effect that such Affiliate Transaction is fair,
from a financial standpoint, to the Company and its Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) shall not prohibit: (1)
any Investment (other than a Permitted Investment) or other Restricted Payment,
in each case permitted to be made pursuant to Section 4.04; (2) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options, stock
ownership plans or other similar incentive arrangements approved by the Board of
Directors; (3) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $5.0 million in the aggregate
outstanding at any one time; (4) guarantees of Permitted Employee Stock Purchase
Loans; (5) the payment of reasonable fees to directors of the Company and its
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Restricted Subsidiaries who are not employees of the Company or its Restricted
Subsidiaries; (6) any transaction with a Restricted Subsidiary or joint venture
or similar entity which would constitute an Affiliate Transaction solely because
the Company or a Restricted Subsidiary owns an equity interest in or otherwise
controls such Restricted Subsidiary, joint venture or similar entity; (7) the
issuance or sale of any Capital Stock (other than Disqualified Stock) of the
Company; (8) any Receivables Program of the Company or a Restricted Subsidiary;
(9) customary directors' and officers' indemnification arrangements; and (10)
any agreement with the Company or any Restricted Subsidiary as in effect as of
the Issue Date and any amendment or replacement thereto or any transaction
contemplated thereby so long as such amendment or replacement agreement is not
more disadvantageous to the Company and its Restricted Subsidiaries than the
original agreement as in effect on the Issue Date.
SECTION 4.08. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company (1) shall not, and shall not
permit any Restricted Subsidiary to, sell, lease, transfer or otherwise dispose
of (but excluding any pledge of such Capital Stock otherwise permitted by this
Indenture) any Capital Stock of any Restricted Subsidiary to any Person (other
than the Company or a Wholly Owned Subsidiary), and (2) shall not permit any
Restricted Subsidiary to issue any of its Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' or other legally
required qualifying shares) to any Person (other than to the Company or a Wholly
Owned Subsidiary), unless (A) immediately after giving effect to such issuance,
sale or other disposition, neither the Company nor any of its Subsidiaries own
any Capital Stock of such Restricted Subsidiary; (B) immediately after giving
effect to such issuance, sale or other disposition, such Restricted Subsidiary
would no longer constitute a Restricted Subsidiary and any Investment in such
Person remaining after giving effect thereto would have been permitted to be
made under Section 4.04 if made on the date of such issuance, sale or other
disposition; or (C) the Company concurrently acquires sufficient shares of
Capital Stock of such Restricted Subsidiary to at least maintain the same
percentage ownership interest it had prior to the transaction.
Notwithstanding the foregoing, the issuance or sale of shares
of Capital Stock of any Restricted Subsidiary of the Company will not violate
the provisions of the
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immediately preceding sentence if such shares are issued or sold in connection
with:
(i) the formation or capitalization of a Restricted
Subsidiary, or
(ii) a single transaction or a series of substantially
contemporaneous transactions whereby such Restricted Subsidiary becomes
a Restricted Subsidiary of the Company by reason of the acquisition of
securities or assets from another Person.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.09(b). In the event that at
the time of such Change of Control the terms of the Senior Indebtedness of the
Company restrict or prohibit the repurchase of Securities pursuant to this
Section 4.09, then prior to the mailing of the notice to Holders provided for in
Section 4.09(b) below but in any event within 30 days following any Change of
Control, the Company shall (1) repay in full all such Senior Indebtedness or
(ii) obtain the requisite consent under the agreements governing such Senior
Indebtedness to permit the repurchase of the Securities as provided for in
Section 4.09(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization, each after giving effect to such
Change of Control);
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(3) the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section 4.09, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section 4.09 shall be delivered by the Company to the Trustee
for Cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section
4.09, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.09 applicable to a Change of Control Offer made by the Company
and purchases all Securities validly tendered and not withdrawn under such
Change of Control Offer.
(f) 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 Securities pursuant to
this Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.09 by virtue of its
compliance with such securities laws or regulations.
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SECTION 4.10. Excess Cash Flow Repurchase Offer. (a) If the
Company has Excess Cash Flow for any fiscal year (commencing with the fiscal
year ending December 31, 2001), no later than the 120th day following the end of
such fiscal year, the Company shall apply an amount equal to 50% of the Excess
Cash Flow for such fiscal year: (1) first, to the extent the Company elects (or
is required by the terms of any Indebtedness), to prepay, repay, redeem or
purchase (and permanently reduce the commitments thereunder) Senior Indebtedness
of the Company with such percentage of Excess Cash Flow; (2) second, to the
extent of the balance of such percentage of Excess Cash Flow after application
in accordance with clause (1), to make an offer to the holders of the Securities
and Euro Notes (and to holders of other Senior Subordinated Indebtedness of the
Company or FFBV designated by the Company) to purchase, on a pro rata basis,
Securities and Euro Notes (and such other Senior Subordinated Indebtedness of
the Company or FFBV) pursuant to and subject to the conditions contained in this
Section 4.10 and in Section 4.10 of the Euro Notes Indenture (an "Excess Cash
Flow Offer"); and (3) third, to the extent of the balance of such percentage of
Excess Cash Flow after application in accordance with clause (1) or (2) above,
to any other application or use not prohibited by the Indenture; provided,
however, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (1) above, the Company shall permanently retire
such Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased; and provided, further, that no Excess Cash Flow Offer shall
be required to be made if the Company's Leverage Ratio is less than 3.0 to 1.0
on the last day of such fiscal year.
(b) In the event of an Excess Cash Flow Offer, the Company
will be required to purchase, on a pro rata basis, Securities and Euro Notes
tendered pursuant to an offer by the Company for the Securities and Euro Notes
(and other Senior Subordinated Indebtedness of the Company and FFBV, as
applicable) at a purchase price of 100% of their respective principal amount
(or, in the event such other Senior Subordinated Indebtedness was issued with
significant original issue discount, 100% of the accreted value thereof),
without premium, plus accrued but unpaid interest (or, in respect of such Senior
Subordinated Indebtedness, such lesser price, if any, as may be provided for by
the terms of such Senior Subordinated Indebtedness) in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
Section 4.10(c). If the aggregate purchase price of the Securities and Dollar
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Notes (and other Senior Subordinated Indebtedness of the Company or FFBV)
tendered pursuant to such offer is less than the Excess Cash Flow allotted to
their purchase, the Company will be entitled to apply the remaining Excess Cash
Flow in accordance with clause (a)(3) above. The Company shall not be required
to make an Excess Cash Flow Offer to purchase Securities and Euro Notes (and
other Senior Subordinated Indebtedness) pursuant to Section 4.10(a) if the
Excess Cash Flow available therefor is less than $5.0 million (which lesser
amount shall be carried forward for purposes of determining whether such an
offer is required with respect to the Excess Cash Flow in any subsequent fiscal
year).
(c)(1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Excess Cash Flow Offer, the Company shall
deliver to the Trustee and send, by first-class mail to each Holder and Euro
Notes Holder, a written notice stating that the Holder and Euro Notes Holder may
elect to have his Securities and Euro Notes purchased by the Company either in
whole or in part (subject to prorating as described in Section 4.10(b) in the
event the Excess Cash Flow Offer is oversubscribed) in integral multiples of
$1,000 of principal amount and E1,000 principal amount, respectively, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Excess
Cash Flow Purchase Date") and shall contain such information concerning the
business of the Company which the Company in good faith believes will enable
such Holders and Euro Notes Holders to make an informed decision (which at a
minimum will include (A) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the Company, the most
recent subsequently filed Quarterly Report on Form 10-Q and any Current Report
on Form 8-K of the Company filed subsequent to such Quarterly Report which may
be incorporated by reference (or corresponding successor reports), and (B) a
description of material developments in the Company's business subsequent to the
date of the latest of such Reports) and all instructions and materials necessary
to tender Securities and Euro Notes pursuant to the Excess Cash Flow Offer,
together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Excess Cash Flow Offer is delivered to the Trustee as provided below, the
Company shall deliver to the Trustee an Officers' Certificate as to (A) the
amount of the Excess Cash Flow Offer (the "Excess Cash Flow Offer Amount"),
including information as to any other Senior
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Subordinated Indebtedness of the Company or FFBV included in the Excess Cash
Flow Offer, (B) the percentage of the Excess Cash Flow remaining after
application in accordance with Section 4.10(a)(1) with respect to which such
Excess Cash Flow Offer is being made and (C) the compliance of such allocation
with the provisions of Section 4.10(a) and (b). On such date, the Company shall
also irrevocably deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust) in
Temporary Cash Investments, maturing on the last day prior to the Excess Cash
Flow Purchase Date or on the Excess Cash Flow Purchase Date if funds are
immediately available by open of business, an amount equal to the Excess Cash
Flow Offer Amount to be held for payment in accordance with the provisions of
this Section 4.10. If the Excess Cash Flow Offer includes other Senior
Subordinated Indebtedness, the deposit described in the preceding sentence may
be made with any other paying agent pursuant to arrangements satisfactory to the
Trustee. Upon the expiration of the period for which the Excess Cash Flow Offer
remains open (the "Excess Cash Flow Offer Period"), the Company shall deliver to
the Trustee for cancellation the Securities and Euro Notes or portions thereof
which have been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment (or cause the
delivery of payment) to each tendering Holder and the Euro Notes Holder in the
amount of the purchase price. In the event that the aggregate purchase price of
the Securities and Euro Notes delivered by the Company to the Trustee is less
than the Excess Cash Flow Offer Amount applicable to the Securities and Euro
Notes, the Trustee shall deliver the excess to the Company immediately after the
expiration of the Excess Cash Flow Offer Period for application by the Company
in any manner permitted by this Indenture.
(3) Holders and Euro Notes Holders electing to have either a
Security or a Euro Note purchased shall be required to surrender the Security or
Euro Note, with an appropriate form duly completed, to the Company at the
address specified in the notice at least three Business Days prior to the Excess
Cash Flow Purchase Date. Holders and Euro Notes Holders shall be entitled to
withdraw their election if the Trustee or the Company receives not later than
one Business Day prior to the Excess Cash Flow Purchase Date, a telex, facsimile
transmission or letter setting forth the name of the Holder or Euro Notes
Holder, the principal amount of the Security or Euro Note which was delivered
for purchase by the Holder or Euro Notes Holder and a statement that such Holder
or Euro Notes Holder is withdrawing his election to have such Security or Euro
Notes
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purchased. Holders or Euro Notes Holders whose Securities or Euro Notes are
purchased only in part shall be issued new Securities or Euro Notes equal in
principal amount to the unpurchased portion of the Securities or Euro Notes
surrendered.
(4) At the time the Company delivers Securities or Euro Notes
to the Trustee which are to be accepted for purchase, the Company shall also
deliver an Officers' Certificate stating that such Securities or Euro Notes are
to be accepted by the Company pursuant to and in accordance with the terms of
this Section 4.10. A Security or Euro Note shall be deemed to have been accepted
for purchase at the time the Trustee, directly or through an agent, mails or
delivers payment therefor to the surrendering Holder or Euro Notes Holder.
(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 Securities or Euro
Notes pursuant to this Section 4.10. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.10,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.10 by
virtue of its compliance with such securities laws or regulations.
SECTION 4.11. Future Guarantors. The Company shall cause each
domestic Restricted Subsidiary that Guarantees any Indebtedness of the Company
or any other Subsidiary Guarantor to, at the same time, execute and deliver to
the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary
will Guarantee payment of the Securities on the same terms and conditions as
those set forth in Article 11 of this Indenture.
SECTION 4.12. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
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SECTION 4.13. Further Instruments and Acts. The Company and
the Subsidiary Guarantors will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper or as the Trustee
may request to carry out more effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease, in one transaction or a series of transactions, directly or indirectly,
all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia or under the laws of Bermuda, the British Virgin Islands,
the Bahamas or Canada and the Successor Company (if not the Company)
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this Indenture;
(2) immediately after giving pro forma effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Company or any Subsidiary as a result of such
transaction as having been Incurred by such Successor Company or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving pro forma effect to such
transaction, the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 4.03(a);
(4) immediately after giving pro forma effect to such
transaction, the Successor Company shall have Consolidated Net Worth in
an amount that is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction;
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(5) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture;
(6) in the event that the Successor Company in any merger is
organized and existing under the laws of Bermuda, the British Virgin
Islands, the Bahamas or Canada (any such merger, a "Foreign
Jurisdiction Merger"), the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Holders will not recognize
income, gain or loss for U.S. Federal income tax purposes as a result
of such transaction and will be subject to U.S. Federal income tax on
the same amounts and at the same times as would have been the case if
such transaction had not occurred; and
(7) in the event of a Foreign Jurisdiction Merger, the Company
shall have delivered to the Trustee an Opinion of Counsel in the
jurisdiction of the Successor Company to the effect that (A) any
payment of interest or principal under or with respect to the
Securities or the Guaranties will, after giving effect to such
transaction, be exempt from any withholding or deduction for or on
account of any present or future tax, duty, levy, impost, assessment or
other governmental charge of whatever nature imposed or levied by or on
behalf of any jurisdiction from or through which payment is made or in
which the payor is organized, resident or engaged in business for tax
purposes and (B) no other taxes or income (including capital gains)
will be payable by a Holder of Securities under the laws of any
jurisdiction where the Successor Company is or becomes organized,
resident or engaged in business for tax purposes in respect of the
acquisition, ownership or disposition of the Securities, including the
receipt of interest or principal thereon, provided that such Holder
does not use or hold, and is not deemed to use or hold the Securities
in carrying on a business in the jurisdiction where the Successor
Company is or becomes organized, resident or engaged in business for
tax purposes;
provided, however, that clause (3) and (4) will not be applicable to (A) a
Restricted Subsidiary consolidating with, merging into or transferring all or
part of its properties and assets to the Company or (B) the Company merging with
an Affiliate of the Company solely for the
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purpose and with the sole effect of reincorporating the Company in another
jurisdiction.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, and the predecessor Company, except
in the case of a lease, shall be released from the obligation to pay the
principal of and interest on the Securities.
The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (1) except in the case of a Subsidiary Guarantor that has
been disposed of in its entirety to another Person (other than to the Company or
an Affiliate of the Company), whether through a merger, consolidation or sale of
Capital Stock or assets, the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and
such Person shall expressly assume, by a Guaranty Agreement, in a form
satisfactory to the Trustee, all the obligations of such Subsidiary, if any,
under its Subsidiary Guaranty of the Securities; (2) immediately after giving
effect to such transaction or transactions on a pro forma basis (and treating
any Indebtedness which becomes an obligation of the resulting, surviving or
transferee Person as a result of such transaction as having been issued by such
Person at the time of such transaction), no Default shall have occurred and be
continuing; and (3) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with this Indenture.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 10, and such default continues
for a period of 30 days;
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(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article 10, or (ii)
fails to redeem or purchase Securities when required pursuant to this
Indenture or the Securities, whether or not such redemption or purchase
shall be prohibited by Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09 or 4.11 (other than a failure to purchase
Securities when required under Section 4.06 or 4.09) and such failure
continues for 30 days after the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply
with any of its agreements in the Securities or this Indenture (other
than those referred to in clause (1), (2), (3) or (4) above) and such
failure continues for 60 days after the notice specified below;
(6) Indebtedness of any Subsidiary Guarantor, the Company or
any Significant Subsidiary is not paid within any applicable grace
period after final maturity or is accelerated by the holders thereof
because of a default and the total amount of such Indebtedness unpaid
or accelerated exceeds $10.0 million, or its foreign currency
equivalent at the time;
(7) any Subsidiary Guarantor, the Company or any Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
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(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against any Subsidiary Guarantor,
the Company or any Significant Subsidiary in an involuntary
case;
(B) appoints a Custodian of any Subsidiary Guarantor,
the Company or any Significant Subsidiary or for any
substantial part of its property; or
(C) orders the winding up or liquidation of any
Subsidiary Guarantor, the Company or any Significant
Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $10.0 million or its foreign currency equivalent at the time is
entered against any Subsidiary Guarantor, the Company or any
Significant Subsidiary, remains outstanding for a period of 60 days
following the entry of such judgment or decree and is not discharged,
waived or the execution thereof stayed within 10 days after the notice
specified below; or
(10) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of this Indenture) or a
Subsidiary Guarantor denies or disaffirms its obligations under its
Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5) or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Securities
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notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such notice. Such notice must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
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 of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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
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in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security, (ii) a Default arising
from the failure to redeem or purchase any Security when required pursuant to
this Indenture or (iii) a Default in respect of a provision that under Section
9.02 cannot be amended without the consent of each Securityholder affected. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification or
security satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
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(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company and,
if such money or property has been collected from a Subsidiary
Guarantor, to holders of Senior Indebtedness of such Subsidiary
Guarantor, in each case to the extent required by Article 10 and 12;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10. At least 15 days
before such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount to be
paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which 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 shall not hinder, delay or
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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 had
been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
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(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) 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.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may
conclusively rely on 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. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys 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; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
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(e) The Trustee may consult with counsel of its choice, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(g) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture;
(i) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder; and
(j) The Trustee may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it
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would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
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 Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the
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Trustee's agents, counsel, accountants and experts. The Company shall indemnify
each of the Trustee and any predecessor Trustee and their agents against any and
all loss, damage, claims, liability or expense (including attorneys' fees and
taxes (other than taxes based upon, measured by, or determined by the income of
the Trustee)) incurred by it in connection with the administration of this trust
and the performance of its duties hereunder including the costs and expenses of
defending itself against any claim (whether asserted by the Company or any
Holder or any other Person). The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee may have separate counsel and the
Company shall pay the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own wilful misconduct, negligence
or bad faith.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee other than money or property held in
trust to pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
7.07 shall survive the discharge of this Indenture and the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(7) or (8) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring 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 Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction at the expense of the Company for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any
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successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (1) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (2) all outstanding Securities have become due and payable,
whether at maturity or on a redemption date as a result of the mailing of a
notice of redemption pursuant to Article 3 hereof and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity or upon redemption
all outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
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(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (1) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (2) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 4.11 and the operation
of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) and the
limitations contained in Sections 5.01(3) and 5.01(4) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Sections
5.01(3) and 5.01(4). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Subsidiary Guarantor, if any, shall be released
from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments
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of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will
be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (B) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred;
(8) the Company delivers to the Trustee an Opinion of Counsel
in the jurisdiction or organization of the Company (if other than the
United States) to the effect
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that (A) Holders will not recognize income, gain or loss income tax
purposes of such jurisdiction a result of such deposit and defeasance,
and will be subject to income tax of such jurisdiction on the same
amounts, and in the same manner and at the same times as would have
been the case if such deposit and defeasance, had not occurred; and
(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, 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, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining
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or otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
of the Company or of a Subsidiary Guarantor (or Representatives
therefor) under Article 10 or 12;
(5) to add guarantees with respect to the Securities,
including any Subsidiary Guaranties, or to secure the Securities;
(6) to add to the covenants of the Company or a Subsidiary
Guarantor for the benefit of the Holders or to surrender any right or
power herein conferred upon the Company or a Subsidiary Guarantor;
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(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
An amendment under this Section 9.01 may not make any change
that adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness of the Company or of a Subsidiary Guarantor then outstanding unless
the holders of such Senior Indebtedness (or any group or Representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section 9.01 becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02. With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to any Securityholder but with the written consent of the Holders
of at least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal amount of or extend the Stated
Maturity of any Security;
(4) reduce the amount payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any changes in the ranking or priority of any
Security that would adversely affect the Securityholders;
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(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section 9.02; or
(8) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness of the Company or of a Subsidiary Guarantor then outstanding unless
the holders of such Senior Indebtedness (or any group or Representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding
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paragraph, those Persons who were Securityholders at such record date (or their
duly designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 120 days after such
record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
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ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment of all
Senior Indebtedness of the Company and that the subordination is for the benefit
of and enforceable by the holders of such Senior Indebtedness. The Securities
shall in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company and only Indebtedness of the Company which is Senior
Indebtedness of the Company shall rank senior to the Securities in accordance
with the provisions set forth herein. All provisions of this Article 10 shall be
subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of such Senior Indebtedness
before Securityholders shall be entitled to receive any payment of
principal of or interest on the Securities; and
(2) until such Senior Indebtedness is paid in full in cash,
any payment or distribution to which Securityholders would be entitled
but for this Article 10 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Securityholders
may receive shares of Capital Stock and any debt securities that are
subordinated to such Senior Indebtedness to at least the same extent as
the Securities.
SECTION 10.03. Default on Senior Indebtedness of the Company.
The Company shall not pay the principal of or interest on the Securities or make
any deposit pursuant to Section 8.01 and may not purchase, redeem or otherwise
retire any Securities (collectively, "pay the Securities") if either of the
following (a "Payment Default") occurs (1) any Designated Senior Indebtedness of
the Company is not paid in cash when due; or (2) any other default on
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Designated Senior Indebtedness of the Company occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, the Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that the Company shall be entitled
to pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
all Designated Senior Indebtedness with respect to which a Payment Default has
occurred and is continuing. During the continuance of any default (other than a
Payment Default) with respect to any Designated Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company
shall not pay the Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee of (with a copy to the Company)
written notice (a "Blockage Notice") of such default from the Representative of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter. The Payment Blockage Period
shall end earlier if such Payment Blockage Period is terminated (1) by written
notice to the Trustee and the Company from the Person or Persons who gave such
Blockage Notice; (2) because the default giving rise to such Blockage Notice is
cured, waived or otherwise no longer continuing; or (3) because such Designated
Senior Indebtedness has been discharged or repaid in full in cash.
Notwithstanding the provisions described in the immediately preceding two
sentences (but subject to the provisions contained in the first sentence of this
Section 10.03), unless the holders of such Designated Senior Indebtedness or the
Representative of such Designated Senior Indebtedness shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company shall be entitled
to resume payments on the Securities after termination of such Payment Blockage
Period. The Securities shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of the Company during such
period; provided, however, that if any Blockage Notice within such 360-day
period is given by or on behalf of any holders of Designated Senior Indebtedness
of the Company (other than the Bank Indebtedness), the Representative of the
Bank Indebtedness shall be entitled to give another Blockage Notice within such
period; provided further, however, that in no event shall the total number of
days during which any Payment Blockage Period or Periods is
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in effect exceed 179 days in the aggregate during any 360-consecutive-day
period, and there must be 181 days during any 360-consecutive-day period during
which no Payment Blockage Period is in effect. For purposes of this Section
10.03, no default or event of default which existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness of the Company initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such default or event of default shall have been cured or waived for a period of
not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness of the Company (or their Representatives) of the
acceleration. If any Designated Senior Indebtedness of the Company is
outstanding, neither the Company nor any subsidiary Guarantor including FFBV
shall pay the Securities until five Business Days after the Representatives of
all the issues of Designated Senior Indebtedness of the Company receive notice
of such acceleration and, thereafter, shall be entitled to pay the Securities
only if this Article 10 otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 10 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
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SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of holders
of Senior Indebtedness of the Company to receive distributions
otherwise payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent shall continue to
make payments on the Securities and shall not be charged with knowledge of the
existence of facts that under this Article 10 would prohibit the making of any
such payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives notice satisfactory to it that
such payments are prohibited by this Article 10. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of the Company shall be entitled to give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative shall be entitled to give the notice.
The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of the Company with the same rights it
would have if it were not Trustee. The Registrar and co-registrar and the Paying
Agent shall be entitled to do the same with like rights. The Trustee shall be
entitled to all the rights set forth in this Article 10 with respect to any
Senior Indebtedness of the Company which may at any time be held by it, to the
same extent as any other holder of such Senior Indebtedness; and nothing in
Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing
in this Article 10 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 7.07.
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SECTION 10.10. Distribution or Notice to Representative.
Whenever any Person is to make a distribution or give a notice to holders of
Senior Indebtedness of the Company, such Person shall be entitled to make such
distribution or give such notice to their Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness of the Company or
subject to the restrictions set forth in this Article 10, and none of the
Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (1) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (2) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the
Securityholders or (3) upon the Representatives of Senior Indebtedness of the
Company for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of such Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article 10, the Trustee shall be entitled
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to request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 10, and, if such evidence is not furnished, the Trustee shall be
entitled to defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article 10 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the Company or any other Person, money or assets to which
any holders of Senior Indebtedness of the Company shall be entitled by virtue of
this Article 10 or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Indenture and no
implied covenants or obligations with respect to holders of Senior Indebtedness
shall be read into this Indenture against the Trustee.
SECTION 10.16. Reliance by Holders of Senior Indebtedness of
the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of the Company, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of such Senior Indebtedness shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
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ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor and that such Subsidiary Guarantor will remain bound under
this Article 11 notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other guarantor of the Obligations; or
(f) except as set forth in Section 11.06, any change in the ownership of such
Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
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Each Subsidiary Guaranty is, to the extent and in the manner
set forth in Article 12, subordinated and subject in right of payment to the
prior payment in full of the principal of and premium, if any, and interest on
all Senior Indebtedness of the Subsidiary Guarantor giving such Subsidiary
Guaranty and each Subsidiary Guaranty is made subject to such provisions of this
Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (1) the unpaid amount of such Obligations, (2) accrued and
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unpaid interest on such Obligations (but only to the extent not prohibited by
law) and (3) all other monetary Obligations of the Company to the Holders and
the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in respect of any Obligations guaranteed hereby
until payment in full of all Obligations and all obligations to which the
Obligations are subordinated as provided in Article 12. Each Subsidiary
Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the Obligations
Guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of such Subsidiary Guarantor's Subsidiary Guaranty herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article 6, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purposes of this Section 11.01.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 11.02. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum aggregate amount
of the Obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Each Subsidiary Guarantor that makes a payment under its
Guaranty will be entitled to a contribution from each other Subsidiary Guarantor
in an amount equal to such other Subsidiary Guarantor's pro rata portion of such
payment based on the respective net assets of all the Subsidiary Guarantors at
the time of such payment determined in accordance with GAAP.
SECTION 11.03. Successors and Assigns. This Article 11 shall
be binding upon each Subsidiary Guarantor and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and
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privileges conferred upon that party in this Indenture and in the Securities
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of this Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 11
at law, in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. Except in the
case of FFBV's Guaranty of the Securities, upon the sale (including any sale
pursuant to any exercise of remedies by a holder of Senior Indebtedness of the
Company or of such Subsidiary Guarantor) or other disposition (including by way
of consolidation or merger) of a Subsidiary Guarantor or the sale or disposition
of all or substantially all the assets of such Subsidiary Guarantor (in each
case other than a sale or disposition to the Company or an Affiliate of the
Company) or at such time as such Subsidiary Guarantor no longer Guarantees any
other Indebtedness of the Company, such Subsidiary Guarantor shall be deemed
released from all obligations under this Article 11 without any further action
required on the part of the Trustee or any Holder. At the request of the
Company, the Trustee shall execute and deliver an appropriate instrument
evidencing such release.
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ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Subsidiary
Guarantor agrees, and each Securityholder by accepting a Security agrees, that
the Indebtedness evidenced by such Subsidiary Guarantor's Subsidiary Guaranty is
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment of all Senior Indebtedness of such
Subsidiary Guarantor and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. The Obligations of a
Subsidiary Guarantor shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Subsidiary Guarantor and only Senior
Indebtedness of such Subsidiary Guarantor (including such Subsidiary]
Guarantor's Guaranty of Senior Indebtedness of the Company) shall rank senior to
the Obligations of such Subsidiary Guarantor in accordance with the provisions
set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any Subsidiary Guarantor to creditors
upon a total or partial liquidation or a total or partial dissolution of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Subsidiary Guarantor or its
property:
(1) holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash of such
Senior Indebtedness before Securityholders shall be entitled to receive
any payment pursuant to the Subsidiary Guaranty of such Subsidiary
Guarantor; and
(2) until the Senior Indebtedness of any Subsidiary Guarantor
is paid in full in cash, any payment or distribution to which
Securityholders would be entitled but for this Article 12 shall be made
to holders of such Senior Indebtedness as their interests may appear,
except that Securityholders may receive shares of Capital Stock and any
debt securities of such Subsidiary Guarantor that are subordinated to
such Senior Indebtedness to at least the same extent as Subsidiary
Guaranty.
SECTION 12.03. Default on Senior Indebtedness of Subsidiary
Guarantor. No Subsidiary Guarantor shall make
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its Subsidiary Guaranty or purchase, redeem or otherwise retire or defease any
Securities or other Obligations (collectively, "pay its Subsidiary Guaranty") if
either of the following (a "Payment Default") occurs (1) any Designated Senior
Indebtedness of such Subsidiary Guarantor is not paid in cash when due; or (2)
any other default on Designated Senior Indebtedness of such Subsidiary Guarantor
occurs and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms; unless, in either case, the Payment Default has been
cured or waived and any such acceleration has been rescinded or such Designated
Senior Indebtedness has been paid in full in cash; provided, however, that any
Subsidiary Guarantor shall be entitled to pay its Subsidiary Guaranty without
regard to the foregoing if such Subsidiary Guarantor and the Trustee receive
written notice approving such payment from the Representative of all Designated
Senior Indebtedness with respect to which a Payment Default has occurred and is
continuing. During the continuance of any default (other than a Payment Default)
with respect to any Designated Senior Indebtedness of such Subsidiary Guarantor
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Subsidiary
Guarantor shall not pay its Subsidiary Guaranty for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee of (with a copy to
such Subsidiary Guarantor) written notice (a "Blockage Notice") of such default
from the Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter. The
Payment Blockage Period shall end earlier if such Payment Blockage Period is
terminated (1) by written notice to the Trustee and such Subsidiary Guarantor
from the Person or Persons who gave such Blockage Notice; (2) because the
default giving rise to such Blockage Notice is cured, waived or otherwise no
longer continuing; or (3) because such Designated Senior Indebtedness has been
discharged or repaid in full in cash. Notwithstanding the provisions described
in the immediately preceding two sentences (but subject to the provisions
contained in the first sentence of this Section 12.03), unless the holders of
such Designated Senior Indebtedness giving such Payment Notice or the
Representative of such Designated Senior Indebtedness shall have accelerated the
maturity of such Designated Senior Indebtedness, any Subsidiary Guarantor shall
be entitled to resume payments pursuant to its Subsidiary Guaranty after
termination of such Payment Blockage Period. No Subsidiary Guarantor shall be
subject to more than one Blockage Period in any 360-consecutive day period,
irrespective of the number of
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defaults with respect to Designated Senior Indebtedness of such Subsidiary
Guarantor during such period; provided, however, that if any Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness of such Subsidiary Guarantor (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness shall be entitled to
give another Blockage Notice within such period; provided further, however, that
in no event shall the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any
360-consecutive-day period, and there must be 181 days during any
360-consecutive-day period during which no Payment Blockage Period is in effect.
For purposes of this Section 12.03, no default or event of default which existed
or was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Indebtedness of such Subsidiary Guarantor
initiating such Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days.
SECTION 12.04. Demand for Payment. If a demand for payment is
made on a Subsidiary Guarantor pursuant to Article 11, the Trustee shall
promptly notify the holders of the Designated Senior Indebtedness of such
Subsidiary Guarantor (or their Representatives) of such demand.
SECTION 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the applicable
Subsidiary Guarantor and pay it over to them or their Representatives as their
interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness of such
Subsidiary Guarantor. A distribution made under this Article 12 to holders of
such Senior Indebtedness which otherwise would have been made to Securityholders
is not, as between the relevant Subsidiary Guarantor and Securityholders, a
payment by such Subsidiary Guarantor on such Senior Indebtedness.
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SECTION 12.07. Relative Rights. This Article 12 defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Subsidiary Guarantor. Nothing in this Indenture shall:
(1) impair, as between a Subsidiary Guarantor and
Securityholders, the obligation of such Subsidiary Guarantor, which is
absolute and unconditional, to pay its Subsidiary Guaranty to the
extent set forth in Article 11; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by such Subsidiary Guarantor
under its Subsidiary Guaranty, subject to the rights of holders of
Senior Indebtedness of such Subsidiary Guarantor to receive
distributions otherwise payable to Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by Company or
any Subsidiary Guarantor. No right of any holder of Senior Indebtedness of any
Subsidiary Guarantor to enforce the subordination of the Subsidiary Guaranty of
such Subsidiary Guarantor shall be impaired by any act or failure to act by the
Company or such Subsidiary Guarantor or by their failure to comply with this
Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent shall continue to
make payments on any Subsidiary Guaranty and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives written notice satisfactory to it that
such payments are prohibited by this Article 12. The Company, the relevant
Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of such Subsidiary Guarantor
shall be entitled to give the notice; provided, however, that, if an issue of
Senior Indebtedness of any Subsidiary Guarantor has a Representative, only the
Representative shall be entitled to give the notice.
The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of any Subsidiary Guarantor with the same
rights it would have if it were not the Trustee. The Registrar and co-registrar
and the Paying Agent may do the same with like rights. The Trustee shall be
entitled to all the rights set forth in this Article 12 with respect to any
Senior Indebtedness of any Subsidiary Guarantor which may at any time be held by
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it, to the same extent as any other holder of such Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative.
Whenever any Person is to make a distribution or give a notice to holders of
Senior Indebtedness of any Subsidiary Guarantor, such Person shall be entitled
to make such distribution or give such notice to their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Events of Default or
Limit Right To Demand Payment. The failure to make a payment pursuant to a
Subsidiary Guaranty by reason of any provision in this Article 12 shall not be
construed as preventing the occurrence of a Default. Nothing in this Article 12
shall have any effect on the right of the Securityholders or the Trustee to make
a demand for payment on any Subsidiary Guarantor pursuant to its Subsidiary
Guaranty.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (1) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (2) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the
Securityholders or (3) upon the Representatives for the holders of Senior
Indebtedness of any Subsidiary Guarantor for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
such Senior Indebtedness and other indebtedness of such Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 12. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness of any
Subsidiary Guarantor to participate in any payment or distribution pursuant to
this Article 12, the Trustee shall be entitled to request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of such Subsidiary Guarantor held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee shall be entitled to defer
any
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payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of any Subsidiary Guarantor as provided in this Article 12
and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any Subsidiary Guarantor
and shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of such Senior Indebtedness shall be entitled by
virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of
Subsidiary Guarantors on Subordination Provisions. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of any Subsidiary Guarantor, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
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ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any Subsidiary Guarantor:
Flowserve Corporation
222 West Las Colinas Blvd.
Suite 1500
Irving, TX 75039
Attention of Renee Hornbaker
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attention of Corporate Trust
Administration-Global Finance Unit
The Company, any Subsidiary Guarantor or the Trustee by notice
to the other may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it. Notices
delivered to the Trustee shall be effective when received.
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SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, any Subsidiary Guarantor, the Trustee, the Registrar
and anyone else shall have the protection of TIA Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal
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amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company or any Subsidiary
Guarantor shall not have any liability for any obligations of the Company under
the Securities or this Indenture or of such Subsidiary Guarantor under its
Subsidiary Guaranty or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
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SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
FLOWSERVE CORPORATION,
by /s/ RENEE J. HORNBAKER
----------------------------
Name: Renee J. Hornbaker
Title: Vice President and
Chief Financial
Officer
FLOWSERVE FINANCE B.V.,
by /s/ JOHN M. NANOS
----------------------------
Name: John M. Nanos
Title: Managing Director
by /s/ M. KATHLEEN MCVAY
----------------------------
Name: M. Kathleen McVay
Title: Managing Director
FLOWSERVE RED CORPORATION,
FLOWSERVE FSD CORPORATION,
FLOWSERVE FCD CORPORATION,
FLOWSERVE INTERNATIONAL, INC.,
FLOWSERVE MANAGEMENT COMPANY (DE
BUSINESS TRUST),
BW/IP-NEW MEXICO, INC.,
FLOWSERVE INTERNATIONAL, LLC,
DURAMETALLIC AUSTRALIA HOLDING
COMPANY,
FLOWSERVE INTERNATIONAL LIMITED,
INNOVATIVE VALVE TECHNOLOGIES, INC.,
PLANT MAINTENANCE, INC.,
VARCO VALVE, INC.,
COLONIAL EQUIPMENT & SERVICE CO.,
INC.,
CECORP, INC.,
DIVT ACQUISITION-DELAWARE, LLC,
DIVT SUBSIDIARY, LLC,
SOUTHERN VALVE SERVICE, INC.,
L.T. KOPPL INDUSTRIES, INC.,
KOPPL COMPANY,
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KOPPL INDUSTRIAL SYSTEMS, INC.,
HARLEY INDUSTRIES, INC.,
KOPPL COMPANY OF ARIZONA,
SEELEY & JONES, INCORPORATED,
GSV, INC.,
IPSCO-FLORIDA, INC.,
INTERNATIONAL PIPING SERVICES
COMPANY,
CYPRESS INDUSTRIES, INC.,
DALCO, LLC,
PLANT SPECIALTIES, INC.,
ENERGY MAINTENANCE, INC.,
PREVENTIVE MAINTENANCE, INC.,
PRODUCTION MACHINE INCORPORATED,
ICE LIQUIDATING, INC.,
VALVE REPAIR OF SOUTH CAROLINA,
INC.,
THE SAFE SEAL COMPANY, INC.,
FLICKINGER-BENICIA INC.,
PUGET INVESTMENTS, INC.,
STEAM SUPPLY & RUBBER CO., INC.,
FLICKINGER COMPANY,
BOYDEN, INC.,
VALVE ACTUATION & REPAIR CO.,
INGERSOLL-DRESSER PUMP COMPANY,
IDP ALTERNATE ENERGY COMPANY,
ENERGY HYDRO, INC.
PUMP INVESTMENTS, INC.
FLOWSERVE HOLDINGS, INC.
IPSCO HOLDING, INC.
by /s/ JOHN M. NANOS
----------------------------
Name: John M. Nanos
Title:
THE BANK OF NEW YORK,
by /s/ LUIS PEREZ
----------------------------
Name: Luis Perez
Title: Assistant V.P.
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[Draft-08/06/00]
RULE 144A/REGULATION S APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Securities" means (1) the 12-1/4% Senior
Subordinated Securities Due 2010 issued pursuant to the Indenture in connection
with a Registered Exchange Offer pursuant to a Registration Rights Agreement and
(2) Additional Securities, if any, issued pursuant to a registration statement
filed with the SEC under the Securities Act.
"Initial Purchasers" means (1) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston Corporation,
Banc of America Securities LLC, ABN AMRO Incorporated and Banc One Capital
Markets, Inc., and (2) with respect to each issuance of Additional Securities,
the Persons purchasing such Additional Securities under the related Purchase
Agreement.
"Initial Securities" means (1) $290,000,000 aggregate
principal amount of 12-1/4% Senior Subordinated Securities Due 2010 issued on
the Issue Date and (2) Additional Securities, if any, issued in a transaction
exempt from the registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to
a Registration Rights Agreement, to the Initial Purchasers to issue and deliver
to each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 12-1/4% Senior
Securities Subordinated Due 2010 issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated August 3,
among the Company and the Initial
<PAGE> 118
Purchasers, and (2) with respect to each issuance of Additional Securities, the
purchase agreement or underwriting agreement among the Company and the Persons
purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount at maturity of Exchange Securities
registered under the Securities Act.
"Registration Rights Agreement" means (1) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated August 3, among the Company and the Initial Purchasers, and (2) with
respect to each issuance of Additional Securities issued in a transaction exempt
from the registration requirements of the Securities Act, the registration
rights agreement, if any, among the Company and the Persons purchasing such
Additional Securities under the related Purchase Agreement.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to a Registration Rights
Agreement.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.3(b)hereto.
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1.2 Other Definitions
<TABLE>
<CAPTION>
Defined in
Term Section:
---- ----------
<S> <C>
"Agent Members".........................................................................................2.1(b)
"Global Security".......................................................................................2.1(a)
"Regulation S"..........................................................................................2.1(a)
"Restricted Global Security"............................................................................2.1(a)
"Rule 144A".............................................................................................2.1(a)
</TABLE>
2. The Securities.
2.1 (a) Form and Dating. Initial Securities offered and sold to a QIB
in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance
on Regulation S under the Securities Act ("Regulation S"), in each case as
provided in a Purchase Agreement, and Private Exchange Securities, as provided
in a Registration Rights Agreement, shall be issued initially in the form of one
or more permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Restricted Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its principal Corporate Trust Office,
as custodian for the Depository (or with such other custodian as the Depository
may direct), and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter
provided. Exchange Securities shall be issued in global form (with the global
securities legend set forth in Exhibit 1 hereto) or in certificated form at the
option of the Holders thereof from time to time. Exchange Securities issued in
global form and Restricted Global Securities are sometimes referred to in this
Appendix as "Global Securities."
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such
3
<PAGE> 120
Depository or pursuant to such Depository's instructions or held by the Trustee
as custodian for the Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the Company, the
Trustee and any agent of the Company or the Trustee shall be entitled to treat
the Depository as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Restricted
Global Securities shall not be entitled to receive physical delivery of
certificated Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, an aggregate principal amount of $290,000,000 million 12-1/4%
Senior Subordinated Securities Due 2010, (2) any Additional Securities for an
original issue in an aggregate principal amount specified in the written order
of the Company pursuant to Section 2.02 of the Indenture and (3) Exchange
Securities or Private Exchange Securities for issue only in a Registered
Exchange Offer or a Private Exchange, respectively, pursuant to a Registration
Rights Agreement, for a like principal amount of Initial Securities, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of any issuance of Additional Securities pursuant to Section 2.13 of
the Indenture, shall certify that such issuance is in compliance with Section
4.03 of the Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the
4
<PAGE> 121
Depository, in accordance with this Indenture (including applicable restrictions
on transfer set forth herein, if any) and the procedures of the Depository
therefor. A transferor of a beneficial interest in a Global Security shall
deliver to the Registrar a written order given in accordance with the
Depositary's procedures containing information regarding the participant account
of the Depositary to be credited with a beneficial interest in the Global
Security. The Registrar shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Security and to debit the account of the
Person making the transfer the beneficial interest in the Global Security being
transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(iii) In the event that a Restricted Global Security is
exchanged for Securities in certificated registered form pursuant to Section 2.4
of this Appendix, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with such
procedures as are substantially consistent with the provisions of this Section
2.3 (including the certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply with Rule 144A
or Regulation S, as the case may be) and such other procedures as may from time
to time be adopted by the Company.
(b) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing the Restricted
Global Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR
5
<PAGE> 122
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (IV) PURSUANT TO EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Restricted Global Security) pursuant to Rule 144 under the Securities
Act, the Registrar shall permit the transferee thereof to exchange such
Transfer Restricted Security for a certificated Security that does not
bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, if the transferor
thereof certifies in writing to the Registrar that such sale or
transfer was made in reliance on Rule 144 (such certification to be in
the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities pursuant to and during the period of the
effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends on such Initial Security or such
Private Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private Exchange Security
issued to
6
<PAGE> 123
certain Holders be issued in global form will cease to apply, and a
certificated Initial Security or Private Exchange Security or an
Initial Security or Private Exchange Security in global form, in each
case without restrictive transfer legends, will be available to the
transferee of the Holder of such Initial Securities or Private Exchange
Securities upon exchange of such transferring Holder's certificated
Initial Security or Private Exchange Security or directions to transfer
such Holder's interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders be
issued in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities, and
Exchange Securities in certificated or global form will be available to
Holders that exchange such Initial Securities in such Registered
Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply with respect to Holders of such Initial
Securities that do not exchange their Initial Securities, and Private
Exchange Securities in global form with the global securities legend
and the Restricted Securities Legend set forth in Exhibit 1 hereto will
be available to Holders that exchange such Initial Securities in such
Private Exchange.
(c) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for certificated Securities, redeemed, purchased or canceled, such Global
Security shall be returned to the Depository for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for certificated
Securities, redeemed, purchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
7
<PAGE> 124
(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06, 4.09 and 9.05 of
the Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an
interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any
8
<PAGE> 125
participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given or made only
to or upon the order of the registered Holders (which shall be the
Depository or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and procedures
of the Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 Certificated Securities.
(a) A Restricted Global Security deposited with the Depository
or with the Trustee as custodian for the Depository pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of
certificated Securities in an aggregate principal amount equal to the principal
amount of such Global Security, in exchange for such Global Security, only if
such transfer complies with Section 2.3 and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such
Restricted Global Security or if at any time such Depository ceases to be a
"clearing agency" registered under the Exchange Act and a successor depositary
is not appointed by the Company within 90 days of such notice, or (ii) an Event
of Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Securities under this Indenture.
(b) Any Restricted Global Security that is transferable to the
beneficial owners thereof pursuant to this
9
<PAGE> 126
Section 2.4 shall be surrendered by the Depository to the Trustee located at its
principal corporate trust office in the Borough of Manhattan, The City of New
York, to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Restricted Global Security, an equal aggregate principal
amount of certificated Initial Securities of authorized denominations. Any
portion of a Restricted Global Security transferred pursuant to this Section 2.4
shall be executed, authenticated and delivered only in denominations of $1,000
principal amount and any integral multiple thereof and registered in such names
as the Depository shall direct. Any certificated Initial Security or Private
Exchange Security delivered in exchange for an interest in the Restricted Global
Security shall, except as otherwise provided by Section 2.3(b), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security shall be entitled to 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 Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.4(a), the Company shall promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
10
<PAGE> 127
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
<PAGE> 128
No.: CUSIP No.:
ISIN No.:
12-1/4% Senior Subordinated Notes Due 2010
Flowserve Corporation, a New York corporation, promises to pay
to Cede & Co, or registered assigns, the principal amount set forth on Schedule
A hereto on August 15, 2010.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: August 8, 2000
<PAGE> 129
FLOWSERVE CORPORATION,
by
----------------------------
Name: Renee J. Hornbaker
Title: Vice President and
Chief Financial
Officer
FLOWSERVE FINANCE B.V.,
by
----------------------------
Name: John M. Nanos
Title: Managing Director
by
----------------------------
Name: M. Kathleen McVay
Title: Managing Director
FLOWSERVE RED CORPORATION,
FLOWSERVE FSD CORPORATION,
FLOWSERVE FCD CORPORATION,
FLOWSERVE INTERNATIONAL, INC.,
FLOWSERVE MANAGEMENT COMPANY (DE
BUSINESS TRUST),
BW/IP-NEW MEXICO, INC.,
FLOWSERVE INTERNATIONAL, LLC,
DURAMETALLIC AUSTRALIA HOLDING
COMPANY,
FLOWSERVE INTERNATIONAL LIMITED,
INNOVATIVE VALVE TECHNOLOGIES, INC.,
PLANT MAINTENANCE, INC.,
VARCO VALVE, INC.,
COLONIAL EQUIPMENT & SERVICE CO.,
INC.,
CECORP, INC.,
DIVT ACQUISITION-DELAWARE, LLC,
DIVT SUBSIDIARY, LLC,
SOUTHERN VALVE SERVICE, INC.,
L.T. KOPPL INDUSTRIES, INC.,
KOPPL COMPANY,
KOPPL INDUSTRIAL SYSTEMS, INC.,
HARLEY INDUSTRIES, INC.,
KOPPL COMPANY OF ARIZONA,
SEELEY & JONES, INCORPORATED,
GSV, INC.,
IPSCO-FLORIDA, INC.,
<PAGE> 130
INTERNATIONAL PIPING SERVICES
COMPANY,
CYPRESS INDUSTRIES, INC.,
DALCO, LLC,
PLANT SPECIALTIES, INC.,
ENERGY MAINTENANCE, INC.,
PREVENTIVE MAINTENANCE, INC.,
PRODUCTION MACHINE INCORPORATED,
ICE LIQUIDATING, INC.,
VALVE REPAIR OF SOUTH CAROLINA,
INC.,
THE SAFE SEAL COMPANY, INC.,
FLICKINGER-BENICIA INC.,
PUGET INVESTMENTS, INC.,
STEAM SUPPLY & RUBBER CO., INC.,
FLICKINGER COMPANY,
BOYDEN, INC.,
VALVE ACTUATION & REPAIR CO.,
INGERSOLL-DRESSER PUMP COMPANY,
IDP ALTERNATE ENERGY COMPANY,
ENERGY HYDRO, INC.
PUMP INVESTMENTS, INC.
FLOWSERVE HOLDINGS, INC.
IPSCO HOLDING, INC.
by
----------------------------
Name: John M. Nanos
Title:
<PAGE> 131
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
------------------------------
Authorized Signatory
<PAGE> 132
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12-1/4% Senior Subordinated Notes Due 2010
1. Interest
Flowserve Corporation, a New York corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of
0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 2.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. The
Company will pay interest semiannually on February 15 and August 15 of each
year, commencing February 15, 2001. Interest on the Securities will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from August 8, 2000. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company will pay interest on overdue principal
at 1% per annum in excess of the above rate and will pay interest on overdue
installments of interest at such higher rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the February 1 or August 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities 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. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including
<PAGE> 133
principal, premium and interest) by mailing a check to the registered address of
each Holder thereof; provided, however, that payments on a certificated Security
will be made by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of August 8, 2000 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the Indenture. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor will be treated as a single class for all purposes
under the Indenture. The Indenture contains covenants that limit the ability of
the Company and its subsidiaries to incur additional indebtedness; pay dividends
or distributions on, or redeem or repurchase capital stock; make investments;
issue or sell capital stock of subsidiaries; engage in transactions with
affiliates; transfer or sell assets; guarantee
2
<PAGE> 134
indebtedness; restrict dividends or other payments of subsidiaries; consolidate,
merge or transfer all or substantially all of its assets and the assets of its
subsidiaries. These covenants are subject to important exceptions and
qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled
to redeem the Securities at its option prior to August 15, 2005.
On and after August 15, 2005, the Company shall be entitled at
its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued interest
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on August 15 of the
years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
------ ----------
<S> <C>
2005 106.125%
2006 104.083
2007 102.042
2008 and thereafter 100.000%
</TABLE>
In addition, prior to August 15, 2003, the Company shall be
entitled at its option on one or more occasions to redeem Securities (which
includes Additional Securities, if any) in an aggregate principal amount not to
exceed 35% of the aggregate principal amount of the Securities (which includes
Additional Securities, if any) originally issued at a redemption price
(expressed as a percentage of principal amount) of 112.25%, plus accrued and
unpaid interest to the redemption date, with the net cash proceeds from one or
more Public Equity Offerings; provided, however, that (1) at least 65% of such
aggregate principal amount of Securities (which includes Additional Securities,
if any) remains outstanding immediately after the occurrence of each such
redemption (other than Securities held, directly or indirectly, by the Company
or its Affiliates); and (2) each such redemption occurs within 60 days after the
closing date of the related Public Equity Offering.
3
<PAGE> 135
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Subsidiary Guaranties
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Subsidiary
Guarantors.
4
<PAGE> 136
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal
5
<PAGE> 137
amount outstanding of the Securities. Subject to certain exceptions set forth in
the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee shall be entitled to amend the Indenture
or the Securities to cure any ambiguity, omission, defect or inconsistency, or
to comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities, including Subsidiary Guaranties, or
to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company or the Subsidiary Guarantors, or to comply with
any request of the SEC in connection with qualifying the Indenture under the
Act, or to make certain changes in the subordination provisions, or to make any
change that does not adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company, the Significant Subsidiaries or the Subsidiary
Guarantors if the amount accelerated (or so unpaid) exceeds $10 million; (v)
certain events of bankruptcy or insolvency with respect to the Company, the
Subsidiary Guarantors or the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $10 million and (vii) certain
defaults with respect to Subsidiary Guaranties. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal
6
<PAGE> 138
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, any Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company or any Subsidiary Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
7
<PAGE> 139
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
22. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
FLOWSERVE CORPORATION
222 WEST LAS COLINAS BLVD.
SUITE 1500
IRVING, TX 75039
ATTENTION: RENEE HORNBAKER
8
<PAGE> 140
--------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security 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 other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities
Act of 1933) that purchases for its own account or for
the account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to
9
<PAGE> 141
and in compliance with Rule 144A under the Securities
Act of 1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities
Act of 1933; or
(5) [ ] pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (4) or (5) is checked, the Trustee shall be entitled to require,
prior to registering any such transfer of the Securities, such legal
opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
---------------------------- -------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
10
<PAGE> 142
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security 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
11
<PAGE> 143
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The original principal amount of this Global Security is
_____________. The following increases or decreases in this Global Security have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Amount of decrease Amount of increase Principal amount of Signature of
in Principal amount in Principal amount this Global Security authorized officer
Date of of this Global of this Global following such of Trustee or
Exchange Security Security decrease or increase) Securities Custodian
</TABLE>
12
<PAGE> 144
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06, 4.09 or 4.10 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06, 4.09 or 4.10 of the
Indenture, state the amount in principal amount: $o
Date: Your Signature:
--------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Security.)
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
13
<PAGE> 145
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
*/**/
----------
*/If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".]
**/If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.]
<PAGE> 146
No.: CUSIP No.:
ISIN No.:
12-1/4% Senior Subordinated Notes Due 2010
Flowserve Corporation, a New York corporation, promises to pay
to Cede & Co, or registered assigns, the principal amount set forth on Schedule
A hereto on August 15, 2010.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: August 8, 2000
2
<PAGE> 147
FLOWSERVE CORPORATION,
by /s/ RENEE J. HORNBAKER
----------------------------
Name: Renee J. Hornbaker
Title: Vice President and
Chief Financial
Officer
FLOWSERVE FINANCE B.V.,
by /s/ JOHN M. NANOS
----------------------------
Name: John M. Nanos
Title: Managing Director
by /s/ M. KATHLEEN MCVAY
----------------------------
Name: M. Kathleen McVay
Title: Managing Director
FLOWSERVE RED CORPORATION,
FLOWSERVE FSD CORPORATION,
FLOWSERVE FCD CORPORATION,
FLOWSERVE INTERNATIONAL, INC.,
FLOWSERVE MANAGEMENT COMPANY (DE
BUSINESS TRUST),
BW/IP-NEW MEXICO, INC.,
FLOWSERVE INTERNATIONAL, LLC,
DURAMETALLIC AUSTRALIA HOLDING
COMPANY,
FLOWSERVE INTERNATIONAL LIMITED,
INNOVATIVE VALVE TECHNOLOGIES, INC.,
PLANT MAINTENANCE, INC.,
VARCO VALVE, INC.,
COLONIAL EQUIPMENT & SERVICE CO.,
INC.,
CECORP, INC.,
DIVT ACQUISITION-DELAWARE, LLC,
DIVT SUBSIDIARY, LLC,
SOUTHERN VALVE SERVICE, INC.,
L.T. KOPPL INDUSTRIES, INC.,
KOPPL COMPANY,
KOPPL INDUSTRIAL SYSTEMS, INC.,
HARLEY INDUSTRIES, INC.,
KOPPL COMPANY OF ARIZONA,
SEELEY & JONES, INCORPORATED,
GSV, INC.,
IPSCO-FLORIDA, INC.,
3
<PAGE> 148
INTERNATIONAL PIPING SERVICES
COMPANY,
CYPRESS INDUSTRIES, INC.,
DALCO, LLC,
PLANT SPECIALTIES, INC.,
ENERGY MAINTENANCE, INC.,
PREVENTIVE MAINTENANCE, INC.,
PRODUCTION MACHINE INCORPORATED,
ICE LIQUIDATING, INC.,
VALVE REPAIR OF SOUTH CAROLINA,
INC.,
THE SAFE SEAL COMPANY, INC.,
FLICKINGER-BENICIA INC.,
PUGET INVESTMENTS, INC.,
STEAM SUPPLY & RUBBER CO., INC.,
FLICKINGER COMPANY,
BOYDEN, INC.,
VALVE ACTUATION & REPAIR CO.,
INGERSOLL-DRESSER PUMP COMPANY,
IDP ALTERNATE ENERGY COMPANY,
ENERGY HYDRO, INC.
PUMP INVESTMENTS, INC.
FLOWSERVE HOLDINGS, INC.
IPSCO HOLDING, INC.
by
----------------------------
Name: John M. Nanos
Title:
4
<PAGE> 149
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
------------------------------
Authorized Signatory
5
<PAGE> 150
[FORM OF REVERSE SIDE OF [EXCHANGE SECURITY
OR PRIVATE EXCHANGE] SECURITY]
12-1/4% Senior Subordinated Notes Due 2010
1. Interest
Flowserve Corporation, a New York corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of
0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 2.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. The
Company will pay interest semiannually on February 15 and August 15 of each
year, commencing February 15, 2001. Interest on the Securities will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from August 8, 2000. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company will pay interest on overdue principal
at 1% per annum in excess of the above rate and will pay interest on overdue
installments of interest at such higher rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the February 1 or August 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities 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. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all
<PAGE> 151
payments in respect of a certificated Security (including principal, premium and
interest) by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on a certificated Security will be made by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of August 8, 2000 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the Indenture. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor will be treated as a single class for all purposes
under the Indenture. The Indenture contains covenants that limit the ability of
the Company and its subsidiaries to incur additional indebtedness; pay dividends
or distributions on, or redeem or repurchase capital stock; make investments;
issue or sell capital stock of subsidiaries; engage in transactions
2
<PAGE> 152
with affiliates; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries; consolidate, merge or transfer all
or substantially all of its assets and the assets of its subsidiaries. These
covenants are subject to important exceptions and qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled
to redeem the Securities at its option prior to August 15, 2005.
On and after August 15, 2005, the Company shall be entitled at
its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued interest
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on August 15 of the
years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
------ ----------
<S> <C>
2005 106.125%
2006 104.083
2007 102.042
2008 and thereafter 100.000%
</TABLE>
In addition, prior to August 15, 2003, the Company shall be
entitled at its option on one or more occasions to redeem Securities (which
includes Additional Securities, if any) in an aggregate principal amount not to
exceed 35% of the aggregate principal amount of the Securities (which includes
Additional Securities, if any) originally issued at a redemption price
(expressed as a percentage of principal amount) of 112.25%, plus accrued and
unpaid interest to the redemption date, with the net cash proceeds from one or
more Public Equity Offerings; provided, however, that (1) at least 65% of such
aggregate principal amount of Securities (which includes Additional Securities,
if any) remains outstanding immediately after the occurrence of each such
redemption (other than Securities held, directly or indirectly, by the Company
or its Affiliates); and (2) each such redemption occurs within 60 days after the
closing date of the related Public Equity Offering.
3
<PAGE> 153
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Subsidiary Guaranties
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Subsidiary
Guarantors.
4
<PAGE> 154
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal
5
<PAGE> 155
amount outstanding of the Securities. Subject to certain exceptions set forth in
the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee shall be entitled to amend the Indenture
or the Securities to cure any ambiguity, omission, defect or inconsistency, or
to comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities, including Subsidiary Guaranties, or
to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company or the Subsidiary Guarantors, or to comply with
any request of the SEC in connection with qualifying the Indenture under the
Act, or to make certain changes in the subordination provisions, or to make any
change that does not adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company, the Significant Subsidiaries or the Subsidiary
Guarantors if the amount accelerated (or so unpaid) exceeds $10 million; (v)
certain events of bankruptcy or insolvency with respect to the Company, the
Subsidiary Guarantors or the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $10 million and (vii) certain
defaults with respect to Subsidiary Guaranties. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal
6
<PAGE> 156
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, and Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company or any Subsidiary Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
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20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
22. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
FLOWSERVE CORPORATION
222 WEST LAS COLINAS BLVD.
SUITE 1500
IRVING, TX 75039
ATTENTION: RENEE HORNBAKER
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<PAGE> 158
--------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security 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 other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities
Act of 1933) that purchases for its own account or for
the account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to
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<PAGE> 159
and in compliance with Rule 144A under the Securities
Act of 1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities
Act of 1933; or
(5) [ ] pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (4) or (5) is checked, the Trustee shall be entitled to require,
prior to registering any such transfer of the Securities, such legal
opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
---------------------------- -------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
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<PAGE> 160
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security 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
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<PAGE> 161
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The original principal amount of this Global Security is
_____________. The following increases or decreases in this Global Security have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal amount in Principal amount this Global Security authorized officer
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
</TABLE>
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<PAGE> 162
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06, 4.09 or 4.10 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06, 4.09 or 4.10 of the
Indenture, state the amount in principal amount: $o
Date: Your Signature:
--------------- ---------------------------------
(Sign exactly as your name
appears on the other side of
this Security.)
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
13
