- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______ .
COMMISSION FILE NUMBER 1-52
[SUNBEAM LOGO]
SUNBEAM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 25-1638266
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1615 SOUTH CONGRESS AVENUE 33445
SUITE 200 (ZIP CODE)
DELRAY BEACH, FLORIDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(561) 243-2100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes ____ No
On May 11, 1998 there were 100,824,578 shares of the registrant's Common
Stock ($.01 par value) outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT
ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) for the three
months ended March 30, 1997 and March 31, 1998 ........................ 2
Condensed Consolidated Balance Sheets as of December 28, 1997 and
March 31, 1998 (Unaudited) ............................................ 3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the
three months ended March 30, 1997 and March 31, 1998 .................. 4
Notes to Condensed Consolidated Financial Statements (Unaudited) ........ 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................. 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ....................................................... 14
Item 5. Other Information ....................................................... 14
Item 6. Exhibits and Reports on Form 8-K ........................................ 14
SIGNATURES ................................................................................. 15
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
MARCH 31, MARCH 30,
1998 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
Net sales .............................................................. $ 244,296 $ 253,450
Cost of goods sold ..................................................... 211,459 185,698
Selling, general and administrative expense ............................ 68,841 33,009
--------- ---------
Operating earnings (loss) .............................................. (36,004) 34,743
Interest expense ....................................................... 5,072 1,993
Other expense, net ..................................................... 2,367 113
--------- ---------
Earnings (loss) from continuing operations before
extraordinary charges and income taxes ................................ (43,443) 32,637
Income taxes (benefit):
Current ............................................................... 327 (1,052)
Deferred .............................................................. (4,785) 13,128
--------- ---------
(4,458) 12,076
--------- ---------
Earnings (loss) from continuing operations. ............................ (38,985) 20,561
Extraordinary charge from early retirement of debt, net of tax ......... (5,608) --
Loss from discontinued operations, net of tax .......................... -- (13,713)
--------- ---------
Net earnings (loss) .................................................... $ (44,593) $ 6,848
========= =========
Earnings (loss) per share from continuing operations
before extraordinary charge (basic and diluted) ....................... $ (.45) $ .24
========= =========
Earnings (loss) per share (basic and diluted) .......................... $ (.52) $ .08
========= =========
Weighted average common shares outstanding (basic and diluted) ......... 86,390 86,978
Dividends declared per share of common stock ........................... $ .01 $ .01
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 28,
1998 1997
-------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 193,543 $ 52,378
Receivables, net ................................................ 562,294 295,550
Inventories ..................................................... 575,109 256,180
Deferred income taxes ........................................... 70,782 36,706
Prepaid expenses and other current assets ....................... 36,910 17,191
---------- ----------
Total current assets ......................................... 1,438,638 658,005
Property, plant and equipment, net ............................... 403,179 240,897
Trademarks and trade names, net .................................. 192,882 194,372
Goodwill ......................................................... 1,324,851 24,750
Other assets, including deferred financing costs ................. 83,872 2,260
---------- ----------
$3,443,422 $1,120,284
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt ........... $ 62,139 $ 668
Accounts payable ................................................ 205,217 105,580
Other current liabilities ....................................... 179,373 91,851
---------- ----------
Total current liabilities .................................... 446,729 198,099
Long-term debt ................................................... 1,637,820 194,580
Other long-term liabilities ...................................... 189,660 141,109
Deferred income taxes ............................................ 79,674 54,559
Minority interest ................................................ 55,191 --
Commitments and Contingencies (Note 6)
Shareholders' equity:
Common stock (issued 100,824,578 and 89,984,425 shares) ......... 1,008 900
Accumulated comprehensive loss .................................. (29,288) (28,722)
Other shareholders' equity ...................................... 1,062,628 622,804
---------- ----------
1,034,348 594,982
Treasury stock, at cost (4,454,394 shares in 1997) .............. -- (63,045)
---------- ----------
Total shareholders' equity ................................... 1,034,348 531,937
---------- ----------
$3,443,422 $1,120,284
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
MARCH 31, MARCH 30,
1998 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) ........................................................ $ (44,593) $ 6,848
Adjustments to reconcile net earnings (loss) to net cash
used in operating activities:
Depreciation and amortization ............................................. 11,400 10,587
Deferred income taxes ..................................................... (4,785) 13,128
Extraordinary charge on early extinguishment of debt, net of taxes ........ 5,608 --
Non-cash special compensation charges ..................................... 24,290 --
Loss on sale of discontinued operations, net of taxes ..................... -- 13,713
Changes in working capital and other, including restructuring spending...... (135,786) (66,969)
---------- ---------
Net cash used in operating activities .................................... (143,866) (22,693)
---------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net .................................................. (10,420) (10,821)
Acquisition of CLN Holdings, Inc., net of cash acquired .................... (160,612) --
Proceeds from sales of divested operations and other assets ................ -- 70,404
---------- ---------
Net cash provided by (used in) investing activities ...................... (171,032) 59,583
---------- ---------
FINANCING ACTIVITIES:
Issuance of convertible subordinated debentures, net of financing fees ..... 729,622 --
Payments of debt obligations, including prepayment penalties ............... (266,672) (26,322)
Other debt financing fees .................................................. (25,075) --
Proceeds from exercise of stock options .................................... 19,045 8,866
Other, net ................................................................. (857) (545)
---------- ---------
Net cash provided by (used in) financing activities ...................... 456,063 (18,001)
---------- ---------
Net increase in cash and cash equivalents ................................... 141,165 18,889
Cash and cash equivalents at beginning of period ............................ 52,378 11,526
---------- ---------
Cash and cash equivalents at end of period .................................. $ 193,543 $ 30,415
========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. OPERATIONS AND BASIS OF PRESENTATION
Sunbeam Corporation (the "Company") is a leading designer, manufacturer,
and marketer of consumer branded products. The Sunbeam/registered trademark/
and Oster/registered trademark/ brands have been household names for
generations, and the Company is a market share leader in many of its product
categories.
The Company markets its products through virtually every category of
retailer including mass merchandisers, catalog showrooms, warehouse clubs,
department stores, catalogs, Company-owned outlet stores, television shopping
channels, hardware stores, home centers, drug and grocery stores, pet supply
retailers, as well as independent distributors and the military. The Company
also sells its products to commercial end-users such as hotels and other
institutions.
As further described in Note 2, on March 30, 1998, a wholly owned
subsidiary of the Company acquired CLN Holdings, Inc. ("CLN Holdings"). As a
result of the acquisition of CLN Holdings, the Company became the indirect
owner of approximately 80.9% of the total number of then outstanding shares of
The Coleman Company, Inc. ("Coleman"). Coleman is a leading manufacturer and
marketer of consumer products for the worldwide outdoor recreation market. Its
products have been sold domestically and internationally under the
Coleman/registered trademark/ brand name since the 1920's.
To standardize the fiscal period ends of Sunbeam and each of its recent
acquisitions as further described in Note 2, the Company has changed its fiscal
year-end from the Sunday nearest December 31 to December 31, effective with its
1998 fiscal year. Accordingly, the first quarter 1998 period-end was changed
from March 29 to March 31. The impact of this change on net sales for the first
quarter of 1998 was approximately $5 million (excluding the impact of Coleman
which was acquired on March 30). This change in fiscal year-end puts Sunbeam
and its recent acquisitions on the same fiscal reporting basis.
In the opinion of management, the unaudited condensed consolidated
financial statements furnished herein include all adjustments (consisting of
only recurring adjustments with the exception of the extraordinary charge in
1998 and loss from discontinued operations in 1997) necessary for a fair
presentation of the results of operations for the interim periods presented.
These interim results of operations are not necessarily indicative of results
for the entire year. The condensed consolidated financial statements contained
herein should be read in conjunction with the consolidated financial statements
and related notes contained in the Company's 1997 Annual Report on Form 10-K
("Form 10-K").
2. BUSINESS COMBINATIONS
On March 30, 1998, Laser Acquisition Corporation ("LAC"), a wholly owned
subsidiary of the Company, acquired indirect beneficial ownership of 44,067,520
shares of CLN Holdings, Inc. common stock, which represented approximately
80.9% of the total number of then outstanding shares of Coleman in exchange for
14,099,749 shares of the Company's common stock (valued at approximately $514
million) and $160 million in cash ("Step One"). The Company expects to acquire
the remaining equity interest in Coleman during the summer of 1998 ("Step Two")
pursuant to a merger transaction in which the existing Coleman minority
shareholders will receive .5677 shares of Sunbeam common stock and $6.44 in
cash for each share of Coleman common stock then outstanding. In addition,
unexercised options under Coleman's stock option plans will be cashed out at a
price per share equal to the difference between $27.50 and the exercise price
of such option. The Company expects to issue approximately 6.7 million shares
of additional Sunbeam common stock and approximately $87 million in cash to
complete Step Two of the Coleman acquisition (assuming no additional Coleman
stock options are exercised prior to completion of Step Two).
5
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
2. BUSINESS COMBINATIONS --(CONTINUED)
On April 3, 1998, the Company acquired more than 90% interests in each of
First Alert, Inc. ("First Alert"), a leading manufacturer of smoke and carbon
monoxide detectors, and Signature Brands USA, Inc. ("Signature Brands"), a
leading manufacturer of a comprehensive line of consumer and professional
products, pursuant to cash tender offers for each company's outstanding shares.
The Company completed its acquisitions of the remaining publicly held shares of
each of First Alert and Signature Brands pursuant to merger transactions
consummated on April 6, 1998. The First Alert acquisition was valued at
approximately $178 million, including the assumption of debt, and the Signature
Brands acquisition was valued at $253 million, including the assumption of
debt.
Step One of the Coleman acquisition was recorded under the purchase method
of accounting; and accordingly, the results of operations of Coleman for March
30, 1998 and March 31, 1998 are included in the accompanying condensed
consolidated statement of operations. The purchase price of Coleman has been
allocated to individual assets acquired and liabilities assumed based on
preliminary estimates of fair market value at the date of acquisition. The
preliminary fair value of assets acquired was approximately $735 million (of
which $27 million was cash) and approximately $1,349 million of liabilities
were assumed. The excess of purchase price over net assets acquired of $1,301
million has been classified as goodwill and is being amortized on a
straight-line basis over 40 years. The allocation of purchase price for the
acquisition of Coleman will be revised when additional information concerning
asset and liability valuations is obtained. Adjustments, which could be
significant, will be made during the allocation period based on detailed
reviews of the fair values of assets acquired and liabilities assumed and could
result in a substantial increase in goodwill. Step Two of the Coleman
transaction will be accounted for under the purchase method of accounting on
the date of consummation.
The First Alert and Signature Brands acquisitions will be accounted for
under the purchase method of accounting in the second quarter of 1998 and
accordingly, the results of operations of First Alert and Signature Brands will
be included in the Company's consolidated financial statements from April 3,
1998 forward.
The following unaudited pro forma financial information for the Company
gives effect to Step One of the Coleman acquisition as if it had occurred at
the beginning of the fiscal year for each of the periods presented. These pro
forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which actually would have
occurred had the acquisition been consummated on the date indicated, or which
may result in the future. The unaudited pro forma results follow (in thousands,
except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1998(A) MARCH 30, 1997(B)
-------------------- -------------------
<S> <C> <C>
Net sales .............................................. $ 473,995 $548,914
Net earnings (loss) before extraordinary items ......... (57,341) 5,878
Diluted earnings (loss) per share
before extraordinary items ............................ (.57) .07
</TABLE>
- ----------------
(a) Net loss before extraordinary items for the period March 31, 1998 includes
the following one time charges incurred by Coleman: (i) a $15.7 million
after-tax gain from the sale of Coleman Safety and Security Products,
Inc., (ii) $7.1 million of costs associated with the acquisition of
Coleman by the Company, (iii) the write off of $2.1 million (net of tax)
of capitalized costs associated with the installation of new software
which will be abandoned as a result of the acquisition by the Company,
(iv) $1.3 million (net of tax) of costs to terminate a license agreement
with a former affiliate of Coleman and (v) the write off of $1.7 million
of unrealized deferred tax assets as a result of the change of control of
Coleman.
(b) Net earnings before extraordinary items for the period ended March 30, 1997
include a charge of $2.4 million, net of tax, related to severance costs
of certain executives of Coleman.
6
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
3. LONG TERM DEBT
In order to finance the acquisitions described in Note 2 and refinance
substantially all of the indebtedness of the Company, Coleman, Signature Brands
and First Alert, the Company consummated (i) an offering (the "Offering") of
Zero Coupon Convertible Senior Subordinated Debentures due 2018 (the
"Debentures") at a yield to maturity of 5% (or approximately $2,014 million
principal amount at maturity) in March 1998 which netted approximately $730
million of proceeds to Sunbeam and (ii) entered into a revolving and term
credit facility ("New Credit Facility") in April 1998 as further described
below. The Debentures are exchangeable for shares of common stock of the
Company at an initial conversion rate of 6.575 shares for each $1,000 principal
amount at maturity of the Debentures, subject to adjustment upon the occurrence
of certain events.
The New Credit Facility, as amended, provides for aggregate borrowings of
up to $1.7 billion pursuant to (i) a Revolving Credit Facility in an aggregate
principal amount of up to $400 million (the "Revolving Credit Facility"), (ii)
a Tranche A Term Loan in an aggregate principal amount of up to $800 million
(the "Tranche A Term Loan") and (iii) a Tranche B Term Loan in an aggregate
principal amount of up to $500 million (the "Tranche B Term Loan"). The
Revolving Credit Facility and Tranche A Term Loan mature on March 31, 2005 and
the Tranche B Term Loan matures on September 30, 2006. Interest accrues at the
Company's option, (i) at the London Interbank Offered Rate ("LIBOR") plus an
agreed upon interest margin which varies depending upon the Company's leverage
ratio and whether such interest rate applies to the Revolving Credit Facility,
Tranche A Term Loan or Tranche B Term Loan or (ii) at the base rate of the
administrative agent (generally the higher of the prime commercial lending rate
of the administrative agent or the Federal Funds Rate plus 1/2 of 1%) plus an
agreed upon interest margin which varies depending upon Sunbeam's leverage
ratio and whether such interest rate applies to the Revolving Credit Facility,
Tranche A Term Loan or Tranche B Term Loan. Borrowings under the New Credit
Facility will be secured by a pledge of the stock of certain of the Company's
subsidiaries and, at the lender's request, by a security interest in
substantially all of the assets of the Company and its subsidiaries. The New
Credit Facility contains covenants customary for credit facilities of a similar
nature, including limitations on the ability of the Company and its
subsidiaries to engage in certain transactions. The Company is also required to
comply with certain financial covenants and ratios.
In April and May 1998, the Company drew a total of $1,265 million of term
loans and $50 million of revolving credit loans under the New Credit Facility
bearing weighted average interest rates of approximately 8%.
As a result of the repayment of certain indebtedness of CLN Holdings and
Coleman the Company will recognize a pre-tax extraordinary charge of
approximately $100 million in the second quarter of 1998.
7
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
4. COMPREHENSIVE INCOME
The company adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), REPORTING COMPREHENSIVE INCOME, effective January 1, 1998. SFAS
130 establishes standards for reporting and display of comprehensive income and
its components in financial statements. The components of the Company's
comprehensive income are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
MARCH 31, MARCH 30,
1998 1997
------------- ----------
<S> <C> <C>
Net income (loss) .................................................... $ (44,593) $ 6,848
Foreign currency translation adjustment, net of income taxes ......... (566) (702)
--------- -------
Comprehensive income (loss) .......................................... $ (45,159) $ 6,146
========= =======
</TABLE>
5. SUPPLEMENTAL FINANCIAL STATEMENT DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 28,
1998 1997
------------- -------------
<S> <C> <C>
Inventories:
Finished goods .................................... $ 378,804 $ 142,976
Work in process ................................... 55,630 26,237
Raw materials and supplies ........................ 140,675 86,967
---------- ----------
$ 575,109 $ 256,180
========== ==========
Property, plant and equipment:
Land .............................................. $ 9,143 $ 1,793
Buildings and improvements ........................ 156,615 98,054
Machinery and equipment ........................... 341,509 245,824
---------- ----------
507,267 345,671
Accumulated depreciation and amortization ......... (104,088) (104,774)
---------- ----------
$ 403,179 $ 240,897
========== ==========
Trademarks and trade names:
Gross ............................................. $ 237,095 $ 237,095
Accumulated amortization .......................... (44,213) (42,723)
---------- ----------
$ 192,882 $ 194,372
========== ==========
</TABLE>
THREE MONTHS ENDED
---------------------------
MARCH 31, MARCH 30,
1998 1997
----------- -------------
Cash paid during the period for:
Interest ........................ $5,442 $ 1,103
====== =========
Income taxes, (refunds) ......... $ 381 $ (11,920)
====== =========
8
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
6. LEGAL PROCEEDINGS
Within the last month, at least four purported class action lawsuits were
filed in the United States District Court for the Southern District of Florida
against Sunbeam and certain of its officers and directors alleging violations
of the federal securities laws. The complaints in the lawsuits are essentially
the same and allege that Sunbeam issued a series of materially false and
misleading statements regarding its 1997 fourth quarter and 1998 first quarter
sales and earnings and/or that Sunbeam misrepresented and/or omitted material
information in its public filings and statements concerning its business
operations, sales and sales trends for the purpose of artificially inflating
the market price of Sunbeam common stock. All of the lawsuits seek unspecified
money damages. Sunbeam believes that these lawsuits are without merit and
intends to vigorously defend the lawsuits.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
accompanying condensed consolidated financial statements for the three months
ended March 31, 1998 and March 30, 1997.
Net sales for the three months ended March 31, 1998 were $244.3 million, a
decrease of $9.2 million (3.6%) from the comparable period of the prior year.
First quarter 1998 sales included $14.8 million of Coleman's sales from the
completion of Step One of the Coleman acquisition on March 30, 1998 as further
described below and in Note 2 to the condensed consolidated financial
statements. Sales for the first quarter of 1997 included approximately $14.4
million from certain divested product lines (time and temperature products and
Counselor/registered trademark/ and Borg/registered trademark/ branded scales)
and inventory liquidations from the Company's 1996 SKU rationalization program.
Excluding these items, sales declined 4.0 % from the first quarter of 1997.
Domestic sales (excluding Coleman), which represented approximately 74% of
total sales during the quarter, declined 15.4%. While domestic sales across all
of the Company's product categories (Appliances, Personal Care & Comfort,
Health at Home, Away from Home and Outdoor Cooking) fell short of 1997 due to
lower price realization and unit volume declines, the majority of the sales
decline was in the Outdoor Cooking category and was as a result of lower than
anticipated retail sell-through during the early stages of the 1998 retail
selling season for these products. The Company initiated a $7 million national
advertising campaign for Outdoor Cooking products late during the first quarter
of 1998 to further stimulate retail-sell through during the remainder of the
season, including the peak mid-May to July 4 period. To ensure the continuation
of improved customer service levels during the remainder of the season, the
Company sold approximately $29 million of Outdoor Cooking products on a "bill
and hold" basis during the first quarter. While selected point-of-sale data for
Outdoor Cooking products from certain major customers in April 1998 has been
generally favorable, it now appears unlikely that the Company will recoup
certain lost volume through incremental business generated during the remainder
of the 1998 selling season. Based on the current sales outlook and existing
retail inventory levels for Outdoor Cooking products, the Company now
anticipates experiencing a sales decline in this category during the second
quarter of 1998 as compared to the prior year.
International sales, which represented 26% of total revenues (excluding
Coleman) during the first quarter, grew 14.0% over the first quarter of 1997.
This sales growth was driven primarily by improved distribution and new product
sales in Latin America, including Mexico and Venezuela, offset by declines in
sales of Outdoor Cooking products in Europe and Canada.
The gross margin percentage for the first quarter of 1998 decreased 13.3
percentage points to 13.4%. The margin decline was primarily driven by margin
erosion in the Company's Appliance, Health at Home and Outdoor Cooking
categories. In the Appliance and Health at Home categories, the margin erosion
was due to a decline in overall unit price realization from 1997 levels. In the
Outdoor Cooking category, the gross margin decline was attributable to an
adverse product sales mix, a failure to realize anticipated price realization,
delays in the launch of certain higher price-point gas grills and higher
initial warranty costs on a new grill model. The adverse product sales mix was
a result of experiencing low retail sell-through of higher margin grills during
the first quarter and a decline in sales of higher margin accessory items due
to certain lost retail placements.
The Company continuously monitors future production plans at all of its
facilities based on current inventory levels and anticipated new demand. The
Company is currently evaluating whether to begin the second quarter season-end
ramp down of production at its Neosho Outdoor Cooking products facility earlier
than previously planned. If such action is taken, future operating results for
the 1998 grill season would be adversely impacted due to unabsorbed fixed
factory overhead during the second and third quarters and potential
unanticipated inventory carrying costs.
The Company experienced an operating loss of $4.8 million during the first
quarter of 1998 (excluding the impact of the $31.2 million one-time special
compensation charge described below) compared to operating earnings of $34.8
million in 1997. This operating loss was substantially all related
10
<PAGE>
to the decline in gross margins and lower sales. First quarter 1998 selling,
general and administrative ("SG&A") expenses included a one-time special charge
of $31.2 million related to new employment agreements with the Company's
Chairman and Chief Executive Officer and two other senior officers and $3.7
million related to Coleman's operations for March 30, 1998 and March 31, 1998.
SG&A expense excluding these items was $33.9 million, essentially even with the
first quarter of 1997. Lower administrative costs in 1998 were offset by higher
distribution and warehousing costs due to increased levels of inventory.
Interest expense and other, net increased from $2.1 million in the first
quarter of 1997 to $7.4 million in 1998 primarily related to higher borrowing
levels in the current year for increased working capital and interest expense
related to the Company's zero coupon convertible senior subordinated debentures
issued on March 19, 1998 at a 5% yield to maturity that netted approximately
$730 million of proceeds to the Company as further described in Note 3 to the
condensed consolidated financial statements. In addition, the Company
experienced higher foreign exchange losses in the first quarter of 1998 related
to its Mexican operations and Coleman's operations in Japan.
The effective income tax rate benefit attributable to the operating loss
for the first quarter of 1998 is 10.3% as a result of the non-deductibility of
the $31.2 million special compensation charge for the new employment contracts
described above.
The Company's earnings (loss) per share from continuing operations,
excluding the $.36 per share special compensation charge, was a loss of $.09
per share versus earnings per share from continuing operations in 1997 of $.24.
In March 1998, the Company prepaid a $75.0 million 7.85% industrial revenue
bond related to its Hattiesburg facility originally due in 2009. In connection
with the early extinguishment of this debt, the Company recognized a $5.6
million after tax extraordinary charge ($.07 per share) in the first quarter of
1998.
The Company's discontinued furniture operations, which were sold in March
1997, had revenues of $51.6 million in the first quarter of 1997 prior to the
sale and break-even earnings. The sale of the Company's furniture business
assets (primarily inventory, property, plant and equipment) was completed in
March 1997. The Company received $69 million in cash and retained accounts
receivable related to the furniture business of approximately $50.0 million as
of the closing date. The final purchase price for the furniture business was
subject to a post-closing adjustment which resulted in an additional loss on
disposal of $13.7 million, net of income tax benefits, in the first quarter of
1997.
LIQUIDITY AND CAPITAL RESOURCES
As further described in Note 2 to the condensed consolidated financial
statements, on March 30, 1998 the Company completed the acquisition of CLN
Holdings, Inc. ("CLN Holdings") in exchange for 14,099,749 shares of the
Company's common stock and cash of approximately $160 million, financed from
proceeds of the zero coupon convertible senior subordinated debentures
discussed above. As a result of the acquisition of CLN Holdings, the Company
became the indirect owner of approximately 80.9% of the total number of then
outstanding shares of The Coleman Company, Inc. The Company expects to complete
the acquisition of the remaining shares of Coleman from the minority
shareholders in the summer of 1998 in exchange for approximately 6.7 million
shares of Sunbeam stock and $87 million in cash.
The Coleman acquisition was accounted for under the purchase method of
accounting and accordingly, the condensed consolidated balance sheet at March
31, 1998 reflects the initial allocation of purchase price based on the fair
value of assets acquired and liabilities assumed and the condensed consolidated
statement of operations includes the operating results for Coleman for March 30
and March 31, 1998.
Cash used in operating activities during the first quarter of 1998 was
$143.9 million compared to $22.7 million in the prior year. This increase is
primarily attributable to lower earnings before non-cash charges in 1998 and
increased investments in working capital, including higher accounts receivable
due
11
<PAGE>
to timing of sales during the quarter and extended payment terms under early
buy programs and higher inventories in anticipation of increases in sales that
did not materialize.
Cash used in investing activities reflects the acquisition of CLN
Holdings, net of cash acquired, of $160.6 million during the first quarter of
1998. In 1997, cash provided by investing activities reflected $70.4 million in
proceeds from the sale of assets, businesses and product categories determined
to be non-core to the Company's ongoing operations.
Cash provided by financing activities totaled $456.1 million in 1998 and
reflects net proceeds of $729.6 million from the zero coupon convertible
subordinated debentures, the cancellation of and repayment of all outstanding
balances under the Company's $250 million September 1996 revolving credit
facility, the repayment of certain Coleman debt and the early extinguishment of
the $75.0 million Hattiesburg bond. In addition, cash provided by financing
activities includes $25 million of financing fees related to the Company's new
$1.7 billion revolving and term credit facility ("New Credit Facility") as
further described in Note 3 to the condensed consolidated financial statements
and $19 million of proceeds from the exercise of stock options.
In April 1998, the Company drew $715 million of term loans under the New
Credit Facility to fund the acquisitions of Signature Brands and First Alert as
further described in Note 2 to the condensed consolidated financial statements
and to refinance certain debt of the acquired companies. The Company drew an
additional $550 million of term loans and $50 million of revolving loans in May
1998 to refinance the prepayment of certain CLN Holdings notes. In connection
with these debt refinancings, the Company expects to record a pre-tax
extraordinary charge of approximately $100 million in the second quarter of
1998.
The Company believes its existing cash and cash equivalent balances as
well as its New Credit Facility will be sufficient to finance the completion of
the Coleman acquisition, the restructuring and integration of Coleman,
Signature Brands and First Alert into Sunbeam, and ongoing debt service and
working capital requirements for the foreseeable future.
CAUTIONARY STATEMENTS
Certain of the information contained herein may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, as the same may be amended from time to time (the "Act") and in
releases made by the Securities and Exchange Commission ("SEC") from time to
time. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance, or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. The words "estimate," "project," "intend," "expect"
and similar expressions, when used in connection with the Company, are intended
to identify forward-looking statements. Any such forward-looking statements are
based on various factors and derived utilizing numerous important assumptions
and other important factors that could cause actual results to differ
materially from those in the forward-looking statements. These Cautionary
Statements are being made pursuant to the Act, with the intention of obtaining
the benefits of the "Safe Harbor" provisions of the Act. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements as a result of various factors,
including but not limited to those set forth below. Important assumptions and
other important factors that could cause actual results to differ materially
from those in the forward-looking statements include, but are not limited to:
(i) risks associated with leverage, including cost increases due to rising
interest rates; (ii) risks associated with Sunbeam's ability to continue its
strategy of growth through acquisitions; (iii) risks associated with Sunbeam's
ability to successfully integrate all of its recent acquisitions; (iv) risks
associated with Sunbeam's ability to increase revenues by leveraging sales of
Sunbeam, Signature Brands and First Alert products through Coleman's existing
distribution channels, and by leveraging sales of Coleman, Signature Brands and
First Alert products through Sunbeam's existing distribution channels,
particularly in foreign markets; (v) risks associated with Sunbeam's ability to
realize the anticipated cost
12
<PAGE>
savings of its restructuring program, including the timing thereof; (vi) risks
associated with Sunbeam's ability to implement its planned divestitures,
including the amount of the net proceeds to be realized and the timing thereof;
(vii) Sunbeam's ability to make effective acquisitions in the future and to
successfully integrate newly acquired businesses into existing operations and
the risks associated with such newly acquired businesses; (viii) Sunbeam's and
Coleman's ability to maintain and increase market share for their respective
products at anticipated margins; (ix) Sunbeam's ability to successfully
introduce new products and to provide on-time delivery and a high level of
customer service; (x) changes in laws and regulations, including changes in tax
rates, accounting standards, environmental laws, occupational, health and
safety laws; (xi) access to foreign markets together with foreign economic
conditions, including currency fluctuations; (xii) uncertainty as to the effect
of competition in Sunbeam's or Coleman's existing and potential future lines of
business; (xiii) fluctuations in the cost and availability of raw materials
and/or products in relation to historical levels; (xiv) changes in the
availability and relative costs of labor; (xv) effectiveness of advertising and
marketing programs; (xvi) the effect of, or changes in, general economic
conditions; (xvii) economic uncertainty in Japan, Korea and other Asian
countries, as well as Mexico, Venezuela and other Latin American countries;
(xviii) weather conditions that are adverse to the specific businesses of
Sunbeam and Coleman; and (xix) risks related to product quality, including
excess warranty costs, product liability expense and costs of possible product
recall. Other factors and assumptions not identified above may also be involved
in the derivation of forward-looking statements, and the failure of such other
assumptions to be realized as well as other factors may also cause actual
results to differ materially from those projected. The Company assumes no
obligation to update these forward-looking statements to reflect actual
results, changes in assumptions or changes in other factors affecting such
forward-looking statements.
YEAR 2000
The Company has assessed and continues to assess the impact of the Year
2000 computer issues on its operations, including the development and
implementation of project plans and cost estimates required to make its
information systems infrastructure Year 2000 compliant. The Company recently
completed acquisitions whereby it obtained control of Coleman, Signature Brands
and First Alert and is currently completing preliminary plans for the
integration of the computer systems of these acquired companies into Sunbeam.
Based on preliminary estimates, the Company believes that anticipated spending
necessary to integrate the computer systems of these acquired companies into
Sunbeam systems and upgrade all such systems to become Year 2000 compliant will
be approximately $25 million, however the Company has not yet completed
detailed analysis and integration plans with respect to such acquired
companies.
OTHER
On May 11, 1998 the Company announced its preliminary restructuring and
integration plan for Coleman, Signature Brands and First Alert. In connection
with these activities, the Company expects to incur certain cash costs during
the remainder of 1998 and 1999. Costs related to the closure and exit of
acquired facilities and businesses to be divested will generally be reflected
as an adjustment to the purchase price of the each of Coleman, Signature Brands
and First Alert in accordance with Emerging Issues Task Force Issue ("EITF")
No. 95-3, RECOGNITION OF LIABILITIES IN CONNECTION WITH A PURCHASE BUSINESS
COMBINATION while integration costs not specifically related to the closure and
exit of acquired facilities will be reflected as charges to future operating
results when incurred. Total one-time costs in connection with the
restructuring and integration of the acquisitions, including those reflected as
an adjustment to the purchase price in accordance with EITF 95-3, are expected
to total approximately $210 million pre-tax including cash costs of
approximately $125 million.
On May 11, 1998 the Company also announced the closure of its appliance
manufacturing facilities located in Mexico City and Acuna, Mexico and the
outsourcing of the manufacture of certain components and finished products
later this year. In connection with these closures and outsourcing initiatives,
the Company expects to record cash and non-cash special charges during the
second and third quarters of approximately $65 million to $70 million primarily
related to severance costs,
13
<PAGE>
estimated losses on disposal of excess equipment and inventory and relocation
costs for equipment and tooling. The cash portion of the charge is estimated to
be approximately 30% of the total and the majority of the charge is expected to
be recorded in the second quarter of 1998.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Within the last month, at least four purported class action lawsuits were
filed in the United States District Court for the Southern District of Florida
against Sunbeam and certain of its officers and directors alleging violations
of the federal securities laws. The complaints in the lawsuits are essentially
the same and allege that Sunbeam issued a series of materially false and
misleading statements regarding its 1997 fourth quarter and 1998 first quarter
sales and earnings and/or that Sunbeam misrepresented and/or omitted material
information in its public filings and statements concerning its business
operations, sales and sales trends for the purpose of artificially inflating
the market price of Sunbeam common stock. All of the lawsuits seek unspecified
money damages. Sunbeam believes that these lawsuits are without merit and
intends to vigorously defend the lawsuits.
ITEM 5. OTHER INFORMATION
The Company has announced plans for a significant realignment of the
businesses recently acquired by it, The Coleman Company, Inc., Signature Brands
USA, Inc. and First Alert, Inc. The press release included herewith as Exhibit
99.a sets forth the Company's plans for the restructuring of these companies.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<S> <C>
3 Bylaws of Sunbeam Corporation, as amended.
10.a Credit Agreement dated as of March 30, 1998, among Sunbeam Corporation, the Subsidiary
Borrowers referred to therein, the Lenders party thereto, Morgan Stanley Senior Funding, Inc.,
Bank America National Trust and Savings Association and First Union National Bank.
10.b First Amendment to Credit Agreement dated as of May 8, 1998, among Sunbeam Corporation,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank.
10.c Indenture, dated as of March 25, 1998, by and among the Company and Bank of New York, as
Trustee, with respect to the Zero Coupon Convertible Senior Subordinated Debentures due 2018.
10.d Registration Rights Agreement dated March 25, 1998, by and among the Company and
Morgan Stanley & Co., Inc., with respect to the Zero Coupon Convertible Senior Subordinated
Debentures due 2018.
27 Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.a Press Release dated May 11, 1998, regarding first quarter 1998 earnings and restructure of the
Sunbeam acquired companies.
</TABLE>
(b) Reports on Form 8-K
The Company filed Reports on Form 8-K on April 13, 1998 as amended by Form
8-K/A on May 11, 1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNBEAM CORPORATION
Date: May 15, 1998 By: /s/ Russell A. Kersh
------------------------------------
Russell A. Kersh
Executive Vice President,
Finance and Administration
(Principal Financial Officer
and duly authorized to sign
on behalf of the Registrant)
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3 Bylaws of Sunbeam Corporation, as amended.
10.a Credit Agreement dated as of March 30, 1998, among Sunbeam Corporation, the Subsidiary
Borrowers referred to therein, the Lenders party thereto, Morgan Stanley Senior Funding, Inc.,
Bank America National Trust and Savings Association and First Union National Bank.
10.b First Amendment to Credit Agreement dated as of May 8, 1998, among Sunbeam Corporation,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank.
10.c Indenture, dated as of March 25, 1998, by and among the Company and Bank of New York, as
Trustee, with respect to the Zero Coupon Convertible Senior Subordinated Debentures due 2018.
10.d Registration Rights Agreement dated March 25, 1998, by and among the Company and
Morgan Stanley & Co., Inc., with respect to the Zero Coupon Convertible Senior Subordinated
Debentures due 2018.
27 Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.a Press Release dated May 11, 1998, regarding first quarter 1998 earnings and restructure of the
Sunbeam acquired companies.
</TABLE>
BY-LAWS
OF
SUNBEAM CORPORATION
---------------------
ARTICLE I
OFFICES
Section 1.1 REGISTERED OFFICE. The registered office of the Corporation
within the State of Delaware shall be located at the principal place of business
in said State of such corporation or individual acting as the Corporation's
registered agent in Delaware.
Section 1.2 OTHER OFFICES. The Corporation may also have offices and
places of business at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 PLACE OF MEETINGS. All meetings of stockholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Delaware as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2.2 ANNUAL MEETINGS. The annual meeting of stockholders for the
election of directors shall be held at such time on such day, other than a legal
holiday, as the Board of Directors in each such year determines. At the annual
meeting, the stockholders entitled to vote for the election of directors shall
elect, by a plurality vote, a Board of Directors and transact such other
business as may properly come before the meeting.
Section 2.3 SPECIAL MEETINGS. Special meetings of stockholders, for any
purpose or purposes, may be called by the Chairman of the Board of Directors.
Any such request shall state the purpose or purposes of the proposed meeting. At
any special meeting of stockholders, only such business may be transacted as is
related to the purpose or purposes set forth in the notice of such meeting.
Section 2.4 NOTICE OF MEETINGS. Written notice of every meeting of
stockholders, stating the place, date and hour thereof and, in the case of a
special meeting of stockholders, the purpose or purposes thereof and the person
or persons by whom or at whose direction such meeting has been called and such
notice is being issued, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at
<PAGE>
the direction of the Chairman of the Board, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Nothing herein contained shall preclude the stockholders from
waiving notice as provided in Section 4.1 hereof.
Section 2.5 QUORUM. The holders of a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote, represented in
person or by proxy, shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If, however, such quorum
shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record date for the
adjourned meeting, or if the adjournment is for more than thirty (30) days, a
notice of such adjourned meeting shall be given as provided in Section 2.4
hereof, but such notice may be waived as provided in Section 4.1 hereof.
Section 2.6 VOTING. At each meeting of stockholders, each holder of
record of shares of stock entitled to vote shall be entitled to vote in person
or by proxy, and each such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the record date fixed
by the Board of Directors or prescribed by law and, if a quorum is present, a
majority of the shares of such stock present or represented at any meeting of
stockholders shall be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision of law, by these
By-Laws or by the Certificate of Incorporation.
Section 2.7 PROXIES. Every stockholder entitled to vote at a meeting or
by consent without a meeting may authorize another person or persons to act for
him by proxy. Each proxy shall be in writing executed by the stockholder giving
the proxy or by his duly authorized attorney. No proxy shall be valid after the
expiration of three (3) years from its date, unless a longer period is provided
for in the proxy. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it, or his legal representatives or assigns
except in those cases where an irrevocable proxy permitted by statute has been
given.
Section 2.8 CONSENTS. Whenever a vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provision of statute, the Certificate of Incorporation or these
By-Laws, the meeting, prior notice thereof and vote of stockholders may be
dispensed with if the holders of shares having not less than the minimum number
of votes that would have been necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted
shall consent in writing to the taking of such action. Where corporate action is
taken in such matter by less than unanimous written consent, prompt written
notice of the taking of such action shall be given thereto.
<PAGE>
Section 2.9 STOCK RECORDS. The Secretary or agent having charge of the
stock transfer books shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order and showing
the address of and the number and class and series, if any, of shares held by
each. For a period of ten (10) days prior to such meeting, such list shall be
kept at the principal place of business of the Corporation or at the office of
the transfer agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder at any time during the meeting.
ARTICLE III
DIRECTORS
Section 3.1 NUMBER. The number of directors of the Corporation which
shall constitute the entire Board of Directors shall not be less than three nor
more than twelve as fixed from time to time by a vote of a majority of the
entire Board, provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in office.
Section 3.2 RESIGNATION AND REMOVAL. Any director may resign at any
time upon notice of resignation to the Corporation. Any director may be removed
at any time by vote of the stockholders then entitled to vote for the election
of directors at a special meeting called for that purpose, either with or
without cause.
Section 3.3 NEWLY CREATED DIRECTORSHIP AND VACANCIES. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason whatsoever shall be
filled by vote of the Board. If the number of directors then in office is less
than a quorum, such newly created directorships and vacancies may be filled by a
vote of a majority of the directors then in office. Any director elected to fill
a vacancy shall be elected until the next meeting of stockholders at which the
election of directors is in the regular course of business, and until his
successor has been elected and qualified.
Section 3.4 POWERS AND DUTIES. Subject to the applicable provisions of
law, these ByLaws or the Certificate of Incorporation, but in furtherance and
not in limitation of any rights therein conferred, the Board of Directors shall
have the control and management of the business and affairs of the Corporation
and shall exercise all such powers of the Corporation and do all such lawful
acts and things as may be exercised by the Corporation.
Section 3.5 PLACE OF MEETINGS. All meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3.6 ANNUAL MEETINGS. An annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order to legally constitute the
<PAGE>
meeting, provided a quorum shall be present, or the newly elected directors may
act by the written consent of all of such directors.
Section 3.7 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice, and at such time and at such place as
shall from time to time be fixed, in advance, by resolution of the Board.
Section 3.8 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board. Written notice of each
special meeting of directors stating the time and place of the meeting shall be
given to each director at least twenty-four (24) hours before such meeting,
provided that neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 3.9 NOTICE OF MEETINGS. Notice of each special meeting of the
Board shall be given by the Secretary or an Assistant Secretary and shall state
the place, date and time of the meeting. Notice of each such meeting shall be
given orally or shall be mailed to each director at his residence or usual place
of business. If notice of less than three (3) days is given, it shall be oral,
whether by telephone or in person, or sent by special delivery mail, facsimile
or telegraph. If mailed, the notice shall be given when deposited in the United
States mail, postage prepaid. Notice of any adjourned meeting, including the
place, date and time of the new meeting, shall be given to all directors not
present at the time of the adjournment, as well as to the other directors unless
the place, date and time of the new meeting is announced at the adjourned
meeting. Nothing herein contained shall preclude the directors from waiving
notice as provided in Section 4.1 hereof.
Section 3.10 QUORUM AND VOTING. At all meetings of the Board of
Directors, a majority of the entire Board shall be necessary to and shall
constitute a quorum for the transaction of business, unless otherwise provided
by any applicable provision of law, by these By-Laws, or by the Certificate of
Incorporation. The act of a majority of the directors present at the time of the
vote, if a quorum is present at such time, shall be the act of the Board of
Directors, unless otherwise provided by an applicable provision of law, by these
By-Laws or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, until a quorum shall be present.
Section 3.11 COMPENSATION. The salaries and other compensation of
directors for services to the Corporation as directors, officers or otherwise
shall be fixed by, or in the manner prescribed by, the Board of Directors,
irrespective of any personal interest of any of its members.
Section 3.12 BOOKS AND RECORDS. The directors may keep the books of the
Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 3.13 ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the Board, or by a committee of the Board, may be taken without a
meeting if all members
<PAGE>
of the Board or the committee, as the case may be, consent in writing to the
adoption of a resolution authorizing the action. Any such resolution and the
written consents thereto by the members of the Board or committee shall be filed
with the minutes of the proceedings of the Board or committee.
Section 3.14 TELEPHONE PARTICIPATION. Any one or more members of the
Board, or any committee of the Board, may participate in a meeting of the Board
or committee by means of a conference telephone call or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 3.15 EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution adopted by the Board, appoint an Executive Committee consisting of
not less than three (3) directors, at least one of whom is not a beneficial
owner, or the representative of a beneficial owner, of 10% or more of the
Corporation's outstanding common stock. The Executive Committee shall keep
minutes of its meetings and report the same to the Board. The Executive
Committee, subject to the last sentence of Section 3.16 of these Bylaws, shall
have and may exercise all of the powers of the Board.
Section 3.16 OTHER COMMITTEES OF THE BOARD. The Board, by resolution
adopted by a majority of the entire Board, may designate such other committees,
each consisting of one or more directors and having such title as the Board may
consider to be a proper description of its function. The Board may designate one
or more directors as alternate members of any such other committee. Such
alternate members may replace any absent member or members at any meeting of
such other committee. Each other committee (including the members thereof) shall
serve at the pleasure of the Board and shall keep minutes of its meetings and
report the same to the Board. Except as otherwise provided by law, each such
committee, to the extent provided in the resolution establishing it, shall have
and may exercise all the authority of the Board with respect to all matters.
However, no such other committee shall have power or authority to:
A. amend the Certificate of Incorporation;
B. adopt an agreement of merger or consolidation;
C. recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets;
D. recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
E. amend these By-Laws; and
F. unless expressly so provided by resolution of the Board,
(i) declare a dividend; or (ii) authorize the issuance of shares of the
Corporation of any class.
<PAGE>
Section 3.17 MANDATORY RETIREMENT. No nominee for election as a
director shall be seventy (70) years or older on the date of election. A
director who attains the age of seventy (70) during his or her term of office
shall complete his or her term but shall not be eligible to stand for reelection
thereafter.
ARTICLE IV
WAIVER
Section 4.1 WAIVER. Whenever a notice is required to be given by any
provision of law, by these By-Laws, or by the Certificate of Incorporation, a
written waiver, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to such notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
Section 5.1 EXECUTIVE OFFICERS. The officers of the Corporation shall
be the Chairman of the Board, a Treasurer and Secretary. Any person may hold two
or more of such offices. The officers of the Corporation shall be elected
annually (and from time to time by the Board of Directors, as vacancies occur),
at the annual meeting of the Board of Directors following the meeting of
stockholders at which the Board of Directors was elected.
Section 5.2 OTHER OFFICERS. The Board of Directors may appoint such
other officers and agents, including a Chief Executive Officer, President, Chief
Financial Officer, Vice President, Assistant Vice Presidents, Secretaries,
Assistant Secretaries and Assistant Treasurers, as it shall at any time or from
time to time deem necessary or advisable.
Section 5.3 AUTHORITIES AND DUTIES. All officers, as between themselves
and the Corporation, shall have such authority and perform such duties in the
management of business and affairs of the Corporation as may be provided in
these By-Laws, or, to the extent not so provided, as may be prescribed by the
Board of Directors.
Section 5.4 TENURE AND REMOVAL. The officers of the Corporation shall
be elected or appointed to hold office until their respective successors are
elected or appointed. All officers shall hold office at the pleasure of the
Board of Directors, and any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors for cause or
without cause at any regular or special meeting.
Section 5.5 VACANCIES. Any vacancy occurring in any office of the
Corporation, whether because of death, resignation or removal, with or without
cause, or any other reason, shall be filled by the Board of Directors.
<PAGE>
Section 5.6 COMPENSATION. The salaries and other compensation of all
officers and agents of the Corporation shall be fixed by or in the manner
prescribed by the Board of Directors.
Section 5.7 CHAIRMAN OF THE BOARD. The Chairman of the Board shall have
the general charge of the business and affairs of the Corporation and shall
preside at all meetings of the stockholders and the directors. The Chairman
shall see to it that all resolutions and orders of the Board are carried into
effect, and, in connection therewith, shall be authorized to delegate the other
executive officers such of his powers and duties as Chairman of the Board at
such times and in such manner as he may deem advisable. In the event that the
Corporation shall at any time or from time to time own or have power to vote any
securities of any other issuer, such securities shall be voted by the Chairman
of the Board. The Chairman of the Board shall perform such other duties as are
properly required of him by the Board of Directors.
Section 5.8 PRESIDENT. The President, if and when appointed or elected,
shall assist the Chairman of the Board in the management of the business of the
Corporation and, in the absence of the Chairman, he shall preside at all
meetings of the stockholders and the directors and exercise the other powers and
perform the other duties of the Chairman or designate the executive officers of
the Corporation by whom such other powers shall be exercised and other duties
performed; and he shall have such other powers and duties as the Board of
Directors or Chairman of the Board may from time to time prescribe. Except where
by law or by order of the Board of Directors the signature of the Chairman of
the Board is required, the President shall have the same power as the Chairman
of the Board to execute instruments on behalf of the Corporation.
Section 5.9 SECRETARY. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and shall record all
proceedings taken at such meetings in a book to be kept for that purpose; he
shall see that all notices of meetings of stockholders and meetings of the Board
of Directors are duly given in accordance with the provisions of these ByLaws or
as required by law; he shall be the custodian of the records and of the
corporate seal or seals of the Corporation; he shall have authority to affix the
corporate seal or seals to all documents, the execution of which, on behalf of
the Corporation, under its seal, is duly authorized, and when so affixed it may
be attested by his signature; and in general, he shall perform all duties
incident to the office of the Secretary of a corporation, and such other duties
as the Board of Directors may from time to time prescribe.
Section 5.10 TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit, or cause to be deposited, in the name and to the
credit of the Corporation, all moneys and valuable effects in such banks, trust
companies, or other depositories as shall from time to time be selected by the
Board of Directors. He shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; he shall render to the
Chairman of the Board and to each member of the Board of Directors, whenever
requested, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation; and in general, he shall perform all of
the duties incident to the office of the Treasurer of a corporation, and such
other duties as the Board of Directors may from time to time prescribe.
<PAGE>
Section 5.11 OTHER OFFICERS. The Board of Directors may also elect or
may delegate to the Chairman of the Board the power to appoint such other
officers as it may at any time or from time to time deem advisable, and any
officers so elected or appointed shall have such authority and perform such
duties as the Board of Directors or the Chairman of the Board, if he shall have
appointed them, may from time to time prescribe.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1 FORM AND SIGNATURE. The shares of the Corporation shall be
represented by a certificate signed by the Chairman of the Board or the
President or any Vice President and by the Secretary or any Assistant Secretary
or the Treasurer, or any Assistant Treasurer, and shall bear the seal of the
Corporation or a facsimile thereof. Each certificate representing shares shall
state upon its face (a) that the Corporation is formed under the laws of the
State of Delaware, (b) the name of the person or persons to whom it is issued,
(c) the number of shares which such certificate represents and (d) the par
value, if any, of each share represented by such certificate.
Section 6.2 REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends or other distributions, and to
vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of stock, and shall not be bound to
recognize any equitable or legal claim to or interest in such shares on the part
of any other person.
Section 6.3 TRANSFER OF STOCK. Upon surrender to the Corporation or the
appropriate transfer agent, if any, of the Corporation, of a certificate
representing shares of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the event that the
certificate refers to any agreement restricting transfer of the shares which it
represents, proper evidence of compliance with such agreement, a new certificate
shall be issued to the person entitled thereto, and the old certificate
cancelled and the transaction recorded upon the books of the Corporation.
Section 6.4 LOST CERTIFICATES, ETC. The Corporation may issue a new
certificate for shares in place of any certificate theretofore issued by it,
alleged to have been lost, mutilated, stolen or destroyed, and the Board may
require the owner of such lost, mutilated, stolen or destroyed certificate, or
his legal representatives, to make an affidavit of the fact and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5 RECORD DATE. For the purpose of determining the
stockholders entitled to notice of, or to vote at, any meeting of stockholders
or any adjournment thereof, or to express written consent to any corporate
action without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of
<PAGE>
stock, or for the purpose of any other lawful action, the Board may fix, in
advance, a record date. Such date shall not be more than sixty (60) nor less
than ten (10) days before the date of any such meeting, nor more than sixty (60)
days prior to any other action.
Section 6.6 REGULATIONS. Except as otherwise provided by law, the Board
may make such additional rules and regulations, not inconsistent with these
By-Laws, as it may deem expedient, concerning the issue, transfer and
registration of certificates for the securities of the Corporation. The Board
may appoint, or authorize any officer of officers to appoint, one or more
transfer agents and one or more registrars and may require all certificates for
shares of capital stock to bear the signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 DIVIDENDS AND DISTRIBUTIONS. Dividends and other
distributions upon or with respect to outstanding shares of stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, bonds, property, or in stock of the
Corporation. The Board shall have full power and discretion, subject to the
provisions of the Certificate of Incorporation or the terms of any other
corporate document or instrument to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2 CHECKS, ETC. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as may
from time to time be designated by the Board of Directors.
Section 7.3 SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 7.4 FISCAL YEAR. The fiscal year of the Corporation shall end
on December 31 of each year and each fiscal quarter of the Corporation shall end
on the last day of every third month of each calender year.
Section 7.5 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may authorize
from time to time the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may
designate or as may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board from time to
time. The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these By-Laws, as it may
deem expedient.
<PAGE>
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 8.1 INDEMNIFICATION BY CORPORATION. To the extent permitted by
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) the Corporation shall indemnify
any person against any and all judgments, fines, amounts paid in settling or
otherwise disposing of threatened, pending or completed actions, suits or
proceedings, whether by reason of the fact that he, his testator or intestate
representative, is or was a director or officer of (or a plan fiduciary or plan
administrator of any employee benefit plan sponsored by) the Corporation or of
(or by) any other corporation of any type or kind, domestic or foreign, which he
served in any capacity at the request of the Corporation. Expenses so incurred
by any such person in defending or investigating a threatened or pending civil
or criminal action or proceeding shall at his request be paid by the Corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized by this Article VIII. The foregoing
right of indemnification shall in no way be exclusive of any other rights or
indemnification to which any such person may be entitled, under any By-law,
agreement, vote of shareholders or disinterested directors or otherwise, and
shall inure to the benefit of the heirs, executors and administrators of such
person.
ARTICLE IX
ADOPTION AND AMENDMENTS
Section 9.1 POWER TO AMEND. These By-Laws may be amended or repealed
and any new By-Laws may be adopted by the Board of Directors; provided that
these By-Laws and any other By-Laws amended or adopted by the Board of Directors
may be amended, may be reinstated, and new By-Laws may be adopted, by the
stockholders of the Corporation entitled to vote at the time for the election of
directors.
EXHIBIT 10.a
CREDIT AGREEMENT
Dated as of March 30, 1998
among
SUNBEAM CORPORATION,
The SUBSIDIARY BORROWERS referred to herein,
The LENDERS party hereto,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Documentation Agent
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
-------------------------------------------
MORGAN STANLEY SENIOR FUNDING, INC.,
as Arranger
<PAGE>
TABLE OF CONTENTS
---------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINED TERMS.....................................1
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS...........28
SECTION 1.03. TERMS GENERALLY..................................28
SECTION 1.04. ACCOUNTING TERMS; GAAP...........................29
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS......................................29
SECTION 2.02. LOANS AND BORROWINGS.............................30
SECTION 2.03. REQUESTS FOR BORROWINGS..........................30
SECTION 2.04. LETTERS OF CREDIT................................31
SECTION 2.05. FUNDING OF BORROWINGS............................36
SECTION 2.06. INTEREST ELECTIONS...............................37
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS.........38
SECTION 2.08. MATURITY OF LOANS; EVIDENCE OF DEBT..............39
SECTION 2.09. MANDATORY REPAYMENT AND PREPAYMENT OF LOANS AND
REDUCTION OF COMMITMENTS..................................40
SECTION 2.10. OPTIONAL PREPAYMENT OF LOANS.....................45
SECTION 2.11. FEES.............................................45
SECTION 2.12. INTEREST.........................................47
SECTION 2.13. ALTERNATE RATE OF INTEREST.......................48
SECTION 2.14. INCREASED COSTS .................................48
SECTION 2.15. BREAK FUNDING PAYMENTS...........................50
SECTION 2.16. TAXES............................................50
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT;
SHARING OF SET-OFFS.......................................51
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS...53
SECTION 2.19. SUBSIDIARY BORROWINGS............................54
SECTION 2.20. COMPETITIVE BID AMENDMENT........................55
<PAGE>
PAGE
----
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. ORGANIZATION; POWERS.............................55
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY....................56
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS.............56
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE..56
SECTION 3.05. PROPERTIES.......................................57
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS.............57
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS..............58
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS............58
SECTION 3.09. TAXES............................................58
SECTION 3.10. ERISA............................................58
SECTION 3.11. DISCLOSURE.......................................59
SECTION 3.12. GUARANTORS.......................................59
SECTION 3.13. COLLATERAL DOCUMENTS.............................59
SECTION 3.14. ACQUISITION DOCUMENTS............................59
SECTION 3.15. SOLVENCY.........................................59
SECTION 3.16. OUTSTANDING INDEBTEDNESS.........................59
ARTICLE 4
CONDITIONS
SECTION 4.01. EFFECTIVE DATE...................................60
SECTION 4.02. TRANCHE A EFFECTIVE DATE.........................60
SECTION 4.03. TRANCHE B EFFECTIVE DATE.........................60
SECTION 4.04. EACH CREDIT EVENT................................61
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION.......61
SECTION 5.02. NOTICES OF MATERIAL EVENTS.......................63
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS...................64
SECTION 5.04. PAYMENT OF OBLIGATIONS...........................64
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE.............64
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS.............64
SECTION 5.07. COMPLIANCE WITH LAWS AND CONTRACTS...............64
SECTION 5.08. USE OF PROCEEDS AND LETTERS OF CREDIT............65
SECTION 5.09. FURTHER ASSURANCES...............................65
SECTION 5.10. APPROVED HEDGING AGREEMENTS......................67
SECTION 5.11. LIENS ON ASSETS..................................67
ii
<PAGE>
PAGE
----
SECTION 5.12. REPAYMENT OF OUTSTANDING INDEBTEDNESS............67
SECTION 5.13. YEAR 2000 COMPATIBILITY..........................67
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. INDEBTEDNESS.....................................68
SECTION 6.02. LIENS............................................69
SECTION 6.03. FUNDAMENTAL CHANGES; ASSET SALES.................70
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS..............................................71
SECTION 6.05. HEDGING AGREEMENTS...............................71
SECTION 6.06. RESTRICTED PAYMENTS; VOLUNTARY PAYMENTS..........72
SECTION 6.07. TRANSACTIONS WITH AFFILIATES.....................72
SECTION 6.08. RESTRICTIVE AGREEMENTS...........................73
SECTION 6.09. MODIFICATION OF CERTAIN DOCUMENTS................73
SECTION 6.10. ACCOUNTING CHANGES...............................74
SECTION 6.11. CAPITAL EXPENDITURES.............................74
SECTION 6.12. LEVERAGE RATIO...................................74
SECTION 6.13. INTEREST COVERAGE RATIO..........................75
SECTION 6.14. FIXED CHARGE COVERAGE RATIO......................75
SECTION 6.15. EBITDA CALCULATIONS..............................75
ARTICLE 7
EVENTS OF DEFAULT
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. APPOINTMENT, POWERS AND IMMUNITIES...............78
SECTION 8.02. RELIANCE BY ADMINISTRATIVE AGENT.................79
SECTION 8.03. APPOINTMENT OF SUB-AGENTS........................80
SECTION 8.04. SUCCESSOR ADMINISTRATIVE AGENTS..................80
SECTION 8.05. NON-RELIANCE ON ADMINISTRATIVE AGENT AND
OTHER LENDERS.............................................80
SECTION 8.06. OTHER AGENTS.....................................81
ARTICLE 9
GUARANTY
SECTION 9.01. THE GUARANTY.....................................81
SECTION 9.02. GUARANTY UNCONDITIONAL...........................81
iii
<PAGE>
SECTION 9.03. DISCHARGE ONLY UPON PAYMENT IN FULL;
REINSTATEMENT IN CERTAIN CIRCUMSTANCES....................82
SECTION 9.04. WAIVER BY THE PARENT.............................82
SECTION 9.05. SUBROGATION......................................82
SECTION 9.06. STAY OF ACCELERATION.............................83
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES.........................................83
SECTION 10.02. WAIVERS; AMENDMENTS.............................84
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER..............85
SECTION 10.04. SUCCESSORS AND ASSIGNS..........................87
SECTION 10.05. SURVIVAL........................................89
SECTION 10.06. COUNTERPARTS; INTEGRATION.......................90
SECTION 10.07. SEVERABILITY....................................90
SECTION 10.08. RIGHT OF SETOFF.................................90
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS........................................91
SECTION 10.10. WAIVER OF JURY TRIAL............................91
SECTION 10.11. HEADINGS........................................92
SECTION 10.12. CONFIDENTIALITY.................................92
SECTION 10.13. INTEREST RATE LIMITATION........................93
iv
<PAGE>
SCHEDULES:
Schedule 2.01 -- Commitments
Schedule 3.01(a) -- Domestic Subsidiaries
Schedule 3.01(b) -- Foreign Subsidiaries
Schedule 3.03 -- Defaults and Required Payments
Schedule 3.06 -- Litigation and Environmental Matters
Schedule 3.16 -- Outstanding Indebtedness
Schedule 4.01 -- Conditions to the Effective Date
Schedule 4.02 -- Conditions to Tranche A Effective Date
Schedule 4.03 -- Conditions to Tranche B Effective Date
Schedule 5.08 -- Refinanced Indebtedness
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.08 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Parent Pledge and Security Agreement
Exhibit C -- Form of Subsidiary Guarantee
Exhibit D -- Form of Subsidiary Pledge and Security Agreement
Exhibit E -- Form of Opinion of Counsel for Obligors
Exhibit F -- Form of Opinion of Special Counsel for the Agents
Exhibit G -- Form of Subsidiary Borrowing Agreement
Exhibit H -- Form of Subsidiary Borrower Pledge and Security Agreement
Exhibit I -- Form of Opinion of Counsel for Subsidiary Borrower
Exhibit J -- Form of Opinion of Special Counsel for the Agents
Exhibit K -- Form of Opinion of Counsel for Subsidiary Guarantor
Exhibit L -- Form of Notice of Account Designation
v
<PAGE>
CREDIT AGREEMENT dated as of March 30, 1998, among SUNBEAM CORPORATION,
the SUBSIDIARY BORROWERS referred to herein, the LENDERS party hereto, MORGAN
STANLEY SENIOR FUNDING, INC., as Syndication Agent, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, and FIRST UNION NATIONAL
BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"ACQUISITION" means, collectively, the Coleman Acquisition, the First
Alert Acquisition and the Signature Acquisition.
"ACQUISITION DOCUMENTS" means , collectively, the Coleman Acquisition
Documents, the First Alert Acquisition Documents and the Signature Acquisition
Documents.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means First Union National Bank, in its capacity as
administrative agent for the Lenders under the Loan Documents, and any successor
appointed pursuant to the provisions of Section 8.04.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
<PAGE>
"AGENTS" means the Administrative Agent, the Documentation Agent and the
Syndication Agent listed on the cover page of this Agreement, and "Agent" means
any of them, as the context may require.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE LEVERAGE RATIO" means, for any Performance Period (or portion
thereof), the Leverage Ratio on the last day of the most recently ended fiscal
quarter of the Parent for which the Parent has delivered to the Administrative
Agent and the Lenders the financial statements required to be delivered by the
Parent pursuant to Sections 5.01(a) or 5.01(b), as the case may be; PROVIDED
that if the Parent shall not have timely delivered any such financial
statements, and the Required Lenders shall not have agreed otherwise, the
Applicable Leverage Ratio for the portion of such Performance Period from and
including the day on which such financial statements are required to be
delivered to but excluding the day on which such financial statements are
delivered shall be deemed to be greater than 5.25 to 1.
"APPLICABLE PERCENTAGE" means, with respect to any Lender with a
Commitment of any Class, the percentage of the total Commitments of such Class
represented by such Lender's Commitment of such Class. If the Commitments of
such Class have terminated or expired, the Applicable Percentages with respect
to the Commitments of such Class shall be determined based upon the Commitments
of such Class most recently in effect, giving effect to any assignments.
"APPLICABLE RATE" means, for any day during any Performance Period (or
portion thereof), with respect to any ABR Loan or Eurodollar Loan, with respect
to any commitment fee payable hereunder, or with respect to any participation
fee related to any Letter of Credit, as the case may be, the applicable rate per
annum set forth below under the caption "ABR SPREAD","EURODOLLAR SPREAD",
"COMMITMENT FEE RATE" or "LETTER OF CREDIT FEE RATE", as the case may be, based
upon the Applicable Leverage Ratio for such Performance Period (or portion
thereof):
2
<PAGE>
<TABLE>
<CAPTION>
REVOLVING LOANS AND TRANCHE A TERM LOANS
ABR EURODOLLAR COMMITMENT LETTER OF CREDIT
APPLICABLE LEVERAGE RATIO: SPREAD SPREAD FEE RATE FEE RATE
- ------------------------------------------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
/greater than/5.25 TO 1 0.500% 1.750% 0.500% 1.500%
/greater than/ 4.75 TO 1 AND /less than/ 5.25 TO 1 0.250% 1.500% 0.375% 1.250%
or equal to
/greater than/ 4.25 TO 1 AND /less than/ 4.75 TO 1 0% 1.250% 0.375% 1.000%
or equal to
/greater than/ 3.75 TO 1 AND /less than/ 4.25 TO 1 0% 1.125% 0.300% 1.000%
or equal to
/greater than/ 3.25 TO 1 AND /less than/ 3.75 TO 1 0% 1.000% 0.300% 0.750%
or equal to
/greater than/ 2.75 TO 1 AND /less than/ 3.25 TO 1 0% 0.750% 0.250% 0.500%
or equal to
/less than/ 2.75 TO 1 0% 0.625% 0.200% 0.500%
or equal to
</TABLE>
<TABLE>
<CAPTION>
TRANCHE B TERM LOANS
APPLICABLE LEVERAGE RATIO: ABR SPREAD EURODOLLAR SPREAD
- -------------------------------------------------- ---------- -----------------
<S> <C> <C>
/greater than/ 5.25 TO 1 0.750% 2.000%
/greater than/ 3.75 TO 1 AND /less than/ 5.25 TO 1 0.500% 1.750%
or equal to
/less than/ 3.75 TO 1 0.250% 1.500%
or equal to
</TABLE>
"ASSET SALE" means any sale, lease, license or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Parent or any of its Subsidiaries of any asset, including without limitation
any sale-leaseback transaction, whether or not involving a capital lease, or any
sale of the stock of any Subsidiary, but excluding (i) dispositions of cash,
cash equivalents and other cash management investments, and obsolete, unused or
3
<PAGE>
unnecessary equipment, in each case in the ordinary course of business, (ii)
dispositions of inventory in the ordinary course of business, (iii) dispositions
to the Parent or any Subsidiary Guarantor and (iv) dispositions of any Margin
Stock for fair value. The description of any transaction as not constituting an
"Asset Sale" does not affect any limitation on such transaction imposed by
Articles 5 and 6 of this Agreement, it being understood that the limitations set
forth in Section 6.03(c) relate only to "Asset Sales" as set forth in this
definition.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"BOARD" means the Board of Governors of the Federal Reserve System of the
United States of America.
"BORROWER" means the Parent or any Subsidiary Borrower, as the context may
require, and their respective successors and "Borrowers" means all of the
foregoing. When used in connection with a specific Loan or Loans, the term
"Borrower" means the borrower (or proposed borrower) of such Loan or Loans. When
used in connection with a specific Letter of Credit or Letters of Credit the
term "Borrower" means the account party (or proposed account party) of such
Letter of Credit or Letters of Credit. As the context may permit, the terms
"Borrower" and "Borrowers" include the Parent in its capacity as guarantor of
the obligations of the Subsidiary Borrowers hereunder.
"BORROWING" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"BORROWING REQUEST" means a request by a Borrower for a Borrowing in
accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City or Charlotte, North Carolina are
authorized or required by law to remain closed; PROVIDED that, when used in
connection with a Eurodollar Loan, the term "BUSINESS DAY" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
4
<PAGE>
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CHANGE IN CONTROL" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Parent; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Parent by Persons who were neither (i) nominated by the board of directors of
the Parent nor (ii) appointed by directors so nominated; (c) the acquisition of
direct or indirect Control of the Parent by any Person or group; or (d) the
occurrence of a "Fundamental Change" (as defined in the Indenture).
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CLASS", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Tranche A Term
Loans, Tranche B Term Loans or Revolving Loans.
"CLN" means Coleman Holdings Inc., a Delaware corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLEMAN" means The Coleman Company, Inc., a Delaware corporation.
"COLEMAN ACQUISITION" means the transactions contemplated by the Coleman
Acquisition Documents, which, if consummated, will result in the Parent and its
Subsidiaries owning, collectively, 100% of the issued and outstanding shares of
common stock of CLN and at least 77% of the issued and outstanding shares of
common stock of Coleman.
5
<PAGE>
"COLEMAN ACQUISITION DOCUMENTS" means (i) the Agreement and Plan of Merger
dated as of February 27, 1998 among the Parent, Laser Acquisition Corp., CLN and
Coleman (Parent) Holdings Inc, (ii) the Agreement and Plan of Merger dated as of
February 27, 1998 among the Parent, Camper Acquisition Corp. and Coleman and
(iii) each other document executed and delivered at the closing of the Coleman
Acquisition, each as in effect on the Effective Date and substantially in the
form provided to Lenders on or prior to the Effective Date and as further
amended from time to time in accordance with Section 6.09.
"COLLATERAL" means, collectively, all of the "Collateral" under the
Collateral Documents.
"COLLATERAL ACCOUNT" has the meaning assigned to such term in the Parent
Pledge and Security Agreement.
"COLLATERAL DOCUMENTS" means the Pledge and Security Agreements, and any
additional pledge agreements, security agreements or mortgages required to be
delivered pursuant to the Loan Documents (including without limitation pursuant
to Section 5.09 of this Agreement) and any other instruments or agreements
executed pursuant to any of the foregoing.
"COMMITMENT" means a Tranche A Term Commitment, a Tranche B Term
Commitment or a Revolving Commitment, and "COMMITMENTS" means all or any
combination of them, as the context may require.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the additions
to property, plant and equipment and other capital expenditures of the Parent
and its Consolidated Subsidiaries for such period, as the same are or would be
set forth in a consolidated statement of cash flows of the Parent and its
Consolidated Subsidiaries for such period, including in any event the capital
portion of lease payments made in respect of Capital Lease Obligations, but
excluding expenditures for the restoration or replacement of assets to the
extent financed by the proceeds of an insurance policy described in clause (i)
of the definition of "MAJOR CASUALTY PROCEEDS."
"CONSOLIDATED CURRENT ASSETS" means at any date the consolidated current
assets of the Parent and its Consolidated Subsidiaries determined as of such
date.
"CONSOLIDATED CURRENT LIABILITIES" means at any date (i) the consolidated
current liabilities of the Parent and its Consolidated Subsidiaries PLUS (ii)
the current liabilities of any Person (other than the Parent or any of its
6
<PAGE>
Consolidated Subsidiaries) which are Guaranteed by the Parent or a Consolidated
Subsidiary, all determined as of such date.
"CONSOLIDATED EBITDA" means, for any period, the sum of:
(1) consolidated net income of the Parent and its Consolidated
Subsidiaries for such period (exclusive of (x) the portion of net
income allocable to minority interests in unconsolidated Persons to
the extent that cash distributions have not actually been received
from such Persons and (y) the effect of any extraordinary or non
recurring gain or loss), PLUS
(2) to the extent deducted in determining such consolidated
net income, the aggregate amount of (i) Consolidated Interest
Expense, (ii) income tax expense and (iii) depreciation and
amortization (including without limitation amortization of debt
issuance costs) and other similar non-cash charges, PLUS
(3) for any period ending prior to April 1, 1999, to the
extent deducted in determining such consolidated net income, (i) all
non-cash special charges during such period and (ii) cash special
charges not to exceed $150,000,000 during such period.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of (i) the
aggregate principal amount of scheduled amortization of Consolidated
Indebtedness during such period, (ii) the aggregate amount by which the
Revolving Commitments have been reduced during such period to the extent that
Revolving Loans have been concurrently repaid in corresponding amounts, (iii)
Consolidated Interest Expense for such period, (iv) cash taxes actually paid or
required to be paid by the Parent and its Consolidated Subsidiaries, determined
on a consolidated basis for such period, (v) Consolidated Capital Expenditures
for such period and (vi) cash dividends actually paid or required to be paid by
the Parent and its Consolidated Subsidiaries during such period.
"CONSOLIDATED INDEBTEDNESS" means, at any date, the Indebtedness of the
Parent and its Consolidated Subsidiaries determined on a consolidated basis as
of such date.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense of the Parent and its Consolidated Subsidiaries, determined on a
consolidated basis for such period, including in any event the interest portion
of payments under Capital Lease Obligations, but excluding (i) any amortization
of debt issuance costs and (ii) to the extent included in interest expense in
7
<PAGE>
accordance with Financial Accounting Standards Board Statements Nos. 87 and 106,
deferred payment obligations with respect to pension plans and post retirement
benefits.
"CONSOLIDATED NET WORKING INVESTMENT" means at any date Consolidated
Current Assets (exclusive of cash and cash equivalents) MINUS Consolidated
Current Liabilities (exclusive of Indebtedness).
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of the Parent and its Consolidated Subsidiaries determined
as of such date.
"CONSOLIDATED RENTAL EXPENSE" means, for any period, the aggregate rental
expense of the Parent and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Parent in
its consolidated financial statements if such statements were prepared as of
such date.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DOLLARS" or "$" refers to lawful money of the United States of America.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"ELIGIBLE SUBSIDIARY" means any of Coleman, First Alert or Signature, and
their respective successors, at any time that such Person is a Subsidiary.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
8
<PAGE>
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Parent or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Parent, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "REPORTABLE EVENT", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "ACCUMULATED FUNDING DEFICIENCY" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Parent or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Parent or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Parent or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Parent or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
9
<PAGE>
"EVENT OF DEFAULT" has the meaning assigned to such term in Article VII.
"EXCESS CASH FLOW" means, for any period, the excess (if any), determined
without duplication, of:
the sum of (i) Consolidated EBITDA for such fiscal period, (ii) cash
interest income and extraordinary cash income of the Parent and its
Consolidated Subsidiaries for such fiscal period (to the extent not
included in Consolidated EBITDA) and (iii) any decrease in Consolidated
Net Working Investment between the beginning and the end of such period;
MINUS
the sum of (i) Consolidated Capital Expenditures made in cash in
accordance with Section 6.11 during such period, (ii) cash interest
expense and extraordinary cash expense of the Parent and its Consolidated
Subsidiaries for such period (to the extent not included in Consolidated
EBITDA), (iii) any increase in Consolidated Net Working Investment between
the beginning and the end of such period, (iv) mandatory reductions of
long-term Indebtedness of the Parent and its Consolidated Subsidiaries
during such period (adjusted to eliminate the effect of prepayments on
account of Excess Cash Flow for a prior period), (v) repayments during
such period of the revolving credit loans and short-term Indebtedness of
the Parent and its Consolidated Subsidiaries which were not made with the
proceeds of other Indebtedness and which repaid amounts cannot be
reborrowed or redrawn under the instruments evidencing such loans and
short-term Indebtedness, (vi) optional repayments during such period of
long-term Indebtedness, including Term Loans, of the Parent and its
Consolidated Subsidiaries which were not made with the proceeds of other
Indebtedness and which repaid amounts cannot be reborrowed under the
instrument evidencing such long-term Indebtedness, and (vii) cash payments
with respect to taxes made during such period;
PROVIDED that Consolidated Net Working Investment at the beginning of such
period shall be determined on a pro forma basis adjusted to give effect (as if
such event had occurred on the first day of such period) to each Permitted
Acquisition made in accordance with Section 6.04 during such period.
"EXCHANGE ACT" has the meaning set forth in Section 5.01(a).
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
10
<PAGE>
on account of any obligation of a Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which a Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under Section 2.18(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.16(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from a Borrower with respect to such withholding tax pursuant to Section
2.16(a).
"EXISTING BANTSA LETTER OF CREDIT" means Letter of Credit No. C7285660
issued by Bank of American National Trust and Savings Association for the
benefit of National Union Fire Insurance Company of Pittsburgh, Pennsylvania in
the maximum stated amount of $13,275,000 having an expiry date of November 3,
1998, as the same may be terminated in accordance with the provisions thereof.
"EXISTING CORESTATES LETTERS OF CREDIT" means the trade letters of credit
issued by CoreStates Bank, N.A. or its subsidiaries for the account of Coleman
or any of its subsidiaries up to an aggregate maximum stated amount of
$60,000,000, each of which shall expire no later than July 31, 1998.
"EXISTING RECEIVABLES PROGRAM" means the accounts receivable sales program
established pursuant to (i) the Receivables Sale and Contribution Agreement
dated as of December 4, 1997 between Sunbeam Products, Inc. and Sunbeam Asset
Diversification, Inc. and (ii) the Receivables Purchase and Servicing Agreement
dated as of December 4, 1997 by and among Llama Retail Funding, L.P., Capital
USA, L.L.C., Sunbeam Asset Diversification, Inc. and Sunbeam Products, Inc.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received
11
<PAGE>
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Parent.
"FIRST ALERT" means First Alert, Inc., a Delaware corporation.
"FIRST ALERT ACQUISITION" means the collective transactions contemplated
by the First Alert Acquisition Documents, which, if consummated, will result in
the Parent and its Subsidiaries owning, collectively, at least 50.1% of the
issued and outstanding shares of common stock of First Alert.
"FIRST ALERT ACQUISITION DOCUMENTS" means (i) the Agreement and Plan of
Merger dated as of February 28, 1998 by and among the Parent, Sentinel
Acquisition Corp. and First Alert and (ii) each other document executed and
delivered at the closing of the First Alert Acquisition, each as in effect on
the Effective Date and substantially in the form provided to the Lenders on or
prior to the Effective Date and as further amended from time to time in
accordance with Section 6.09.
"FIXED CHARGE COVERAGE RATIO" means, at the last day of any fiscal
quarter, the ratio of (i) Consolidated EBITDA for the period of four consecutive
fiscal quarters then ended to (ii) Consolidated Fixed Charges for the same
four-quarter period.
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than that in which a Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United States
of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other
12
<PAGE>
Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guarantee issued to support such Indebtedness or
obligation; PROVIDED, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENT" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guarantee and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result
13
<PAGE>
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. For the avoidance of doubt, it is expressly agreed that the
sale, transfer or other disposition of accounts receivable shall be treated, for
all purposes of this Agreement, as an Asset Sale.
"INDEBTEDNESS INCURRENCE" means any incurrence by the Parent or any of its
Subsidiaries of any Indebtedness, other than Indebtedness permitted under
Section 6.01(a) through (g), inclusive.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITY PROCEEDS" means any amounts constituting indemnity payments
received by the Parent or any of its Subsidiaries pursuant to indemnity
provisions contained in the Acquisition Documents.
"INDENTURE" means the Indenture dated as of March 25, 1998 between the
Parent and The Bank of New York, as Trustee, as amended from time to time in
accordance with Section 6.09.
"INTEREST COVERAGE RATIO" means, at the last day of any fiscal quarter,
the ratio of (i) Consolidated EBITDA for the period of four consecutive fiscal
quarters then ended to (ii) Consolidated Interest Expense for the same
four-quarter period.
"INTEREST ELECTION REQUEST" means a request by a Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.06.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December, (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, three or six months
thereafter, as a Borrower may elect, PROVIDED, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end
14
<PAGE>
on the next preceding Business Day, (ii) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period, and (iii) if any Interest
Period pertaining to a Eurodollar Term Loan includes a date on which a scheduled
payment of principal of the Term Loans included in such Borrowing is required to
be made under Section 2.09(a) but does not end on such date, then (a) the
principal amount of each Eurodollar Term Loan required to be repaid on such date
shall have an Interest Period ending on such date and (b) the remainder (if any)
of each such Eurodollar Term Loan shall have an Interest Period determined as
set forth above. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and, thereafter, shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"ISSUING BANK" means (i) in the case of the Existing BANTSA Letter of
Credit, Bank of America National Trust and Savings Association, (ii) in the case
of the Existing CoreStates Letters of Credit, CoreStates Bank, N.A. or its
subsidiaries and (iii) in all other cases, First Union National Bank, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.04(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the Issuing Bank, in which case the term "ISSUING BANK" shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.
"LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC EXPOSURE" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit, the Existing BANTSA Letter of
Credit and the Existing CoreStates Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of a Borrower at such time. The LC Exposure of any Lender at any time
shall be its Applicable Percentage (determined on the basis of the Revolving
Commitments) of the total LC Exposure at such time.
"LC REIMBURSEMENT ACCOUNT" has the meaning set forth in the Parent Pledge
and Security Agreement.
"LENDERS" means the Persons listed on Schedule 2.01 under the heading
"LENDERS" and any other Person that shall have become a party hereto as a Lender
pursuant to an Assignment and Acceptance, other than any such Person that
15
<PAGE>
ceases to be a party hereto as a Lender pursuant to an Assignment and
Acceptance.
"LETTER OF CREDIT" means any letter of credit issued pursuant to this
Agreement.
"LEVERAGE RATIO" means, at the last day of any fiscal quarter, the ratio
of (i) Consolidated Indebtedness on such day (other than Indebtedness consisting
of contingent obligations with respect to letters of credit and letters of
guarantee) to (ii) Consolidated EBITDA for the period of four consecutive fiscal
quarters ended on such day. For purposes of determining Consolidated EBITDA at
any time during the fiscal quarter in which a Permitted Acquisition has been
made and the three fiscal quarters immediately succeeding such fiscal quarter,
Consolidated EBITDA shall be increased for any fiscal quarter which began prior
to such Permitted Acquisition by the amount of Consolidated EBITDA which the
Parent shall determine would have been attributable to the acquired assets for
the fiscal quarter most recently ended on or prior to the date of such Permitted
Acquisition; PROVIDED that (i) the Administrative Agent shall have consented to
the calculation on the basis of which the Parent determined such amount to be so
attributed and (ii) for the fiscal quarter in which the Permitted Acquisition
has occurred, such increase shall be prorated to reflect only the days during
such fiscal quarter prior to the consummation of the Permitted Acquisition.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO RATE" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale
16
<PAGE>
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LOAN DOCUMENTS" means this Agreement, the Letters of Credit, the
Subsidiary Guarantees, the Collateral Documents and any Subsidiary Borrowing
Agreement executed pursuant to Section 2.19.
"LOANS" means Term Loans or Revolving Loans or any combination thereof, as
the context may require.
"MAJOR CASUALTY AND INDEMNITY PROCEEDS ACCOUNT" has the meaning set forth
in the Parent Pledge and Security Agreement.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance proceeds
received from a Person other than the Parent or any of its Subsidiaries in
connection with one or more related events by the Parent or any of its
Subsidiaries under any insurance policy maintained by the Parent or any of its
Subsidiaries covering losses with respect to tangible real or personal property
or improvements or (ii) any award or other compensation with respect to any
condemnation of property (or any transfer or disposition of property in lieu of
condemnation) received by the Parent or any of its Subsidiaries, in either case
only if the amount of such aggregate proceeds or award or other compensation
exceeds $10,000,000, in each case less any taxes actually paid or to be payable
by the Parent or any of its Subsidiaries (as estimated by a Financial Officer,
giving effect to the overall tax position of the Parent) in respect of receipt
of such insurance proceeds or award or other compensation, as the case may be.
"MARGIN STOCK" has the meaning ascribed to such term in Regulations G and
U of the Board, as in effect from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Parent and the Subsidiaries taken as a whole, (b) the ability of any
Borrower to perform any of its obligations under the Loan Documents or (c) the
ability of the Lenders or the Administrative Agent to practically realize the
rights and benefits, taken as a whole, intended to be afforded to the Lenders or
the Administrative Agent, as the case may be, under the Loan Documents.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Parent and its Subsidiaries in an aggregate principal
17
<PAGE>
amount exceeding $25,000,000. For purposes of determining Material Indebtedness,
the "PRINCIPAL AMOUNT" of the obligations of the Parent or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Parent or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"MATERIAL SUBSIDIARY" means (i) any Subsidiary Borrower, (ii) as of any
date, any other Subsidiary that meets or that, had it then been a Subsidiary,
would have met the definition of "significant subsidiary" contained as of the
date hereof in Regulation S-X of the Securities and Exchange Commission as of
the last day of the fiscal year of the Parent ending on (or most recently ended
prior to) such date; PROVIDED THAT, for purposes of this definition of "Material
Subsidiary", all references in Regulation S-X to "10 percent" shall be deemed to
be references to "5 percent", (iii) any other Subsidiary of the Parent from time
to time designated by the Parent as a "Material Subsidiary" for purposes of this
Agreement and (iv) any Subsidiary that directly or indirectly owns common stock
of a Material Subsidiary; and PROVIDED FURTHER that, for the period from the
Effective Date until December 31, 1998, the determination of whether a
Subsidiary constitutes a Material Subsidiary within the meaning of the foregoing
shall be made on a pro forma basis taking into account the Acquisition.
Notwithstanding the foregoing, if the combined assets of all Subsidiaries that
are not Material Subsidiaries under the preceding sentence equals or exceeds 10%
of the consolidated total assets of the Parent and its Consolidated
Subsidiaries, or if the combined income (before taxes, extraordinary items and
the cumulative effect of a change in accounting principle) of all Subsidiaries
that are not Material Subsidiaries under the preceding sentence equals or
exceeds 10% of such income of the Parent and its Consolidated Subsidiaries, then
one or more of such non-Material Subsidiaries designated by the Parent (or, if
the Parent shall make no designation, then one or more of such subsidiaries in
descending order based on their respective contributions to consolidated total
assets or combined income, as determined by the Administrative Agent) shall be
deemed for purposes of this Agreement to be Material Subsidiaries to the extent
necessary to eliminate such excess.
"MATURITY DATE" means (i) with respect to the Revolving Loans and the
Tranche A Term Loans, March 30, 2005 and (ii) with respect to the Tranche B Term
Loans, September 30, 2006.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET CASH PROCEEDS" means, with respect to any Indebtedness Incurrence or
Asset Sale, an amount equal to the cash proceeds received by the Parent or any
18
<PAGE>
of its Subsidiaries therefrom or in respect thereof (including any cash proceeds
received as income or other cash proceeds of any noncash proceeds of any Asset
Sale, but only as and when received), less (x) any expenses reasonably incurred
by such Person in respect thereof and (y) solely with respect to any Asset Sale,
(i) the amount of any Indebtedness secured by a Lien on any asset disposed of in
such Asset Sale and required to be discharged from the proceeds thereof and (ii)
any taxes actually paid or to be payable by such Person (as estimated by a
Financial Officer, giving effect to the overall tax position of the Parent) in
respect of such Asset Sale.
"NOTICE OF ACCOUNT DESIGNATION" means the notice of account designation
substantially in the form of Exhibit L delivered by the Parent to the
Administrative Agent.
"OBLIGOR" means each of the Parent, the Subsidiary Borrowers and the
Subsidiary Guarantors.
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, the Loan Documents.
"PARENT" means Sunbeam Corporation, a Delaware corporation, and its
successors.
"PARENT PLEDGE AND SECURITY AGREEMENT" means the pledge and security
agreement substantially in the form of Exhibit B between the Parent and the
Administrative Agent entered into as of the Effective Date, as amended from time
to time.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERFORMANCE PERIOD" shall mean each of the periods commencing after June
30, 1998 on the day that is five Business Days following the day that a complete
set of all financial statements required to be delivered to the Administrative
Agent under Section 5.01(a) or 5.01(b), as the case may be, is received by it
and ending on a day immediately preceding the day that is five Business Days
following the day on which the next subsequent complete set of all the financial
statements required to be delivered to the Administrative Agent under Section
5.01(a) or 5.01(b), as the case may be, is received by it.
19
<PAGE>
"PERMITTED ACQUISITION" means any acquisition (other than the
Acquisition), whether in a single transaction or series of related transactions,
by the Parent or any one or more Subsidiaries, or any combination thereof, of
(i) all or a substantial part of the assets, or a going concern business or
division, of any Person, whether through purchase of assets or securities, by
merger or otherwise, (ii) control of securities of an existing corporation or
other Person having ordinary voting power (apart from rights accruing under
special circumstances) to elect a majority of the board of directors of such
corporation or other Person or (iii) control of a greater than 50% ownership
interest in any existing partnership, joint venture or other Person, PROVIDED
that:
(w) both before and immediately after giving effect to such
acquisition, no Default shall have occurred and be continuing;
(x) the Person whose assets, securities or equity interests are
being acquired is engaged in businesses of the type conducted by the
Parent and its Subsidiaries and businesses reasonably related thereto or
to the sale and distribution of household consumer products;
(y) the Parent shall be in compliance with Sections 6.12, 6.13, and
6.14, after the Leverage Ratio, Interest Coverage Ratio, Fixed Charges
Coverage Ratio and Consolidated EBITDA are each adjusted with respect to
such acquisition on the date of consummation or proposed consummation
thereof (the "Transaction Date") as follows: in calculating Consolidated
EBITDA, Consolidated Interest Expense and Consolidated Rental Expense, (1)
the incurrence of any Indebtedness in connection with such acquisition and
the application of the proceeds therefrom shall be assumed to have
occurred on the first day of the period of four consecutive fiscal
quarters (or other period) for which such amounts are required to be
determined in accordance with the definitions of Leverage Ratio, Interest
Coverage Ratio and Fixed Charges Coverage Ratio (the "Reference Period"),
(2) pro forma effect shall be given to any acquisition (including
adjustments to operating results required to be made in accordance with
GAAP) which occurs during the Reference Period or subsequent to the
Reference Period and prior to the Transaction Date as if such acquisition
had occurred on the first day of the Reference Period, (3) the incurrence
of any Indebtedness during the Reference Period or subsequent to the
Reference Period and prior to the Transaction Date and the application of
the proceeds therefrom shall be assumed to have occurred on the first day
of such Reference Period and (4) Consolidated Interest Expense
attributable to any Indebtedness (whether existing or being incurred)
bearing a floating interest rate shall be computed on a pro forma basis as
if the rate in effect on the date of computation had been the applicable
rate
20
<PAGE>
for the entire period, unless such Person or any of its Subsidiaries is a
party to an interest party swap or cap or similar agreement (which shall
remain in effect for the twelve month period after the Transaction Date)
which has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be
used; and
(z) at least thirty days prior to the closing date for any such
acquisition (or, in the case of any acquisition that occurs within 30 days
after the Effective Date, within such time as the Parent and the
Administrative Agent agree), the Parent shall have delivered to the
Administrative Agent (1) a compliance certificate certifying the Parent's
compliance with the provisions of this Agreement, including, without
limitation, Sections 6.12, 6.13 and 6.14, after giving effect on a pro
forma basis to such acquisition and (2) a report of the chief financial
officer or chief accounting officer of the Parent, in a form and providing
sufficient detail and justification for the information provided therein,
including assumptions, as shall be found to be reasonable by the
Administrative Agent in its good faith discretion after completion of
reasonable due diligence, establishing (A) the basis for such
certification and (B) that after giving effect to such acquisition and the
financing therefor, the Parent shall be in compliance on a pro forma basis
until the end of the fiscal year immediately following the fiscal year in
which such acquisition is proposed to be consummated with the covenants
contained in Sections 6.12, 6.13 and 6.14.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
other like Liens imposed by law, arising in the ordinary course of business or
with respect to obligations that are being contested in compliance with Section
5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
and
21
<PAGE>
(e) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Parent or any Subsidiary;
PROVIDED that the term "PERMITTED ENCUMBRANCES" shall not include any Lien
securing Indebtedness (other than the Loans and reimbursement obligations in
respect of LC Disbursements).
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, a rating of at least A-1 from Standards & Poor's Rating
Group or at least P-1 from Moody's Investor Service Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
and entered into with a financial institution satisfying the
criteria described in clause (c) above; and
(e) investments in money market funds which invest
substantially all of their assets in securities of the types
described in the foregoing clauses (a) through (d).
"PERMITTED LIENS" means any Lien permitted under Section 6.02.
22
<PAGE>
"PERSON" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"PLAN" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Parent or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "EMPLOYER" as defined in Section 3(5) of ERISA.
"PLAN REVERSION PROCEEDS" means the aggregate amount of payments received
by the Parent or any of its Subsidiaries from the termination of a Plan.
"PLEDGE AND SECURITY AGREEMENT" means the Parent Pledge and Security
Agreement, the Subsidiary Pledge and Security Agreement or the Subsidiary
Borrower Pledge and Security Agreement, as the context may require, and "PLEDGE
AND SECURITY AGREEMENTS" means all of the foregoing.
"PREPAYMENT ACCOUNT" has the meaning set forth in the Parent Pledge and
Security Agreement.
"PRIME RATE" means the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"REDUCTION PERCENTAGE" means (i) in the case of Excess Cash Flow, 50%
prior to the Trigger Date and 25% thereafter and (ii) in all other cases, 100%.
For the purpose of this definition, "Trigger Date" means the first day of the
next succeeding fiscal quarter of the Parent following delivery of financial
statements pursuant to Section 5.01 for the immediately preceding fiscal quarter
demonstrating a Leverage Ratio of less than 2.75 to 1.0.
"REFINANCED INDEBTEDNESS" means the Indebtedness to be refinanced in
connection with the transactions contemplated hereunder as set forth on Schedule
5.08.
"REGISTER" has the meaning set forth in Section 10.04.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
23
<PAGE>
"REQUIRED LENDERS" means, at any time, Lenders having in the aggregate at
least 51% of the sum of (i) Revolving Credit Exposures and unused Revolving
Commitments at such time, (ii) the principal amount of Tranche A Term Loans and
unused Tranche A Term Commitments at such time and (iii) the principal amount of
Tranche B Loans and unused Tranche B Term Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of the Parent or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of the Parent or any option,
warrant or other right to acquire any such shares of capital stock of the
Parent.
"REVOLVING COMMITMENT" means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender's Revolving Credit Exposure hereunder, as such commitment
may be (x) reduced from time to time pursuant to Section 2.07(c) and (y) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The initial amount of each Lender's Revolving
Commitment is set forth on Schedule 2.01 under the heading "REVOLVING
COMMITMENT", or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Revolving Commitment, as applicable. The initial
aggregate amount of the Lenders' Revolving Commitments is $600,000,000.
"REVOLVING CREDIT AVAILABILITY PERIOD" means the period from and including
the Effective Date to but excluding the earlier of (i) the Maturity Date and
(ii) the date of termination of the Revolving Commitments.
"REVOLVING CREDIT EXPOSURE" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure at such time.
"REVOLVING LOAN" means a loan made pursuant to Section 2.01(c).
"SIGNATURE" means Signature Brands USA, Inc., a Delaware corporation.
"SIGNATURE ACQUISITION" means the collective transactions contemplated
by the Signature Acquisition Documents, which, if consummated, will result in
24
<PAGE>
the Parent and its Subsidiaries owning, collectively, at least 51% of the issued
and outstanding shares of common stock of Signature.
"SIGNATURE ACQUISITION DOCUMENTS" means (i) the Agreement and Plan of
Merger dated as of February 28, 1998 between the Parent, Java Acquisition Corp.
and Signature and (ii) each other document executed and delivered at the closing
of the Signature Acquisition, each as in effect on the Effective Date and as
further amended from time to time in accordance with Section 6.09.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurodollar funding (currently referred to as "EURODOLLAR LIABILITIES" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurodollar funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"SUBORDINATED NOTES" means the Zero Coupon Convertible Senior Subordinated
Notes Due 2018 issued by the Parent pursuant to the Indenture.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"SUBSIDIARY" means any subsidiary of the Parent.
25
<PAGE>
"SUBSIDIARY BORROWER" means at any time, any Eligible Subsidiary of the
Parent designated as a Subsidiary Borrower by the Parent pursuant to Section
2.19 that has not ceased to be a Subsidiary Borrower pursuant to such Section.
"SUBSIDIARY BORROWER PLEDGE AND SECURITY AGREEMENT" means a pledge and
security agreement substantially in the form of Exhibit H between a Subsidiary
Borrower and the Administrative Agent, as amended from time to time.
"SUBSIDIARY BORROWING AGREEMENT" means a subsidiary borrowing agreement
substantially in the form of Exhibit G among the Parent, an Eligible Subsidiary
and the Administrative Agent, as amended from time to time.
"SUBSIDIARY GUARANTEE" means a guarantee agreement substantially in the
form of Exhibit D executed by each Subsidiary Guarantor for the benefit of the
Administrative Agent, as amended from time to time.
"SUBSIDIARY GUARANTORS" means each Material Subsidiary identified on
Schedule 3.01(a) and Schedule 3.01(b) and each other Person who becomes a party
to the Subsidiary Guarantee pursuant to Section 5.09.
"SUBSIDIARY PLEDGE AND SECURITY AGREEMENT" means the pledge and security
agreement substantially in the form of Exhibit E among each Subsidiary Guarantor
and the Administrative Agent, as amended from time to time.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM COMMITMENTS" means Tranche A Term Commitments and Tranche B Term
Commitments, or any combination thereof, as the context may require.
"TERM LOANS" means Tranche A Term Loans and Tranche B Term Loans, or any
combination thereof, as the context may require.
"TRANCHE A AVAILABILITY PERIOD" means the period from and including the
Tranche A Effective Date to but excluding the earlier of (i) June 30, 1998 and
(ii) the date of termination of the Tranche A Term Commitments.
"TRANCHE A EFFECTIVE DATE" means the date on which the conditions
specified in Section 4.02 are satisfied (or waived in accordance with Section
10.02).
26
<PAGE>
"TRANCHE A TERM COMMITMENT" means, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Tranche A
Term Loans hereunder, as such commitment may be (x) reduced from time to time
pursuant to Sections 2.07(c) and 2.09(b) and (y) reduced or increased from time
to time pursuant to assignments by or to such Lender pursuant to Section 10.04.
The initial amount of each Lender's Tranche A Term Commitment is set forth on
Schedule 2.01 under the heading "TRANCHE A TERM COMMITMENT", or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche A Term Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche A Term Commitments is $900,000,000.
"TRANCHE A TERM LOAN" means a loan made pursuant to Section 2.01(a).
"TRANCHE B EFFECTIVE DATE" means the date on which the conditions
specified in Section 4.03 are satisfied (or waived in accordance with Section
10.02).
"TRANCHE B AVAILABILITY PERIOD" means the period from and including the
Tranche B Effective Date to but excluding the earlier of (i) May 15, 1998 and
(ii) the date of termination of the Tranche B Term Commitments.
"TRANCHE B TERM COMMITMENT" means, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Tranche B
Term Loans hereunder, as such commitment may be (x) reduced from time to time
pursuant to Section 2.07(c) and 2.09(b) and (y) reduced or increased from time
to time pursuant to assignments by or to such Lender pursuant to Section 10.04.
The initial amount of each Lender's Tranche B Term Commitment is set forth on
Schedule 2.01 under the heading "TRANCHE B TERM COMMITMENT", or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche B Term Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche B Term Commitments is $500,000,000.
"TRANCHE B TERM LOAN" means a loan made pursuant to Section 2.01(b).
"TRANSACTIONS" means the execution, delivery and performance by the
Borrowers of the Loan Documents, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
27
<PAGE>
"TYPE", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation or other similar legal entity, directors' qualifying shares or
shares held by residents of the jurisdiction in which such corporation or other
similar legal entity is organized as required by the law of such jurisdiction)
are directly or indirectly owned or controlled by the Parent or one or more
Wholly Owned Subsidiaries or by the Parent and one or more Wholly Owned
Subsidiaries of the Parent.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of this
Agreement, Loans may be classified and referred to by Class (E.G., a "REVOLVING
LOAN") or by Type (E.G., a "EURODOLLAR LOAN") or by Class and Type (E.G., a
"EURODOLLAR REVOLVING LOAN"). Borrowings also may be classified and referred to
by Class (E.G., a "REVOLVING BORROWING") or by Type (E.G., a "EURODOLLAR
BORROWING") or by Class and Type (E.G., a "EURODOLLAR REVOLVING BORROWING").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "INCLUDE", "INCLUDES" and "INCLUDING" shall
be deemed to be followed by the phrase "WITHOUT LIMITATION". The word "WILL"
shall be construed to have the same meaning and effect as the word "SHALL".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "HEREIN", "HEREOF" and "HEREUNDER", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"ASSET" and "PROPERTY" shall
28
<PAGE>
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time (subject to
Section 6.10; PROVIDED that, if the Parent notifies the Administrative Agent
that the Parent requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the Administrative
Agent notifies the Parent that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS. (a) TRANCHE A TERM LOANS. Subject to the terms
and conditions set forth herein, each Lender agrees to make loans to any
Borrower on not more than four dates during the Tranche A Availability Period in
an aggregate principal amount that will not result in such Lender's Tranche A
Term Loans to all Borrowers exceeding such Lender's Tranche A Term Commitment.
Loans made pursuant to this paragraph are not revolving in nature and amounts of
such loans repaid or prepaid may not be reborrowed.
(b) TRANCHE B TERM LOANS. Subject to the terms and conditions set forth
herein, each Lender agrees to make a single loan to any Borrower during the
Tranche B Availability Period in a principal amount that will not result in such
Lender's Tranche B Term Loans to all Borrowers exceeding such Lender's Tranche B
Term Commitment. Loans made pursuant to this paragraph are not revolving in
nature and amounts of such loans repaid or prepaid may not be reborrowed.
(c) REVOLVING LOANS. Subject to the terms and conditions set forth herein,
each Lender agrees to make loans to any Borrower from time to time during the
Revolving Credit Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Credit Exposure to all Borrowers
29
<PAGE>
exceeding such Lender's Revolving Commitment; PROVIDED that, prior to the
Tranche B Term Loan Borrowing, the aggregate amount of the Revolving Credit
Exposure of all of the Lenders shall not exceed $100,000,000. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrowers may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans of the relevant Class made by the Lenders
ratably in accordance with their respective Commitments of such Class. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; PROVIDED that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
PROVIDED that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000; PROVIDED that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Commitments or that is required to finance
the reimbursement of an LC Disbursement as contemplated by Section 2.04(e).
Borrowings of more than one Type and Class may be outstanding at the same time;
PROVIDED that there shall not at any time be more than a total of twelve
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing of any Class if the Interest Period requested with respect thereto
would end after the Maturity Date for the relevant Class.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Charlotte,
North
30
<PAGE>
Carolina time, three Business Days before the date of the proposed Borrowing or
(b) in the case of an ABR Borrowing, not later than 10:00 a.m., Charlotte, North
Carolina, on the same Business Day of the proposed Borrowing; PROVIDED that any
such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(e), may be given not later than
9:00 a.m., Charlotte, North Carolina time, on the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall
be confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Borrowing Request in a form approved by the Administrative Agent
and signed by the Borrower. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:
(i) the identity of the Borrower and the aggregate amount of the
requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Tranche A Term Borrowing, a
Tranche B Term Borrowing, or a Revolving Borrowing;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "INTEREST PERIOD"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender with a Commitment of the relevant
Class of the details thereof and of the amount of such Lender's Loan to be made
as part of the requested Borrowing.
SECTION 2.04. LETTERS OF CREDIT. (a) Subject to the terms and conditions
set forth herein, a Borrower may request the issuance of Letters of Credit for
its own account, in a form reasonably acceptable to the Administrative Agent and
the Issuing Bank, at any time and from time to time during the Revolving Credit
Availability Period. In the event of any inconsistency between the terms and
31
<PAGE>
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by a Borrower to, or entered
into by a Borrower with, the Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), a Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (at least three Business Days before the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of a
Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit application on
the Issuing Bank's standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and upon issuance, amendment, renewal or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $200,000,000 and (ii) the total Revolving Credit Exposures shall not
exceed the total Revolving Commitments.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
thirty Business Days prior to the Maturity Date for Revolving Loans.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Applicable
Percentage (if any) of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
(if any) of each LC Disbursement made by the Issuing Bank and not reimbursed on
the
32
<PAGE>
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, Charlotte, North Carolina time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Charlotte, North Carolina time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon, Charlotte, North Carolina time, on
(i) the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., Charlotte, North Carolina time, on the day of
receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; PROVIDED that, if such LC Disbursement is not less than
$500,000, the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment be financed
with an ABR Revolving Borrowing in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing. If the Borrower fails to make
such payment when due, the Administrative Agent shall notify each Lender with a
Revolving Commitment of the applicable LC Disbursement, the payment then due
from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each such Lender shall pay
to the Administrative Agent its Applicable Percentage of the payment then due
from the Borrower, in the same manner as provided in Section 2.05 with respect
to Loans made by such Lender (and Section 2.05 shall apply, MUTATIS MUTANDIS, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute
such payment to the Issuing Bank or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans
33
<PAGE>
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. Each Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement or any other Loan Document, or any term or provision
therein, (ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder. None of the Administrative Agent, the Lenders
or the Issuing Bank, or any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; PROVIDED that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
34
<PAGE>
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; PROVIDED that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans; PROVIDED that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph
(e) of this Section, then Section 2.12(c) shall apply. Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.
(i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced at
any time by written agreement among the Parent, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Parent shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "ISSUING BANK" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, on the Business Day that a Borrower receives notice from the
35
<PAGE>
Administrative Agent or the Lenders with LC Exposure representing at least 51%
of the total LC Exposure demanding the deposit of cash collateral pursuant to
this paragraph, such Borrower shall deposit in the LC Reimbursement Account
established pursuant to Section 6(C) of the Parent Pledge and Security Agreement
an amount in cash equal to the LC Exposure as of such date plus any accrued and
unpaid interest thereon; PROVIDED that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default described in clause (h) or (i) of Article
7. Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrowers for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Lenders with LC Exposure representing at least 51% of the total LC
Exposure), be applied to satisfy other obligations of the Borrowers under this
Agreement. If a Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to such Borrower within
three Business Days after all Events of Default have been cured or waived.
(k) EXISTING CORESTATES LETTERS OF CREDIT. The parties hereto agree that,
as of May 15, 1998 (or such later date on which the merger of CoreStates Bank,
N.A. and First Union National Bank is consummated), the Existing CoreStates
Letters of Credit shall be deemed to have been issued pursuant to this Agreement
and all provisions hereof shall apply thereto as if such CoreStates Letters of
Credit were issued hereunder on such date.
SECTION 2.05. FUNDING OF BORROWINGS. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, Charlotte, North Carolina time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent
and designated by the Borrower in the Notice of Account Designation; PROVIDED
that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.04(e) shall be remitted by the Administrative Agent to
the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
36
<PAGE>
Borrowing (if any), the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.06. INTEREST ELECTIONS. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to
37
<PAGE>
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "INTEREST
PERIOD".
If any such Interest Election Request requests a Eurodollar Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Parent, then, so long as an Event of
Default is continuing, (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, the Tranche A Commitments shall terminate on the last day
of the Tranche A Availability Period; the Tranche B Commitments shall terminate
on the Tranche B Effective Date simultaneous with the funding of the Loans made
under the Tranche B Commitments on the Tranche B Effective Date; and the
Revolving Commitments shall terminate on the last day of the Revolving Credit
Availability Period.
(b) (i) The Parent may at any time terminate, or from time to time reduce,
the Commitments of any class; PROVIDED that (A) each reduction of the
38
<PAGE>
Commitments shall be in an amount that is an integral multiple of $500,000 and
not less than $1,000,000 and (B) the Parent shall not terminate or reduce the
Revolving Commitments if, after giving effect to any concurrent prepayment of
the Loans in accordance with Section 2.10, the total Revolving Credit Exposures
would exceed the total Revolving Commitments.
(ii) The Tranche A Commitments shall be reduced by (A) $180,000,000 if
the First Alert Acquisition is not consummated on or prior to the last day
of the Tranche A Availability Period and (B) $275,000,000 if the Signature
Acquisition is not consummated on or prior to the last day of the Tranche A
Availability Period.
(c) The Parent shall notify the Administrative Agent of any election to
terminate or reduce the Commitments of any Class under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders having Commitments of the affected Class of the
contents thereof. Each notice delivered by the Parent pursuant to this Section
shall be irrevocable; PROVIDED that a notice of termination of the Commitments
delivered by the Parent may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Parent (by notice to the Administrative Agent on or prior to the
specified effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.
SECTION 2.08. MATURITY OF LOANS; EVIDENCE OF DEBT. (a) Each Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan of such
Lender to such Borrower on the relevant Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder and (iii) the amount of any sum received by the
39
<PAGE>
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be PRIMA FACIE evidence of the existence and
amounts of the obligations recorded therein; PROVIDED that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of any Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, each Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. MANDATORY REPAYMENT AND PREPAYMENT OF LOANS AND REDUCTION OF
COMMITMENTS. (a) REPAYMENT. Each Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Lender having Term Loans, on
each date set forth below, an aggregate principal amount of such Loans made to
such Borrower so that the aggregate principal amount of all Loans being repaid
by all of the Borrowers on such date is equal to the amount set forth below for
such Class opposite such date (as such amount may be reduced pursuant to
paragraph (b)(iv) below or Section 2.10(c)):
TRANCHE-A-TERM TRANCHE B TERM
DATE LEANS AMOUNT LOANS AMOUNT
- ------------------ ----------------- ---------------
September 30, 1998 $ 0 $ 2,500,000
March 31, 1999 $ 0 $ 2,500,000
September 30, 1999 $ 75,000,000 $ 2,500,000
March 31, 2000 $ 75,000,000 $ 2,500,000
September 30, 2000 $ 75,000,000 $ 2,500,000
March 31, 2001 $ 75,000,000 $ 2,500,000
September 30, 2001 $ 75,000,000 $ 2,500,000
March 31, 2002 $ 75,000,000 $ 2,500,000
September 30, 2002 $ 75,000,000 $ 2,500,000
March 31, 2003 $ 75,000,000 $ 2,500,000
40
<PAGE>
TRANCHE-A-TERM TRANCHE B TERM
DATE LEANS AMOUNT LOANS AMOUNT
- ------------------ ----------------- ---------------
September 30, 2003 $ 75,000,000 $ 2,500,000
March 31, 2004 $ 75,000,000 $ 2,500,000
September 30, 2004 $ 75,000,000 $ 2,500,000
March 31, 2005 $ 75,000,000 $ 2,500,000
September 30, 2005 $ 0 $ 157,500,000
March 31, 2006 $ 0 $ 157,500,000
September 30, 2006 $ 0 $ 150,000,000
(b) PREPAYMENT AND REDUCTION. (i) In addition, the Parent shall prepay or
cause a Subsidiary Borrower to prepay Term Loans (or the Term Commitments shall
be reduced) as follows:
(x) on the date which the Parent or any of its Subsidiaries shall
receive any Net Cash Proceeds with respect to (1) any Asset Sale made
in any fiscal year, but solely if, and solely to the extent that, the
aggregate Net Cash Proceeds from such Asset Sale, when combined with
all other Asset Sales previously made during such fiscal year,
exceeds $15,000,000 or (2) any Indebtedness Incurrence, the Parent
shall prepay, or cause a Subsidiary Borrower to prepay, Term Loans
(or, if Term Commitments are outstanding, the Term Commitments shall
be reduced until the Term Commitments have been reduced to zero), in
the aggregate, by an amount equal to the Reduction Percentage of such
Net Cash Proceeds; PROVIDED that (A) if the Net Cash Proceeds are
less than $5,000,000, such prepayment or reduction shall be made upon
receipt of proceeds such that, together with all other such amounts
not previously applied, aggregate Net Cash Proceeds are equal to at
least $5,000,000; (B) the Parent or the Subsidiary Borrower receiving
the Net Cash Proceeds shall not be required to apply to such
prepayment or reduction up to $50,000,000 of Net Cash Proceeds of
Asset Sales which would otherwise be required to be applied to such
prepayment or reduction, to the extent such Net Cash Proceeds are
reinvested within 365 days of such Asset Sales in productive assets
of a kind used or usable in the business of the Parent or such
Subsidiary; and (C) such prepayment shall not be required with
respect to Net Cash Proceeds from Asset Sales consisting of sales of
accounts receivables by the Parent or any of its Subsidiaries,
whether pursuant to the Existing Receivables Program or otherwise, to
the extent that the aggregate principal amount to be recovered from
the sales of such accounts receivables shall not exceed at any time
outstanding $100,000,000.
41
<PAGE>
(y) on or before the 95th day after the end of each fiscal year
beginning with the fiscal year ending in 1998, the Parent shall
prepay, or cause a Subsidiary Borrower to prepay, Term Loans by an
amount equal to the Reduction Percentage of Excess Cash Flow for such
fiscal year.
(ii) In addition, promptly following receipt by the Parent or any of
its Subsidiaries of any Major Casualty Proceeds or Indemnity Proceeds, the
Parent shall deposit in the Major Casualty and Indemnity Proceeds Account
established pursuant to Section 6(A) of the Parent Pledge and Security
Agreement an amount of cash equal to the amount of such Major Casualty
Proceeds or Indemnity Proceeds, as the case may be. So long as no Default
has occurred and is continuing, an amount equal to the aggregate amount of
such cash proceeds which such Person has expended or committed to expend
for the restoration, replacement or environmental remediation of the asset
in respect of which such Major Casualty Proceeds payment was made or to
remedy the event giving rise to such Indemnity Proceeds payment, shall be
released by the Administrative Agent to the Parent; PROVIDED that if
within 180 days of receipt of such payment such Person shall not have
expended or committed to expend an equivalent amount for the restoration,
replacement or environmental remediation of the asset in respect of which
such Major Casualty Proceeds payment was made, or to remedy the event
giving rise to such Indemnity Proceeds payment, the excess of the amount
of such payment over the amount of such expenditures and commitments shall
be applied to prepay the Term Loans (or, if Term Commitments are
outstanding, reduce the Term Commitments until the Term Commitments have
been reduced to zero) on such 180th day.
(iii) The Parent shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment or reduction under this
paragraph not later than 11:00 a.m., Charlotte, North Carolina time, three
Business Days before the date of prepayment or reduction, as the case may
be (or, solely if such prepayment will be a prepayment of ABR Loans only,
no later than 11:00 a.m., Charlotte, North Carolina time, one Business Day
before the date of such prepayment). Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid; PROVIDED that, if a notice of
prepayment is given in connection with a conditional notice of termination
of the Commitments as contemplated by Section 2.07, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.07. Each prepayment of Loans of any Class made
pursuant to this Section shall be applied to such Borrowing or Borrowings
of such Class as the Parent may designate in the
42
<PAGE>
notice of prepayment delivered with respect thereto (or, failing such
designation, as determined by the Administrative Agent), and shall be
applied to repay ratably the Loans of such Class of the several Lenders
included in such Borrowing or Borrowings. Promptly following receipt of
any such notice relating to a Borrowing, the Administrative Agent shall
advise the affected Lenders of the contents thereof. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.12 and
shall be subject to the provisions of Section 2.15.
(iv) The amount of any prepayment of the Term Loans made pursuant to
clauses (i) or (ii) of this paragraph shall be applied to reduce ratably
the amount of each subsequent scheduled repayment of the Term Loans to be
made by the Borrowers pursuant to paragraph (a) of this Section.
(c) OPTION OF TRANCHE B LENDERS NOT TO ACCEPT PREPAYMENTS. (i) The Parent
shall (x) at least one Business Day prior to any date (an "UNSCHEDULED
PREPAYMENT DATE") on which any prepayment of the Tranche B Term Loans (an
"UNSCHEDULED PREPAYMENT"), other than a prepayment of such Loans in whole,
would, but for the provisions of this paragraph (c), otherwise have been made
pursuant to this Section or Section 2.10, deliver a notice conforming to the
requirements set forth below (a "PREPAYMENT NOTICE") to the Administrative Agent
and (y) on or prior to such Unscheduled Prepayment Date, deposit in the
Prepayment Account established pursuant to Section 6(D) of the Parent Pledge and
Security Agreement an amount equal to the principal amount that would have been
payable pursuant to this Section or Section 2.10 on such Unscheduled Prepayment
Date in respect of such Unscheduled Prepayment. Such Unscheduled Prepayment
shall not occur on such Unscheduled Prepayment Date but shall instead be
deferred as hereinafter provided in this paragraph (c). Upon receipt of any
Prepayment Notice, the Administrative Agent shall promptly notify each affected
Lender of the contents hereof. Amounts on deposit in the Prepayment Account
shall be deemed to reduce the aggregate principal amount of Loans outstanding as
if applied to the repayment thereof, but only with respect to calculations made
for purposes of determining compliance with the covenants set forth in Sections
6.12, 6.13, and 6.14.
(ii) Each Prepayment Notice shall be in writing, shall refer to this
paragraph (c) and shall (w) set forth the amount of the Unscheduled
Prepayment and the prepayment that the applicable Term Lender will be
entitled to receive if it accepts prepayment of its Tranche B Term Loans
in accordance with this subsection, (x) contain an offer to prepay on a
specified date (each such date, a "DEFERRED UNSCHEDULED PREPAYMENT DATE"),
which shall not be less than 20 days or more than 25 days after the date
of such Prepayment Notice, the Tranche B Term Loans of such
43
<PAGE>
Lender by an aggregate principal amount equal to such Lender's ratable
share of such Unscheduled Prepayment (determined by reference to the
outstanding principal amount of such Lender's Tranche B Term Loan as a
proportion of the aggregate outstanding principal amount of the Tranche B
Term Loans of all of the Lenders), (y) request such Lender to notify the
Parent and the Administrative Agent in writing, no later than the fifth
Business Day prior to the Deferred Unscheduled Prepayment Date, of such
Lender's acceptance or rejection (in each case, in whole and not in part)
of such offer of prepayment and (z) inform such Lender that the failure by
such Lender to reject such offer in writing on or before the fifth day
prior to such Deferred Unscheduled Prepayment Date shall be deemed an
acceptance of such prepayment offer. Each Prepayment Notice shall be given
by telecopy, confirmed hand delivery or overnight courier service, in each
case addressed to the Administrative Agent and each affected Lender as
provided in Section 10.01.
(iii) On each Deferred Unscheduled Prepayment Date, the
Administrative Agent shall withdraw from the Prepayment Account the
aggregate amount required to prepay the Tranche B Term Loans of each of
the Lenders that shall have accepted (or been deemed to have accepted)
prepayment in accordance with the related Prepayment Notice (each, an
"ACCEPTING LENDER") and shall cause such amount to be applied to prepay
the outstanding Tranche B Term Loans of the Accepting Lenders.
(iv) Any amount remaining in the Prepayment Account on any Deferred
Unscheduled Prepayment Date after giving effect to the prepayments
required by clause (iii) above (exclusive of any interest or profits with
respect to amounts held in the Prepayment Account) shall be withdrawn and
applied by the Administrative Agent (x) to prepay the principal of the
then outstanding Tranche A Term Loans ratably in proportion to their then
outstanding principal amounts, and/or (y) after all Term Loans have been
repaid, or all Tranche B Lenders having Tranche B Term Loans outstanding
have declined to accept prepayments, to reduce the Commitments, all in
accordance with paragraph (b) above or Section 2.10, as applicable.
SECTION 2.10. OPTIONAL PREPAYMENT OF LOANS. (a) Each Borrower shall have
the right at any time and from time to time to prepay any Borrowing of any Class
in whole or in part, subject to prior notice in accordance with paragraph (b) of
this Section.
(b) A Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
44
<PAGE>
time, three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; PROVIDED that, if a notice of
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.07. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.12.
(c) Each prepayment of the Term Loans made pursuant to this Section shall
be allocated pro rata on the basis of principal amount among the then
outstanding Tranche A Term Loans and Tranche B Term Loans. The amount of any
prepayment of the Term Loans made by a Borrower pursuant to this Section shall
be applied to reduce ratably the amount of each subsequent scheduled repayment
of the Term Loans in order of maturity to be made by the Borrowers pursuant to
Section 2.09(a).
SECTION 2.11. FEES. (a) The Parent agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue (i)
during the period from and including the Effective Date to but excluding the
first day of the initial Performance Period, at the rate of .375% per annum and
(ii) during the period from and including the first day of the initial
Performance Period to but excluding the date on which the last Commitment
terminates, at the Applicable Rate, in each case on the daily aggregate unused
amount of the Commitments of such Lender; PROVIDED that, if such Lender
continues to have any Revolving Credit Exposure after its Revolving Commitment
terminates, then such commitment fee shall continue to accrue on the daily
amount of such Lender's Revolving Credit Exposure from and including the date on
which its Revolving Commitment terminates to but excluding the date on which
such Lender ceases to have any Revolving Credit Exposure. Accrued commitment
fees shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the relevant Commitments
terminate, commencing on the first such date to occur after the date hereof;
PROVIDED that any commitment fees accruing after the date on which the Revolving
Commitments terminate shall be payable on demand. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
45
<PAGE>
(b) The Parent agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue (x) during the period from and including
the Effective Date to but excluding the first day of the initial Performance
Period, at the rate of 1.25% per annum and (y) during the period from and
including the first day of the initial Performance Period to but excluding the
later of the date on which such Lender's Revolving Commitment terminates and the
date on which such Lender ceases to have any LC Exposure, at the Applicable
Rate, in each case on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of
1/4% per annum on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank's standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Accrued participation fees and fronting fees
shall be payable on the last day of March, June, September and December of each
year and on the later of the date on which the Revolving Commitments terminate
and the date on which the Lenders cease to have any LC Exposure, commencing on
the first such date to occur after the Effective Date; PROVIDED that any such
fees accruing after the date on which the Revolving Commitments terminate shall
be payable on demand. Any other fees payable to the Issuing Bank pursuant to
this paragraph shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(c) The Parent agrees to pay to each Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the
Parent and such Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to each of the
other Agents and the Issuing Bank, in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
relevant Lenders. Fees paid shall not be refundable under any circumstances.
SECTION 2.12. INTEREST. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus (i) for each day during the period
from and including the Effective Date to but excluding the first day of the
initial Performance Period, the rate of .25% per annum (with respect to
Revolving
46
<PAGE>
Loans and Tranche A Term Loans) or .75% per annum (with respect to Tranche B
Term Loans) and (ii) thereafter, the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
(i) for each day during the period from and including the Effective Date to but
excluding the first day of the initial Performance Period, the rate of 1.50% per
annum (with respect to Revolving Loans and Tranche A Term Loans) or 2.00% per
annum (with respect to Tranche B Term Loans) and (ii) thereafter, the Applicable
Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable hereunder is not paid when due, whether
at stated maturity, upon acceleration or otherwise, such overdue amount shall
bear interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section
or (ii) in the case of any other amount, 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; PROVIDED that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Loan prior to the end of the Revolving Credit Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. ALTERNATE RATE OF INTEREST. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
47
<PAGE>
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Parent and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Parent and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
(ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
shall be made as an ABR Borrowing.
SECTION 2.14. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Parent will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
the
48
<PAGE>
Loan Documents or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Parent will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Parent shall be conclusive absent
manifest error. The Parent shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; PROVIDED
that the Parent shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Parent of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; PROVIDED FURTHER that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.15. BREAK FUNDING PAYMENTS. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.10(b) and is revoked in accordance therewith) or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by a Borrower pursuant to Section 2.18, then,
in any such event, the Parent shall compensate each Lender for the loss, cost
and expense attributable to such event. Such loss, cost or expense to any Lender
shall be deemed to include an amount determined by such Lender to be the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such
49
<PAGE>
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the Parent
and shall be conclusive absent manifest error. The Parent shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.16. TAXES. (a) Any and all payments by or on account of any
obligation of any Borrower under the Loan Documents shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that
if any Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Borrower shall make
such deductions and (iii) such Borrower shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
(b) In addition, each Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Each Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of such Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to any Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
50
<PAGE>
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by a Borrower to a Governmental Authority, such Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which a Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to such Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by such Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-
OFFS. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Sections 2.14, 2.15 or 2.16, or
otherwise) prior to 12:00 noon, Charlotte, North Carolina time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Charlotte, North
Carolina, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16
and 10.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
51
<PAGE>
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans of any Class or participations in LC Disbursements
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans of such Class or participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender with respect to its Loans of the relevant Class or participations
in LC Disbursements and accrued interest thereon, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans of the relevant Class and participations in LC Disbursements of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans of such Class and
participations in LC Disbursements; PROVIDED that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by a Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to a Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from a
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that such
Borrower will not make such payment, the Administrative Agent may assume that
such Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if such Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of
52
<PAGE>
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(d) or 2.04(e), 2.05(b) or 2.17(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any
Lender requests compensation under Section 2.14, or if any Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16 as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if any
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then such
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
and the other Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
PROVIDED that (i) such Borrower or the Parent shall have received the prior
written consent of the Administrative Agent (and, if a Revolving Commitment is
being assigned, the Issuing Bank), which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or such Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16,
53
<PAGE>
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling a Borrower to require such assignment and delegation
cease to apply.
SECTION 2.19. SUBSIDIARY BORROWINGS. Subject to the prior or concurrent
satisfaction of each of the following conditions, any Eligible Subsidiary may be
designated by the Parent as a Subsidiary Borrower hereunder following the
acquisition of Control of such Eligible Subsidiary by the Parent, entitled to
the rights and subject to the obligations incident thereto:
(a) The Administrative Agent (or its counsel) shall have received from the
Parent and such Subsidiary Borrower a counterpart of a Subsidiary Borrowing
Agreement signed on behalf of such party or written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page) that such party has signed a counterpart thereof.
(b) The Administrative Agent (or its counsel) shall have received from
such Subsidiary Borrower a counterpart of a Subsidiary Borrower Pledge and
Security Agreement signed on behalf of such party or written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page) that such party has signed a
counterpart thereof.
(c) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
date that such Borrowing Subsidiary is making its Initial Borrowing) of Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel for the Subsidiary Borrower,
substantially in the form of Exhibit I, and of Davis Polk & Wardwell, special
counsel for the Agents, substantially in the form of Exhibit J, and each
covering such other matters relating to the Obligors, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request.
(d) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence, good standing and solvency of such
Subsidiary Borrower, the authorization of the Transactions and any other legal
matters relating to any of the foregoing, all in form and substance satisfactory
to the Administrative Agent and its counsel.
SECTION 2.20. COMPETITIVE BID AMENDMENT. As promptly as practicable
following (i) the date on which the Parent's long-term Indebtedness is assigned
an investment grade rating by Standard & Poor's Rating Group or Moody's Investor
Service Inc. or (ii) if the Parent's long-term Indebtedness is not rated, the
date on
54
<PAGE>
which the Parent delivers financial statements pursuant to Section 5.01
demonstrating that the Leverage Ratio for the immediately preceding four fiscal
quarters is equal to or less than 2.0 to 1, this Agreement shall be amended in a
manner reasonably satisfactory to the Parent and the Required Lenders to provide
that Loans may be made to the Parent bearing interest at a rate based on
competitive bids by the Lenders.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each of the Parent and each Subsidiary Borrower (to the extent applicable
to such Subsidiary Borrower) represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. (a) Each of the Obligors and its
Material Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required. Schedule 3.01(a) identifies each Material Subsidiary organized under
the laws of the United States of America or any State thereof.
(b) Schedule 3.01(b) lists each Material Subsidiary organized under the
laws of any jurisdiction outside of the United States of America.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions are within
each Obligor's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. Each Loan Document has been duly
executed and delivered by each Obligor party thereto and constitutes a legal,
valid and binding obligation of such Obligor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, (b) will not violate any applicable
law or regulation or the charter, by-laws or other organizational documents of
the Parent or any of its Material Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Parent or any of its Material
Subsidiaries or its assets,
55
<PAGE>
or give rise to a right thereunder to require any payment to be made by the
Parent or any of its Material Subsidiaries (other than as set forth in Schedule
3.03), and (d) will not result in the creation or imposition of any Lien on any
asset of the Parent or any of its Material Subsidiaries (other than the Liens
created by the Collateral Documents).
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) The
Parent has heretofore furnished to the Lenders (i) its consolidated statements
of operations, stockholders equity and cash flows as of and for each of the
fiscal years ended December 28, 1997, December 29, 1996 and December 31, 1995
and (ii) its consolidated balance sheets as of and for each of the fiscal years
ended December 28, 1997 and December 29, 1996, reported on by Arthur Andersen
LLP, independent public accountants. Such financial statements present fairly,
in all material respects, the financial position and results of operations and
cash flows of the Parent and its consolidated Subsidiaries as of such dates and
for such periods in accordance with GAAP.
(b) Since December 28, 1997, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Parent and its Subsidiaries, taken as a whole.
(c) The Parent has heretofore furnished to the Lenders the pro forma
balance sheet of the Parent as of December 28, 1997 certified by one of its
Financial Officers. Such balance sheet presents fairly, in all material
respects, the financial position of the Parent and its Consolidated Subsidiaries
as of December 28, 1997 in accordance with GAAP on a pro forma basis, adjusted
to give effect (as if such events had occurred on such date) to (i) the
consummation of the Acquisition, (ii) the Transactions contemplated to occur in
connection therewith (including without limitation the making of Loans), (iii)
the application of the proceeds therefrom as contemplated by the Acquisition
Documents and the Loan Documents and (iv) the payment of all legal, accounting
and other fees related thereto to the extent known at the time of the
preparation of such balance sheet. As of the date of such balance sheet and the
Effective Date, the Parent had and has no material liabilities, contingent or
otherwise, including liabilities for taxes, long-term leases or forward or
long-term commitments, which are not properly reflected on such balance sheet.
SECTION 3.05. PROPERTIES. (a) Each of the Parent and its Material
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
56
<PAGE>
(b) Each of the Parent and its Material Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Parent and its
Material Subsidiaries does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) Other than as set
forth on Schedule 3.06, there are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Parent, threatened against or affecting the Parent or any of its Material
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect,
considering, among other things, reserves established by the Parent or its
applicable Material Subsidiaries, or (ii) that involve the Loan Documents, or
the Transactions, the Acquisition Documents or the Acquisition.
(b) Except as set forth on Schedule 3.06, neither the Parent nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability which, in each case, could not reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect, considering, among
other things, reserves established by the Parent or its applicable Material
Subsidiaries.
(c) Since the date of this Agreement, there has been no change in the
status of the matters disclosed on Schedule 3.06 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the Parent and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the Parent
nor any of its Subsidiaries is (a) an "INVESTMENT COMPANY" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
57
<PAGE>
"HOLDING COMPANY" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Parent and its Material Subsidiaries has
timely filed or caused to be filed all tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except Taxes that are being contested in good faith by appropriate
proceedings and for which the Parent or such Subsidiary, as applicable, has set
aside on its books adequate reserves.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $25,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. DISCLOSURE. The Parent has disclosed to the Lenders all
material agreements, instruments and corporate or other restrictions to which
it, any of its Material Subsidiaries or any of Coleman, First Alert, Signature
or any Subsidiary of Coleman, First Alert or Signature is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other information (taken as a whole) furnished by or
on behalf of any Obligor to the Administrative Agent or any Lender in connection
with the negotiation of the Loan Documents or delivered thereunder (as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED that, with respect to projected financial
information, the Parent represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. GUARANTORS. The Subsidiary Guarantors are all of the
Material Subsidiaries (other than Subsidiaries organized under the laws of any
jurisdiction outside the United States of America), and each Subsidiary
Guarantor is a wholly-owned Subsidiary.
58
<PAGE>
SECTION 3.13. COLLATERAL DOCUMENTS. Each of the representations and
warranties made by the Obligors in the Collateral Documents is true and correct.
SECTION 3.14. ACQUISITION DOCUMENTS. As of each of the Effective Date, the
Tranche A Effective Date and the Tranche B Effective Date, each of the
representations and warranties made in the Acquisition Documents by the Parent
is true and correct in all material respects.
SECTION 3.15. SOLVENCY. As of each of the Effective Date, the Tranche A
Effective Date and the Tranche B Effective Date, after giving effect to the
transactions contemplated hereby to occur on such date: (i) the aggregate fair
market value of the assets of each of the Parent and the other Obligors will
exceed its liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities), (ii) each of the Parent and the other Obligors will
be able to pay its debts as they mature and (iii) each of the Parent and the
other Obligors will not have unreasonably small capital for the business in
which it is engaged.
SECTION 3.16. OUTSTANDING INDEBTEDNESS. Schedule 3.16 identifies all
outstanding Indebtedness (other than intercompany Indebtedness), as of the
Effective Date, of any of the Parent, CLN, Coleman, First Alert or Signature or
any of their respective subsidiaries.
ARTICLE 4
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The Effective Date hereunder shall occur on
the first date on which each of the conditions set forth in Schedule 4.01 is
satisfied (or waived in accordance with Section 10.02), it being understood that
with respect to the conditions set forth in clauses (e) and (h) of Schedule
4.01, each Lender shall be deemed to have determined that such conditions shall
have been satisfied unless the Administrative Agent shall have received notice
from such Lender prior to the Effective Date that such Lender does not consider
such conditions to have been satisfied (or, solely with respect to the
conditions set forth in clause (e), the Lenders shall not have received any
documents referred to therein).
The Administrative Agent shall notify the Parent and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the conditions set forth in Schedule 4.01 is satisfied (or waived pursuant to
59
<PAGE>
Section 10.02) at or prior to 3:00 p.m., New York City time, on April 15, 1998
(and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. TRANCHE A EFFECTIVE DATE. The Tranche A Effective Date shall
occur hereunder on the first date on which each of the conditions set forth in
Schedule 4.02 is satisfied (or waived in accordance with Section 10.02). The
Administrative Agent shall notify the Parent and the Lenders of the Tranche A
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Tranche A Term Loans shall
not become effective unless each of the conditions set forth in Schedule 4.02 is
satisfied (or waived in accordance with Section 10.02) at or prior to 3:00 p.m.,
New York City time, on June 30, 1998 (and, in the event such conditions are not
so satisfied or waived, the Tranche A Commitments shall terminate at such time).
SECTION 4.03. TRANCHE B EFFECTIVE DATE. The Tranche B Effective Date shall
occur hereunder on the first date on which each of the conditions set forth in
Schedule 4.03 is satisfied (or waived in accordance with Section 10.02). The
Administrative Agent shall notify the Parent and the Lenders of the Tranche B
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Tranche B Term Loans shall
not become effective unless each of the conditions set forth in Schedule 4.03 is
satisfied (or waived in accordance with Section 10.02) at or prior to 3:00 p.m.,
New York City time, May 15, 1998 (and, in the event such conditions are not so
satisfied or waived, the Tranche B Commitments shall terminate at such time).
SECTION 4.04. EACH CREDIT EVENT. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:
(a) The Effective Date shall have occurred and, in the case of any Tranche
A Term Loans, the Tranche A Effective Date shall have occurred, and, in the case
of any Tranche B Term Loans, the Tranche B Effective Date shall have occurred.
(b) The representations and warranties of the Obligors set forth in the
Loan Documents shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable.
(c) At the time of and immediately after giving effect to such Borrowing
or the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
60
<PAGE>
Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Parent and each Subsidiary Borrower on the date thereof as to the matters
specified in paragraphs (b) and (c) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees and other amounts payable hereunder shall
have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, the Parent
covenants and agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Parent will
furnish to the Administrative Agent:
(a) within 90 days after the end of each fiscal year of the Parent, its
audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year (which
may be on Form 10-K, so long as the Parent is subject to periodic reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Arthur Andersen LLP or other
independent public accountants of recognized national standing (without a "GOING
CONCERN" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of each fiscal year of the Parent, its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year (which may be on Form 10-Q, so long as the Parent is subject to the
periodic reporting requirements of the Exchange Act), setting forth in each case
in comparative form the figures for the corresponding period or periods of (or,
in the case of the balance sheet, as of the end of) the previous fiscal year,
all certified by one of its Financial Officers as presenting fairly in all
material respects the financial
61
<PAGE>
condition and results of operations of the Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.01 and 6.11 through 6.15, inclusive and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Parent or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Parent to its shareholders generally, as the case may be;
(f) prior to the end of each fiscal year of the Parent, copies of an
operating plan and financial forecast for the next fiscal year, by the
management of the Parent for internal use;
(g) promptly following the delivery thereof to the Parent or its board of
directors or management, a copy of any management letter or written report by
independent public accountants with respect to the policies and procedures of
the Parent and its Subsidiaries that notes a "reportable condition"; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the Parent
or any Subsidiary, or compliance with the terms of the Loan Documents, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Parent will furnish to the
Administrative Agent prompt written notice of the following:
62
<PAGE>
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the Parent
or any Affiliate thereof that could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Parent and its Subsidiaries in an aggregate amount exceeding
$25,000,000; and
(d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Parent
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. The Parent will, and will
cause each of its Material Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; PROVIDED that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.04. PAYMENT OF OBLIGATIONS. The Parent will, and will cause each
of its Material Subsidiaries to, pay its obligations, including liabilities for
Taxes, that, if not paid, could result in a Material Adverse Effect before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Parent or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Parent will, and
will cause each of its Material Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies or through programs of self-insurance
(including levels of self-insured retention), insurance in such amounts and
against such risks and, in the case of self-insurance, at such levels and in
such amounts
63
<PAGE>
(including without limitation comprehensive general liability insurance, workers
compensation insurance, product liability insurance, business interruption
insurance and environmental insurance) as are customarily maintained by
companies engaged in the same or similar businesses operating in the same or
similar locations.
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS. The Parent will, and
will cause each of its Material Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Parent will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.
SECTION 5.07. COMPLIANCE WITH LAWS AND CONTRACTS. (a) The Parent will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so could not reasonably be expected to result in
a Material Adverse Effect.
(b) The Parent will, and will cause each of its Material Subsidiaries to,
comply with all provisions of all contracts to which the Parent or such
Subsidiary, as the case may be, is a party, except where the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of the
Revolving Loans will be used only (i) to consummate the Acquisition, (ii) to
repay certain of the Refinanced Indebtedness, (iii) to pay related fees and
expenses, (iv) to finance Consolidated Capital Expenditures and Permitted
Acquisitions permitted hereunder, and (v) for general corporate purposes
(including without limitation the making of intercompany loans to Subsidiaries,
the proceeds of which loans will be used by such Subsidiaries for general
corporate purposes). The proceeds of the Tranche A Term Loans will be used to
repay certain of the Refinanced Indebtedness. The proceeds of the Tranche B Term
Loans will be used (i) to consummate the Acquisition and (ii) to repay certain
of the Refinanced Indebtedness. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations G, U and X.
Letters of Credit will be issued only to support obligations of the Parent and
its Subsidiaries incurred in the ordinary course of business and will not be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations G, U and X. No
part of the proceeds of any
64
<PAGE>
Loan will be used, whether directly or indirectly, in connection with the
initiation or participation by the Parent or any of its Subsidiaries as a member
of a "group" (as that term is used for the purposes of Section 13(d)(3) of the
Exchange Act or the rules and regulations thereunder) or as a "PARTICIPANT" or a
"PARTICIPANT IN A SOLICITATION" (as defined in Rule 14a-11 under the Exchange
Act) in (i) a tender offer for the securities of any Person, if the board of
directors (or similar body) of such Person recommends, in a Schedule 14D-9 filed
under the Exchange Act or otherwise, that holders of securities of such Person
not tender their securities pursuant to such tender offer or (ii) in any
solicitation of any proxy, consent or authorization for the purpose of opposing
the board of directors (or other similar body) of any Person.
SECTION 5.09. FURTHER ASSURANCES. (a) The Parent will, and will cause each
Material Subsidiary to, at the Parent's sole cost and expense, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment and transfers as the Administrative Agent
shall from time to time reasonably request, which may be necessary or desirable
(in the reasonable judgment of the Administrative Agent or the Required Lenders)
from time to time to assure, perfect, convey, assign and transfer to the
Administrative Agent the property and rights conveyed or assigned pursuant to
the Collateral Documents.
(b) The Parent will:
(i) cause (A) each Person (other than Coleman, First Alert or
Signature) which becomes a Material Subsidiary (other than a Subsidiary
organized under the laws of any jurisdiction outside of the United States)
after the Effective Date and (B) each of Coleman, First Alert and
Signature (in each case after the date on which such entity becomes a
Wholly Owned Subsidiary) to become a party to the Subsidiary Guarantee as
guarantor by executing the Subsidiary Guarantee or a supplement thereof in
form and substance satisfactory to the Administrative Agent; and
(ii) pledge, or cause to be pledged, pursuant to the Parent Pledge
and Security Agreement or the Subsidiary Pledge and Security Agreement (or
another pledge agreement in form and substance satisfactory to the
Administrative Agent) all of the capital stock or other equity interests
(or, in the case of Material Subsidiaries organized under the laws of any
jurisdiction outside of the United States, 66% of such capital stock or
other equity interests) owned directly or indirectly by the Parent of (A)
each Person (other than Coleman, First Alert and Signature) which becomes
a Material Subsidiary after the Effective Date, (B) Coleman, First Alert
and Signature, in each case after the date on which such entity becomes a
65
<PAGE>
Wholly Owned Subsidiary, and (C) any joint venture in which the Parent or
any Subsidiary has an ownership interest.
The Parent shall cause each Person described in clause (i) or (ii) above
to take such actions as may be necessary or desirable to effect the foregoing
within 30 days after such Person becomes a Material Subsidiary or, in the case
of Coleman, First Alert and Signature, a Wholly Owned Subsidiary, including
without limitation causing such Person to (1) execute and deliver to the
Administrative Agent such number of copies as the Administrative Agent may
specify of such supplements and security and pledge agreements and other
documents creating security interests and (2) deliver such certificates,
evidences of corporate action or other documents as the Administrative Agent may
reasonably request, all in form and substance satisfactory to the Administrative
Agent, relating to the satisfaction of the Parent's obligations under this
Section.
(c) The Parent will take all actions necessary to ensure that each of
First Alert and Signature becomes a Wholly Owned Subsidiary on or before June
30, 1998 and that Coleman becomes a Wholly Owned Subsidiary on or before August
15, 1998.
(d) Concurrently with any Person becoming party to the Subsidiary
Guarantee, the Parent will cause such Person to deliver to the Administrative
Agent a legal opinion of counsel substantially in the form of Exhibit K, and
covering such other matters relating to the Subsidiary Guarantor, the Loan
Documents or the Transactions as the Required Lenders shall reasonably request.
SECTION 5.10. APPROVED HEDGING AGREEMENTS. Not later than 60 days after
the Effective Date, the Parent shall have entered into and thereafter maintain
in full force and effect Hedging Agreements providing for a fixed rate of
interest for at least 50% of Consolidated Indebtedness and otherwise on terms
and conditions satisfactory to the Agents.
SECTION 5.11. LIENS ON ASSETS. The Required Lenders shall have the right
from time to time to require the Parent, pursuant to a written request from the
Administrative Agent, to provide, or to cause any Subsidiary Guarantor to
provide, Liens upon such assets as may be specified in such request to secure
the obligations of the Parent and such Subsidiary Guarantor hereunder and under
the Subsidiary Guaranty. Any such request shall be made by the Required Lenders
in the good faith exercise of their discretion. Within 30 days after any such
request, the Parent shall and shall cause the appropriate Subsidiary Guarantor
of the Parent to, (i) execute and deliver to the Administrative Agent such
number of copies as the Administrative Agent may specify of documents creating
such Liens and (ii) do all other things which may be necessary or which the
Administrative Agent may reasonably request in order to confer upon and confirm
to the Lenders the
66
<PAGE>
benefits of such security. Within 45 days after a request for security pursuant
hereto, the Parent shall, and shall cause the appropriate Subsidiary Guarantor
of the Parent to, deliver such legal opinions, certificates, evidences of
corporate action or other documents as the Administrative Agent may reasonably
request, all in form and substance satisfactory to the Administrative Agent,
relating to the satisfaction of the Parent's obligations under this Section.
SECTION 5.12. REPAYMENT OF OUTSTANDING INDEBTEDNESS. The Parent shall
repay, or shall cause a Subsidiary Borrower to repay or defease, on or before
June 15, 1998, each item of outstanding Indebtedness listed on Schedule 5.08.
SECTION 5.13. YEAR 2000 COMPATIBILITY. The Parent shall take all action
necessary to ensure that the computer based systems of the Parent and its
Material Subsidiaries are able to operate and effectively process data including
dates on or after January 1, 2000. At the request of the Administrative Agent,
the Parent shall provide assurance reasonably acceptable to the Administrative
Agent of the year 2000 compatibility of the Parent and its Material
Subsidiaries.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees and other amounts payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Parent covenants and agrees with
the Lenders that:
SECTION 6.01. INDEBTEDNESS. The Parent will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01
and (except with respect to (i) the item of Indebtedness identified as the
"Montey Contingent Debt", (ii) the Existing BANTSA Letter of Credit, (iii) the
Existing CoreStates Letters of Credit and (iv) the item of Indebtedness
identified as the CoreStates Bankers' Acceptances) extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof;
67
<PAGE>
(c) Indebtedness of the Parent to any Subsidiary and of any Subsidiary to
the Parent or any other Subsidiary;
(d) Guarantees by the Parent of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Parent or any other Subsidiary;
(e) Indebtedness of the Parent or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; PROVIDED that (i) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (e) shall not exceed $25,000,000 at any time outstanding;
(f) Indebtedness of any Person that becomes a Subsidiary after the date
hereof; PROVIDED that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (f) shall not exceed $25,000,000 at any
time outstanding;
(g) Indebtedness of foreign Subsidiaries for borrowings in local currency
in an amount not to exceed $40,000,000; and
(h) other unsecured Indebtedness in an aggregate principal amount not
exceeding 5% of Consolidated Net Worth at any time outstanding.
SECTION 6.02. LIENS. The Parent will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Parent or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; PROVIDED that (i)
such Lien shall not apply to any other property or asset of the Parent or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
68
<PAGE>
(c) any Lien existing on any property or asset prior to the acquisition
thereof by the Parent or any Subsidiary or existing on any property or asset of
any Person that becomes a Subsidiary after the date hereof prior to the time
such Person becomes a Subsidiary; PROVIDED that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Parent or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or improved by
the Parent or any Subsidiary; PROVIDED that (i) such security interests secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 80% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Parent or any Subsidiary;
(e) any Lien on Margin Stock, if and to the extent the value of all Margin
Stock owned by the Parent and its Subsidiaries exceeds 25% of the value of the
total assets subject to this Section;
(f) Liens consisting of security interests in accounts receivable (and in
property securing or otherwise supporting such accounts receivable) in
connection with agreements for limited recourse sales by the Parent or any of
its Subsidiaries for cash of such accounts receivable; and
(g) Liens arising under the Collateral Documents.
SECTION 6.03. FUNDAMENTAL CHANGES; ASSET SALES. (a) The Parent will not,
and will not permit any Material Subsidiary to, merge into or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) all or any substantial part of its assets, or all or
substantially all of the stock (other than Margin Stock that is disposed of for
fair value) of any of its Material Subsidiaries (in each case, whether now owned
or hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Material Subsidiary may merge into the Parent
in a transaction in which the Parent
69
<PAGE>
is the surviving corporation, (ii) any Material Subsidiary may merge into any
Material Subsidiary in a transaction in which the surviving entity is a
Subsidiary Guarantor and (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Parent or to a Subsidiary Guarantor;
PROVIDED that any such merger involving a Person that is not a Wholly Owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
(b) The Parent will not, and will not permit any of its Material
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Parent and its Subsidiaries on the date
of execution of this Agreement and businesses reasonably related thereto or to
the sale and distribution of household consumer products.
(c) The Parent will not, and will not permit any of its Subsidiaries to,
make any Asset Sale other than (i) Asset Sales consisting of sales of accounts
receivable by the Parent or any of its Subsidiaries whether pursuant to the
Existing Receivables Program or otherwise; PROVIDED that (x) the consideration
received therefor shall be cash and (y) the aggregate principal amount to be
received from the sales of such accounts receivable shall not exceed at any time
outstanding $250,000,000 and (ii) other Asset Sales the fair market value of
which, when combined with all other such Asset Sales previously made since the
date of this Agreement in reliance on this clause (ii), does not exceed
$400,000,000. The Parent will not, and will not permit any of its Subsidiaries
to, make any Asset Sale unless at least 80% of the consideration received in
connection therewith consists of cash payable at the closing thereof.
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.
The Parent will not, and will not permit any of its Material Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit (any of the foregoing, an
"Investment"), except:
(a) Permitted Investments;
(b) investments by the Parent in the capital stock of, and capital
contributions to, its Material Subsidiaries;
70
<PAGE>
(c) loans or advances made by the Parent to any Subsidiary and made by any
Subsidiary to the Parent or any other Subsidiary;
(d) Guarantees constituting Indebtedness permitted by Section 6.01;
(e) the Acquisition; and
(f) Permitted Acquisitions.
SECTION 6.05. HEDGING AGREEMENTS. The Parent will not, and will not permit
any of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Parent or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.06. RESTRICTED PAYMENTS; VOLUNTARY PAYMENTS. (a) The Parent will
not, and will not permit any of its Subsidiaries to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, except that, so
long as no Default has occurred and is continuing, (i) the Parent may declare
and pay dividends with respect to its capital stock payable solely in additional
shares of its common stock, (ii) the Parent may declare and pay dividends with
respect to its common stock in cash in an aggregate amount not in excess of
$15,000,000 with respect to any fiscal year of the Parent, (iii) Subsidiaries
may declare and pay dividends ratably with respect to their capital stock, (iv)
the Parent may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans or employment arrangements for management or
employees of the Parent and its Subsidiaries, (v) the Parent may purchase common
stock of the Parent from any employee of the Parent in connection with the
termination of such employee's employment so long as the aggregate amount paid
in respect of such purchases during the term of this Agreement does not exceed
$10,000,000, (vi) the Parent may purchase shares of its common stock for
consideration, not exceeding $10,000,000 in any fiscal year and (vii) so long as
the Leverage Ratio at the last day of the most recently ended fiscal quarter is
less than 2.75 to 1 (adjusted to give effect to the Restricted Payments referred
to in this clause), the Parent may make Restricted Payments from Excess Cash
Flow after the application of such funds pursuant to Section 2.09 (and to the
extent such funds are not expended pursuant to Section 6.11).
(b) The Parent will not, and will not permit any of its Subsidiaries to,
directly or indirectly, optionally redeem, retire, purchase, acquire, defease or
otherwise make any payment other than required interest payments in respect of
any Indebtedness which is subordinated in right of payment to the Indebtedness
of the Parent or such Subsidiary (including, without limitation, the
Subordinated Notes) under the Loan Documents; provided that, with respect to the
purchase of
71
<PAGE>
Subordinated Notes at the option of any holder thereof, the Parent may pay the
purchase price thereof with its common stock.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. The Parent will not, and will
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) to the extent otherwise permitted under this Agreement,
but only if such transaction is in the ordinary course of business at prices and
on terms and conditions not less favorable to the Parent or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Parent and its Wholly Owned Subsidiaries not
involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.
SECTION 6.08. RESTRICTIVE AGREEMENTS. The Parent will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Parent or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets or
perform any of its obligations under Section 5.09, or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Parent or any
other Subsidiary or to Guarantee Indebtedness of the Parent or any other
Subsidiary; PROVIDED that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.08 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof.
SECTION 6.09. MODIFICATION OF CERTAIN DOCUMENTS. Without the consent of
the Required Lenders, the Parent will not, and will not permit any of its
Subsidiaries to, (i) consent to or solicit or enter into any amendment or
supplement to, or any waiver or other modification of, the Acquisition Documents
which would impair materially the benefit to the Parent or any of its
Subsidiaries of such agreement or arrangements or (ii) consent to or solicit or
enter into any amendment or supplement to, or any waiver or other modification
of, the
72
<PAGE>
certificate of incorporation or bylaws of the Parent or any of its Subsidiaries,
or the Indenture or any other agreement or instrument governing the terms of the
Subordinated Notes or of any other Indebtedness which by its terms is expressly
subordinated in right of payment to the Loans and the reimbursement obligations
with respect to LC Disbursements, which amendment, supplement, waiver or
modification, as the case may be, could reasonably be expected to have an
adverse effect on the rights of the Lenders or the Administrative Agent under
the Loan Documents.
SECTION 6.10. ACCOUNTING CHANGES. The Parent will not change its fiscal
year from a fiscal year ending on the Sunday closest to December 31, other than
to a fiscal year ending on December 31. The Parent will not adopt any
non-mandatory change in GAAP or the application thereof without 30 days' prior
notice to the Administrative Agent, accompanied, in the case of any material
change, by evidence of concurrence in such change by the public accounting firm
regularly employed by the Parent.
SECTION 6.11. CAPITAL EXPENDITURES. Consolidated Capital Expenditures for
any fiscal year of the Parent will not exceed the sum of:
(i) the Base Amount for such fiscal year, plus
(ii) the amount of Excess Cash Flow not required to be applied to
prepay Term Loans, or applied to make Restricted Payments, during such
fiscal year, plus
(iii) an amount equal to the excess (if any) of (A) the aggregate
amount of Consolidated Capital Expenditures permitted by clauses (i) and
(ii) above for all fiscal years of the Parent ending prior to such fiscal
year over (B) the aggregate amount of Consolidated Capital Expenditures
made in such prior fiscal years.
For purposes of this Section, "BASE AMOUNT" means, (i) for each fiscal
year of the Parent ending on or prior to December 31, 1999, 6%, and (ii) for
each fiscal year thereafter, 5%, in each case of the Parent's consolidated gross
sales for the previous fiscal year. For purposes of determining the Parent's
consolidated gross sales for any fiscal year ending on or prior to December 31,
1998, the amount shall be based on pro forma calculations (giving effect to the
consummation of the Acquisition) that are reasonably satisfactory to the
Administrative Agent.
SECTION 6.12. LEVERAGE RATIO. At the last day of any fiscal quarter of the
Parent ending during any period set forth below, the Leverage Ratio will not
exceed the ratio set forth below opposite such period:
73
<PAGE>
PERIOD RATIO
------ -----
Effective Date - September 30, 1998 5.75:1
October 1, 1998 - September 30, 1999 5.25:1
October 1, 1999 - September 30, 2000 4.00:1
October 1, 2000 - September 30, 2001 3.00:1
On or after October 1, 2001 2.00:1
SECTION 6.13. INTEREST COVERAGE RATIO. At the last day of any fiscal
quarter of the Parent ending during any period set forth below, the Interest
Coverage Ratio will not be less than the ratio set forth below opposite such
period:
PERIOD RATIO
------ -----
Effective Date - September 30, 1998 2.5:1
October 1, 1998 - September 30, 1999 3.0:1
October 1, 1999 - September 30, 2000 4.0:1
October 1, 2000 - September 30, 2001 5.0:1
On or after October 1, 2001 6.0:1
SECTION 6.14. FIXED CHARGE COVERAGE RATIO. At the last day of any fiscal
quarter of the Parent, the Fixed Charge Coverage Ratio will not be less than
1.05 to 1.
SECTION 6.15. EBITDA CALCULATIONS. (a) For purposes of determining
compliance with the covenants set forth in Sections 6.12, 6.13 and 6.14 during
any period ending on or prior to March 30, 1999, the calculation of Consolidated
EBITDA shall include $60,000,000 in respect of the Parent's good faith estimate
of the value of synergies associated with consummation of the Acquisition.
(b) For purposes of calculating compliance with the covenants set forth in
Sections 6.12, 6.13 and 6.14 in the case of any four fiscal quarter period ended
prior to April 1, 1999, each of Consolidated EBITDA, Consolidated Fixed Charges
and Consolidated Interest Expense shall equal Consolidated EBITDA, Consolidated
Fixed Charges and Consolidated Interest Expense, respectively, for the period
beginning April 1, 1998 and ending on the last day of such four fiscal quarter
period (an "ANNUALIZED PERIOD"), multiplied by a fraction, the numerator of
which is 12 and the denominator of which is the number of months included in
such Annualized Period.
74
<PAGE>
ARTICLE 7
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) any Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan or any fee
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three Business Days,
or any Borrower shall fail to pay any other amount (other than an amount
referred to in clause (a) of this Article or interest on any Loan) payable under
this Agreement, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of 15 days;
(c) any representation or warranty made or deemed made by or on behalf of
any Obligor in or in connection with the Loan Documents or any amendment or
modification thereof or waiver hereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with the Loan Documents or any amendment or modification thereof or waiver
hereunder, shall prove to have been materially incorrect when made or deemed
made;
(d) the Parent shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Parent's
existence) or 5.08, Article VI or Section 9.01 of this Agreement, or in
provisions substantially similar to the foregoing set forth in any other
Collateral Document to which the Parent is a party;
(e) any Obligor shall fail to observe or perform any covenant, condition or
agreement contained in the Loan Documents (other than those specified in clause
(a), (b) or (d) of this Article), and such failure shall continue unremedied for
a period of 30 days after notice thereof from the Administrative Agent to the
Parent (which notice will be given at the request of any Lender);
(f) the Parent or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable and such failure
constitutes a default under such Material Indebtedness;
75
<PAGE>
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Parent or any Material Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent or any Material Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(i) the Parent or any Material Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent or any Material Subsidiary or for a substantial
part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) the Parent or any Material Subsidiary shall become unable, admit in
writing or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount
in excess of $25,000,000 shall be rendered against the Parent, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Parent or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Parent and its
76
<PAGE>
Subsidiaries in an aggregate amount exceeding $25,000,000 during the term of
this Agreement;
(m) a Change in Control shall occur;
(n) any Lien created by any of the Collateral Documents shall at any time
fail to constitute a valid and (to the extent required by the Collateral
Documents) perfected first priority Lien on the Collateral securing the
obligations purported to be secured thereby, or any party shall so assert in
writing; or
(o) the Subsidiary Guarantee shall at any time fail to constitute a valid
and binding agreement of each Subsidiary Guarantor, or any party shall so assert
in writing;
then, and in every such event (other than an event with respect to any
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Parent, take
either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of each Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Borrower; and in case of any event with respect to any Borrower described
in clause (h) or (i) of this Article, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of each Borrower accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Borrower.
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. APPOINTMENT, POWERS AND IMMUNITIES. Each of the Lenders and
the Issuing Bank hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative
77
<PAGE>
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.
(a) The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Parent or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
(b) The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Parent or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by a Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with the Loan
Documents, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth therein, (iv) the validity, enforceability, effectiveness or genuineness
of the Loan Documents or any other agreement, instrument or document, (v) the
existence or the value of any of the Collateral or (vi) the satisfaction of any
condition set forth in Article IV or elsewhere herein or in any other Loan
Document, other than to confirm receipt of items expressly required to be
delivered to, and make determinations expressly required to be made by, the
Administrative Agent.
78
<PAGE>
SECTION 8.02. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for any
Obligor), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
SECTION 8.03. APPOINTMENT OF SUB-AGENTS. The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
subagent and to the Related Parties of the Administrative Agent and any such
subagent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
SECTION 8.04. SUCCESSOR ADMINISTRATIVE AGENTS. Subject to the appointment
and acceptance of a successor Administrative Agent as provided in this
paragraph, the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Parent. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Parent, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent, which shall be a bank with an
office in the United States, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by any Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between such Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related
79
<PAGE>
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.
SECTION 8.05. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon the Loan Documents, any related agreement or
any document furnished thereunder.
SECTION 8.06. OTHER AGENTS. Neither Morgan Stanley Senior Funding, Inc.
nor Bank of America National Trust and Savings Association shall have any
responsibility, obligation or liability under the Loan Documents in their
respective capacities as Syndication Agent and Documentation Agent.
ARTICLE 9
GUARANTY
SECTION 9.01. THE GUARANTY. The Parent hereby unconditionally guarantees
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each Loan made to any Subsidiary
Borrower pursuant to this Agreement, and the full and punctual payment of all
other amounts payable by any Subsidiary Borrower under this Agreement. Upon
failure by any Subsidiary Borrower to pay punctually any such amount, the Parent
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in this Agreement.
SECTION 9.02. GUARANTY UNCONDITIONAL. The obligations of the Parent
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of any Subsidiary Borrower under this Agreement, by
operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement;
80
<PAGE>
(c) any release, impairment, non-perfection or invalidity of any direct or
indirect security for any obligation of any Subsidiary Borrower under this
Agreement;
(d) any change in the corporate existence, structure or ownership of any
Subsidiary Borrower, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Subsidiary Borrower or its assets or any
resulting release or discharge of any obligation of any Subsidiary Borrower
contained in this Agreement;
(e) the existence of any claim, set-off or other rights which the Parent
may have at any time against any Subsidiary Borrower, any Agent, any Lender, the
Issuing Bank or any other Person, whether in connection with this Agreement or
any unrelated transactions, PROVIDED that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
Subsidiary Borrower for any reason of this Agreement, or any provision of
applicable law or regulation purporting to prohibit the payment by any
Subsidiary Borrower of the principal of or interest on any Loan or any other
amount payable by any Subsidiary Borrower under this Agreement; or
(g) any other act or omission to act or delay of any kind by any
Subsidiary Borrower, any Agent, any Lender, the Issuing Bank or any other Person
or any other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of or defense to the
Parent's obligations hereunder.
SECTION 9.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. The Parent's obligations hereunder shall remain in full
force and effect until the principal of and interest on the Loans and all other
amounts payable by each Subsidiary Borrower under this Agreement shall have been
paid in full or assumed by the Parent pursuant to an instrument acceptable to
the Administrative Agent. If at any time any payment of the principal of or
interest on any Loan or any other amount payable by any Subsidiary Borrower
under this Agreement is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of such Subsidiary Borrower or
otherwise, the Parent's obligations hereunder with respect to such payment shall
be reinstated as though such payment had been due but not made at such time.
SECTION 9.04. WAIVER BY THE PARENT. The Parent irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
81
<PAGE>
herein, as well as any requirement that at any time any action be taken by any
Person against any Subsidiary Borrower or any other Person.
SECTION 9.05. SUBROGATION. Upon making full payment with respect to any
obligation of any Subsidiary Borrower hereunder, the Parent shall be subrogated
to the rights of the payee against such Subsidiary Borrower with respect to such
obligation; PROVIDED that the Parent shall not enforce any payment by way of
subrogation so long as (i) any Lender has any Commitment hereunder or (ii) any
amount payable by such any Subsidiary Borrower hereunder remains unpaid.
SECTION 9.06. STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by any Subsidiary Borrower under this Agreement is
stayed upon the insolvency, bankruptcy or reorganization of any Subsidiary
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Parent hereunder forthwith on
demand by the Administrative Agent made at the request of the Required Lenders.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to a Borrower, to it at Sunbeam Corporation, 1615 South Congress
Avenue, Suite 200, Delray Beach, FL 33445, Attention of Treasurer (Telecopy No.
561-243-2027]);
(b) if to the Administrative Agent, to First Union National Bank, 301
South College Street, One First Union Center TW-10, Charlotte, NC 28288-0608,
Attention of Tom Molitor (Telecopy No. (704) 374-3300);
(c) if to the Issuing Bank, to it at First Union National Bank, 301 South
College Street, One First Union Center TW-10, Charlotte, NC 28288-0608,
Attention of Tom Molitor (Telecopy No. (704) 374-3300); and
82
<PAGE>
(d) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 10.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders under
the Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Parent and the Required Lenders or by the Parent and the
Administrative Agent with the consent of the Required Lenders; PROVIDED that no
such agreement shall
(i) unless signed by all the Lenders with a Commitment of a Class,
increase or decrease the Commitments of such Class (except for a ratable
decrease in all the Commitments of such Class), or postpone the date fixed
for the scheduled termination of any Commitment of such Class;
(ii) unless signed by all Lenders holding Loans of any Class, reduce
the principal of or (except as expressly provided in the definition of
"Applicable Leverage Ratio") rate of interest on any Loans of, or fees
with respect to, such Class, postpone the date fixed for any scheduled
payment of such fees or the principal of or interest on any such Loans, or
decrease
83
<PAGE>
the aggregate amount by which such Loans are required to be repaid on any
date scheduled pursuant to Section 2.09(a) or postpone any date for such
repayment;
(iii) unless signed by all Lenders with Revolving Commitments, reduce
the amount of any LC Disbursement or of any interest thereon or any fees
payable with respect to the Letters of Credit hereunder, postpone the date
fixed for any payment of any LC Disbursement or any interest thereon or
any fees payable with respect to the Letters of Credit hereunder or
(except as expressly provided in Section 2.04) the expiry date of any
Letter of Credit;
(iv) unless signed by all the Lenders, change any of the provisions of
this Section or the definition of "REQUIRED LENDERS" or any other
provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination
or grant any consent hereunder; or
(v) unless signed by all the Lenders, change Section 2.17(b) or 2.17(c)
in a manner that would alter the pro rata sharing of payments required
thereby; and
PROVIDED FURTHER that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be.
(c) Neither any Collateral Document nor the Subsidiary Guarantee nor any
provision thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Obligors party thereto
and the Administrative Agent with the consent of the number or percentage of
Lenders set forth therein.
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Parent shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated thereby
shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by
the Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder and (iii)
all out-of-pocket expenses incurred by the Administrative Agent, the Issuing
Bank or any Lender,
84
<PAGE>
including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) The Parent shall indemnify the Administrative Agent, the Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an "INDEMNITEE") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of the Loan
Documents or any agreement or instrument contemplated thereby, the performance
by the parties thereto of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated thereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Parent or any of its Subsidiaries, or any Environmental
Liability related in any way to the Parent or any of its Subsidiaries, or (iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; PROVIDED
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that the Parent fails to pay any amount required to be
paid by it to the Administrative Agent or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
PROVIDED that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Issuing Bank in its capacity as such.
85
<PAGE>
(d) To the extent permitted by applicable law, no Borrower shall assert,
and each Borrower hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, the Loan Documents or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that a
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder to any Person other than the Parent without the prior written consent
of each Lender (and any attempted assignment or transfer by a Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment of any Class and the Loans of such Class and, if applicable, the
related participations in LC Disbursements and Letters of Credit); PROVIDED that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
the Administrative Agent (and, in the case of an assignment of all or a portion
of a Revolving Commitment or any Lender's obligations in respect of its LC
Exposure, the Issuing Bank and, after the Agents have notified the Parent that
primary syndication has been completed, the Parent) must give prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitments, the amount of the Commitments of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 unless each of the Parent and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
86
<PAGE>
obligations under this Agreement with respect to the Commitment or Loans (and,
if applicable, the related participations in LC Disbursements and Letters of
Credit) of the relevant Class, (iv) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,000 (which shall be reduced to
$1,500 in the case of an assignment to another Lender, and shall not be payable
during primary syndication or in the case of an assignment to an Affiliate of
the assigning Lender), and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; and
PROVIDED FURTHER that any consent of the Parent otherwise required under this
paragraph shall not be required if an Event of Default under clause (h) or (i)
of Article VII has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and each Borrower, the Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by any Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
87
<PAGE>
this Section and any written consent to such assignment required by paragraph(b)
of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of any Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment of any Class and the Loans of such Class and, if applicable, the
related participations in LC Disbursements and Letters of Credit); PROVIDED that
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. Subject to paragraph (f) of this Section, each Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and
2.16 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph(b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.14 or 2.16 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Parent's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 unless the Parent
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Parent, to comply with Section 2.16(e) as though
it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; PROVIDED that no such pledge or assignment of a security
88
<PAGE>
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 10.05. SURVIVAL. All covenants, agreements, representations and
warranties made by any Borrower herein and in the certificates or other instru
ments delivered in connection with or pursuant to the Loan Documents shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 10.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. COUNTERPARTS; INTEGRATION. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. The Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.
SECTION 10.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Borrower
against any of and all
89
<PAGE>
the obligations of any Borrower now or hereafter existing under the Loan
Documents held by such Lender or any of its Affiliates, irrespective of whether
or not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Borrower or its properties in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY
90
<PAGE>
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. CONFIDENTIALITY. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to the Loan Documents, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to the Loan Documents or the enforcement of rights
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under the Loan Documents, (g) with the consent of the Parent or (h) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than a Borrower. For the purposes of this Section, "INFORMATION" means all
information received from a Borrower relating to such Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
such Borrower; PROVIDED that, in the case of information received from a
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain
91
<PAGE>
the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 10.13. INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
92
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SUNBEAM CORPORATION
By /s/ DAVID C. FANNIN
---------------------------------------------
Name: David C. Fannin
Title: Executive Vice President
and General Counsel
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Syndication Agent
By /s/ MICHAEL A. HART
---------------------------------------------
Name: Michael A. Hart
Title: Principal
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
individually and as Documentation Agent
By /s/ LAURENS F. SCHAAD, JR.
---------------------------------------------
Name: Laurens F. Schaad, Jr.
Title: Vice President
FIRST UNION NATIONAL BANK,
individually and as Administrative Agent
By /s/ THOMAS M. MOLITOR
---------------------------------------------
Name: Thomas M. Molitor
Title: Senior Vice President
93
<PAGE>
SCHEDULE 4.01
CONDITIONS TO EFFECTIVE DATE
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto a counterpart of this Agreement signed on behalf of such party
or written evidence satisfactory to the Administrative Agent (which may include
telecopy transmission of a signed signature page) that such party has signed a
counterpart of this Agreement.
(b) The Administrative Agent (or its counsel) shall have received (i) from
each party to each Collateral Document a counterpart of such Collateral Document
signed on behalf of such party or written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page) that such party has signed a counterpart of such Collateral
Document and (ii) duly executed financing statements on Form UCC-1 in quantity
sufficient for filing in all jurisdictions in which such filing is necessary or
desirable to perfect the Liens created by the Collateral Documents.
(c) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for
the Obligors and of Janet Kelley, Esq., associate general counsel for the
Obligors, collectively addressing the matters set forth in Exhibit E and of
Davis Polk & Wardwell, special counsel for the Agents, substantially in the form
of Exhibit F, and each covering such other matters relating to the Obligors, the
Loan Documents or the Transactions as the Required Lenders shall reasonably
request.
(d) The Lenders shall have received all the financial statements referred
to in Sections 3.04(a) and 3.04(c).
(e) The Administrative Agent shall have received insurance certificates
setting forth the insurance programs maintained (i) with respect to the Parent
and its Material Subsidiaries and (ii) with respect to any joint venture to
which the Parent or any of its Material Subsidiaries are a party, all in form
and substance, and from Persons, reasonably satisfactory to the Administrative
Agent.
(f) In the judgment of the Lenders, there shall be no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or threatened against or affecting the Parent or any of its Subsidiaries
(i) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected, individually or
in the
<PAGE>
aggregate, to result in a Material Adverse Effect or (ii) that involve the Loan
Documents, the Transactions, the Acquisition Documents or the Acquisition.
(g) The Administrative Agent shall have received evidence satisfactory to
it that the outstanding obligations of the Parent and its Subsidiaries under the
agreements and instruments specified in Schedule 5.08 to be repaid or defeased
on the Effective Date (including without limitation principal and interest with
respect to any loans and all accrued fees and expenses) shall have been paid in
full or otherwise discharged, all commitments thereunder shall have been
terminated and all Liens securing such obligations and all Guarantees thereof
shall have been released (or arrangements satisfactory to the Administrative
Agent, including without limitation the giving of notice of prepayment,
redemption or defeasance, to effect the foregoing shall have been made).
(h) The aggregate amount of funds required by the Parent with respect to
the Acquisition (including without limitation for the payment of fees,
commissions and expenses) shall not exceed $2,250,000,000 and the sources and
uses of such funds (and the assumptions relating thereto) shall be as agreed
upon between the Parent and the Lenders prior to the Effective Date.
(i) The Coleman Acquisition Documents shall be in full force and effect,
and all consents, approvals, registrations, or other actions to be obtained,
made or taken in connection with the consummation of the Coleman Acquisition and
the Transactions to be consummated on the Effective Date (including without
limitation any consents or approvals to be obtained from the board of directors
of the Parent, the shareholders of the Parent and any consents, approvals,
registrations or other actions to be obtained from, made with or taken by any
Governmental Authority) shall have been obtained, made or taken and shall be in
full force and effect.
(j) The Administrative Agent shall have received evidence satisfactory to
it, which may include a certificate of the Parent, that (i) all conditions to
the consummation of the transactions contemplated by the Coleman Acquisition
Documents to be consummated on the Effective Date as set forth in the Coleman
Acquisition Documents shall have been satisfied (without waiver of any material
condition, unless such waiver is approved by the Required Lenders), (ii) all
such transactions will take place prior to or simultaneously with the
transactions contemplated hereby to take place on the Effective Date and (iii)
the consummation of all such transactions and all transactions contemplated
hereby to take place on the Effective Date shall not violate any applicable law
or regulation (including without limitation any of the Regulations of the Board,
including Regulations G, U and X).
4.01-2
<PAGE>
(k) The Administrative Agent shall have received evidence satisfactory to
it that the Liens created by the Collateral Documents constitute perfected first
priority Liens on the Collateral.
(l) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Parent, confirming compliance with the conditions set forth in
paragraphs (b) and (c) of Section 4.04.
(m) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Parent hereunder.
(n) The Administrative Agent shall have received a certificate of a
Financial Officer of the Parent to the effect that the Parent shall have (i)
received net cash proceeds of at least $726,600,000 from the issuance of the
Subordinated Notes and (ii) issued 14,099,749 shares of its common stock
(including treasury shares) as partial consideration for the Coleman
Acquisition.
(o) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence, good standing and solvency of the
Parent, the authorization of the Transactions and any other legal matters
relating to any of the foregoing, all in form and substance satisfactory to the
Administrative Agent and its counsel.
4.01-3
<PAGE>
SCHEDULE 4.02
CONDITIONS TO TRANCHE A EFFECTIVE DATE, FIRST ALERT ACQUISITION DATE
AND SIGNATURE ACQUISITION DATE
(a) Each of the Effective Date and the Tranche B Effective Date shall have
occurred.
(b) In the judgment of the Lenders, there shall be no actions, suits or
proceedings by or before any arbitrator or governmental authority pending
against or threatened against or affecting the Parent or any of its Subsidiaries
(i) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect or (ii) that involve
the Loan Documents, the Transactions, the Acquisition Documents or the
Acquisition.
(c) The Administrative Agent shall have received evidence satisfactory to
it that the outstanding obligations of the Parent and its Subsidiaries under the
agreements and instruments specified in Schedule 5.08 to be repaid or defeased
with the proceeds of the Tranche A Term Loans (including without limitation
principal and interest with respect to any loans and all accrued fees and
expenses) shall have been paid in full or otherwise discharged, all commitments
thereunder shall have been terminated and all Liens securing such obligations
and all Guarantees thereof shall have been released (or arrangements
satisfactory to the Administrative Agent, including without limitation the
giving of notice of prepayment, redemption or defeasance, to effect the
foregoing shall have been made).
(d) The Administrative Agent shall have received a certificate, dated the
Tranche A Effective Date and signed by the President, a Vice President or a
Financial Officer of the Parent, confirming compliance with the conditions set
forth in paragraphs (b) and (c) of Section 4.04.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Tranche A Effective Date, including,
to the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Parent hereunder.
(f) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence, good standing and solvency of each
Obligor, the authorization of the Transactions and any other legal matters
relating to any of the foregoing, all in form and substance satisfactory to the
Administrative Agent and its counsel.
<PAGE>
If any of the proceeds of the Tranche A Term Loans are to be used in connection
with the First Alert Acquisition, the following additional conditions will apply
on the date of the consummation thereof (the "FIRST ALERT ACQUISITION DATE"):
(i) The First Alert Acquisition Documents shall be in full force and
effect, and all consents, approvals, registrations, or other actions to be
obtained, made or taken in connection with the consummation of the First
Alert Acquisition and the Transactions to be consummated on the First
Alert Acquisition Date (including without limitation any consents or
approvals to be obtained from the board of directors of the Parent, the
shareholders of the Parent and any consents, approvals, registrations or
other actions to be obtained from, made with or taken by any Governmental
Authority) shall have been obtained, made or taken and shall be in full
force and effect; and
(ii) The Administrative Agent shall have received evidence
satisfactory to it, which may include a certificate of the Parent, that
(i) all conditions to the consummation of the transactions contemplated by
the First Alert Acquisition Documents to be consummated on the First Alert
Acquisition Date as set forth in the First Alert Acquisition Documents
shall have been satisfied (without waiver of any material condition,
unless such waiver is approved by the Required Lenders), (ii) all such
transactions will take place prior to or simultaneously with the
transactions contemplated hereby to take place on the First Alert
Acquisition Date and (iii) the consummation of all such transactions and
all transactions contemplated hereby to take place of the First Alert
Acquisition Date shall not violate any applicable law or regulation
(including without limitation any of the Regulations of the Board,
including Regulations G, U and X).
If any of the proceeds of the Tranche A Term Loans are to be used in connection
with the Signature Acquisition, the following additional conditions will apply
on the date of the consummation thereof (the "SIGNATURE ACQUISITION DATE"):
(i) The Signature Acquisition Documents shall be in full force and
effect, and all consents, approvals, registrations, or other actions to be
obtained, made or taken in connection with the consummation of the
Signature Acquisition and the Transactions to be consummated on the
Signature Acquisition Date (including without limitation any consents or
approvals to be obtained from the board of directors of the Parent, the
shareholders of the Parent and any consents, approvals, registrations or
other actions to be obtained from, made with or taken by any Governmental
Authority) shall have been obtained, made or taken and shall be in full
force and effect; and
4.02-2
<PAGE>
(ii) The Administrative Agent shall have received evidence
satisfactory to it, which may include a certificate of the Parent, that
(i) all conditions to the consummation of the transactions contemplated by
the Signature Acquisition Documents to be consummated on the Signature
Acquisition Date as set forth in the Signature Acquisition Documents shall
have been satisfied (without waiver of any material condition, unless such
waiver is approved by the Required Lenders) (ii) all such transactions
will take place prior to or simultaneously with the transactions
contemplated hereby to take place on the Signature Acquisition Date and
(iii) the consummation of all such transactions and all transactions
contemplated hereby to take place of the Signature Acquisition Date shall
not violate any applicable law or regulation (including without limitation
any of the Regulations of the Board, including Regulations G, U and X).
4.02-3
<PAGE>
SCHEDULE 4.03
CONDITIONS TO TRANCHE B EFFECTIVE DATE, FIRST ALERT ACQUISITION DATE
AND SIGNATURE ACQUISITION DATE
(a) The Effective Date shall have occurred.
(b) In the judgment of the Lenders, there shall be no actions, suits or
proceedings by or before any arbitrator or governmental authority pending
against or threatened against or affecting the Parent or any of its Material
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve the Loan Documents, the Transactions, the Acquisition Documents or
the Acquisition.
(c) The Administrative Agent shall have received evidence satisfactory to
it that all outstanding obligations of the Parent and its Subsidiaries under the
agreement and instruments specified in Schedule 5.08 to be repaid or defeased
with the proceeds of the Tranche B Term Loans (including without limitation
principal and interest with respect to any loans and all accrued fees and
expenses) shall have been paid in full or otherwise discharged, all commitments
thereunder shall have been terminated and all Liens securing such obligations
and all Guarantees thereof shall have been released (or arrangements
satisfactory to the Administrative Agent, including without limitation the
giving of notice of prepayment, redemption or defeasance, to effect the
foregoing shall have been made).
(d) The Administrative Agent shall have received a certificate, dated the
Tranche B Effective Date and signed by the President, a Vice President or a
Financial Officer of the Parent, confirming compliance with the conditions set
forth in paragraphs (a), (b) and (c) of Section 4.04.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Tranche B Effective Date, including,
to the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Parent hereunder.
(f) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence, good standing and solvency of each
Obligor, the authorization of the Transactions and any other legal matters
relating to any of the foregoing, all in form and substance satisfactory to the
Administrative Agent and its counsel.
<PAGE>
If any of the proceeds of the Tranche B Term Loans are to be used in connection
with the First Alert Acquisition, the following additional conditions will apply
on the date of the consummation thereof (the "FIRST ALERT ACQUISITION DATE"):
(i) The First Alert Acquisition Documents shall be in full force and
effect, and all consents, approvals, registrations, or other actions to be
obtained, made or taken in connection with the consummation of the First
Alert Acquisition and the Transactions to be consummated on the First
Alert Acquisition Date (including without limitation any consents or
approvals to be obtained from the board of directors of the Parent, the
shareholders of the Parent and any consents, approvals, registrations or
other actions to be obtained from, made with or taken by any Governmental
Authority) shall have been obtained, made or taken and shall be in full
force and effect; and
(ii) The Administrative Agent shall have received evidence
satisfactory to it, which may include a certificate of the Parent, that
(i) all conditions to the consummation of the transactions contemplated by
the First Alert Acquisition Documents to be consummated on the First Alert
Acquisition Date as set forth in the First Alert Acquisition Documents
shall have been satisfied (without waiver of any material condition,
unless such waiver is approved by the Required Lenders), (ii) all such
transactions will take place prior to or simultaneously with the
transactions contemplated hereby to take place on the First Alert
Acquisition Date and (iii) the consummation of all such transactions and
all transactions contemplated hereby to take place of the First Alert
Acquisition Date shall not violate any applicable law or regulation
(including without limitation any of the Regulations of the Board,
including Regulations G, U and X).
If any of the proceeds of the Tranche B Term Loans are to be used in connection
with the Signature Acquisition, the following additional conditions will apply
on the date of the consummation thereof (the "SIGNATURE ACQUISITION DATE"):
(i) The Signature Acquisition Documents shall be in full force and
effect, and all consents, approvals, registrations, or other actions to be
obtained, made or taken in connection with the consummation of the
Signature Acquisition and the Transactions to be consummated on the
Signature Acquisition Date (including without limitation any consents or
approvals to be obtained from the board of directors of the Parent, the
shareholders of the Parent and any consents, approvals, registrations or
other actions to be obtained from, made with or taken by any Governmental
Authority) shall have been obtained, made or taken and shall be in full
force and effect; and
4.03-2
<PAGE>
(ii) The Administrative Agent shall have received evidence
satisfactory to it, which may include a certificate of the Parent, that
(i) all conditions to the consummation of the transactions contemplated by
the Signature Acquisition Documents to be consummated on the Signature
Acquisition Date as set forth in the Signature Acquisition Documents shall
have been satisfied (without waiver of any material condition, unless such
waiver is approved by the Required Lenders) (ii) all such transactions
will take place prior to or simultaneously with the transactions
contemplated hereby to take place on the Signature Acquisition Date and
(iii) the consummation of all such transactions and all transactions
contemplated hereby to take place of the Signature Acquisition Date shall
not violate any applicable law or regulation (including without limitation
any of the Regulations of the Board, including Regulations G, U and X).
4.03-3
EXHIBIT 10.b
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of May 8, 1998 to the Credit Agreement dated as of
March 30, 1998 (the "CREDIT AGREEMENT") among SUNBEAM CORPORATION (the
"PARENT"), the SUBSIDIARY BORROWERS referred to therein, the LENDERS party
thereto, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, and
FIRST UNION NATIONAL BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement to (i)
modify the definitions of Applicable Leverage Ratio and Applicable Rate as set
forth herein, (ii) increase the rates of interest applicable to Eurodollar
Borrowings prior to the first day of the initial Performance Period, (iii)
reduce the initial aggregate amount of the Lenders' Revolving Commitments from
$600,000,000 to $400,000,000, (iv) reduce the initial aggregate amount of the
Lenders' Tranche A Term Commitments from $900,000,000 to $800,000,000 and (v)
modify the negative covenant relating to the maximum Leverage Ratio permitted
during certain periods as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. APPLICABLE LEVERAGE RATIO DEFINITION. The definition of
"APPLICABLE LEVERAGE RATIO" in Section 1.01 of the Credit Agreement is amended
by deleting the proviso set forth therein and replacing it with the following:
"PROVIDED that if the Parent shall not have timely delivered
any such financial statements, and the Required Lenders shall not have
agreed otherwise, the Applicable Leverage Ratio for the portion of such
Performance Period from and including the day on which such financial
<PAGE>
statements are required to be delivered to but excluding the day on
which such financial statements are delivered shall be deemed to be
greater than 5.50 to 1."
SECTION 3. APPLICABLE RATE DEFINITION. The definition of "APPLICABLE
RATE" in Section 1.01 of the Credit Agreement is amended in its entirety to read
as follows:
"APPLICABLE RATE means, for any day during any Performance
Period (or portion thereof), with respect to any ABR Loan or Eurodollar
Loan, with respect to any commitment fee payable hereunder, or with
respect to any participation fee related to any Letter of Credit, as
the case may be, the applicable rate per annum set forth below under
the caption "ABR SPREAD", "EURODOLLAR SPREAD", "COMMITMENT FEE RATE" or
"LETTER OF CREDIT FEE RATE", as the case may be, based upon the
Applicable Leverage Ratio for such Performance Period (or portion
thereof):
REVOLVING LOANS AND TRANCHE A TERM LOANS
<TABLE>
<CAPTION>
ABR EURODOLLAR COMMITMENT LETTER OF CREDIT
APPLICABLE LEVERAGE RATIO: SPREAD SPREAD FEE RATE FEE RATE
-------------------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
/greater than/5.50 TO 1 0.750% 2.000% 0.500% 1.750%
/greater than/5.25 TO 1 AND /less than or equal to/5.50 TO 1 0.500% 1.750% 0.500% 1.500%
/greater than/4.75 TO 1 AND /less than or equal to/5.25 TO 1 0.250% 1.500% 0.375% 1.250%
/greater than/4.25 TO 1 AND /less than or equal to/4.75 TO 1 0% 1.250% 0.375% 1.000%
/greater than/3.75 TO 1 AND /less than or equal to/4.25 TO 1 0% 1.125% 0.300% 0.875%
/greater than/3.25 TO 1 AND /less than or equal to/3.75 TO 1 0% 1.000% 0.300% 0.750%
/greater than/2.75 TO 1 AND /less than or equal to/3.25 TO 1 0% 0.750% 0.250% 0.500%
/less than or equal to/2.75 TO 1 0% 0.625% 0.200% 0.500%
</TABLE>
2
<PAGE>
TRANCHE B TERM LOANS
<TABLE>
<CAPTION>
APPLICABLE LEVERAGE RATIO: ABR SPREAD EURODOLLAR SPREAD
-------------------------- ---------- -----------------
<S> <C> <C>
/greater than/5.50 TO 1 1.000% 2.250%
/greater than/5.25 TO 1 AND /less than or equal to/ 5.50 TO 1 0.750% 2.000%
/less than or equal to/5.25 TO 1 0.500% 1.750%
</TABLE>
The Applicable Rates set forth above shall apply to interest and fees accruing
under the Credit Agreement on and after the date hereof.
SECTION 4. PERFORMANCE PERIOD DEFINITION. The definition of
"PERFORMANCE PERIOD" in Section 1.01 of the Credit Agreement is amended by
changing the date specified therein from "June 30, 1998" to "December 31, 1998".
SECTION 5. REDUCTION IN REVOLVING COMMITMENTS. The definition of
"REVOLVING COMMITMENT" in Section 1.01 of the Credit Agreement is amended by
deleting the last sentence thereof and replacing it with the following:
"The initial aggregate amount of the Lenders' Revolving
Commitments is $400,000,000."
SECTION 6. REDUCTION IN TRANCHE A TERM COMMITMENTS. The definition of
"TRANCHE A TERM COMMITMENT" in Section 1.01 of the Credit Agreement is amended
by deleting the last sentence thereof and replacing it with the following:
"The initial aggregate amount of the Lenders' Tranche A Term
Commitments is $800,000,000."
SECTION 7. MANDATORY REPAYMENT OF LOANS. Section 2.09(a) of the Credit
Agreement is amended in its entirety to read as follows:
"SECTION 2.09. MANDATORY REPAYMENT AND PREPAYMENT OF LOANS AND
REDUCTION OF COMMITMENTS(A) REPAYMENT. Each Borrower hereby
unconditionally promises to pay to the Administrative Agent for the
account of each Lender having Term Loans, on each date set forth below,
an aggregate principal amount of such Loans made to such Borrower so
that the aggregate principal amount of all Loans being repaid by all of
the Borrowers on such date is equal to the amount set forth below for
such
3
<PAGE>
Class opposite such date (as such amount may be reduced pursuant to
paragraph (b)(iv) below or Section 2.10(c)):
<TABLE>
<CAPTION>
TRANCHE-A-TERM TRANCHE B TERM
DATE LOANS AMOUNT LOANS AMOUNT
---- -------------- --------------
<S> <C> <C>
September 30, 1998 $ 0 $ 2,500,000
March 31, 1999 $ 0 $ 2,500,000
September 30, 1999 $ 66,750,000 $ 2,500,000
March 31, 2000 $ 66,750,000 $ 2,500,000
September 30, 2000 $ 66,750,000 $ 2,500,000
March 31, 2001 $ 66,750,000 $ 2,500,000
September 30, 2001 $ 66,750,000 $ 2,500,000
March 31, 2002 $ 66,750,000 $ 2,500,000
September 30, 2002 $ 66,750,000 $ 2,500,000
March 31, 2003 $ 66,750,000 $ 2,500,000
September 30, 2003 $ 66,750,000 $ 2,500,000
March 31, 2004 $ 66,750,000 $ 2,500,000
September 30, 2004 $ 66,750,000 $ 2,500,000
March 31, 2005 $ 65,750,000 $ 2,500,000
September 30, 2005 $ 0 $ 157,500,000
March 31, 2006 $ 0 $ 157,500,000
September 30, 2006 $ 0 $ 150,000,000"
</TABLE>
SECTION 8. INCREASE IN INTEREST RATES APPLICABLE TO EURODOLLAR
BORROWINGS. Section 2.12(b) of the Credit Agreement is amended in its entirety
to read as follows:
"(b) The Loans comprising each Eurodollar Borrowing shallbear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus (i) for each day during the period from and including the
Effective Date to but excluding the first day of the initial Performance Period,
the rate of 2.25% per annum (with respect to Revolving Loans and Tranche A Term
Loans) or 2.50% per annum (with respect to Tranche B Term Loans) and (ii)
thereafter, the Applicable Rate."
The increase in Interest Rates set forth above shall apply to interest
accruing under the Credit Agreement on and after the date hereof.
4
<PAGE>
SECTION 9. LEVERAGE RATIO. Section 6.12 of the Credit Agreement is
amended in its entirety to read as follows:
"SECTION 6.12. LEVERAGE RATIO. At the last day of any fiscal
quarter of the Parent ending during any period set forth below, the
Leverage Ratio will not exceed the ratio set forth below opposite such
period:
PERIOD RATIO
------ -----
Effective Date - September 30, 1998 5.75:1
October 1, 1998 - March 31, 1999 5.50:1
April l, 1999 - September 30, 1999 5.25:1
October 1, 1999 - September 30, 2000 4.00:1
October 1, 2000 - September 30, 2001 3.00:1
On or after October 1, 2001 2.00:1"
SECTION 10. REPRESENTATIONS OF PARENT. The Parent represents and
warrants that (i) the representations and warranties of the Parent set forth in
Article 3 of the Credit Agreement will be true on and as of the Amendment
Effective Date and (ii) no Default will have occurred and be continuing on such
date.
SECTION 11. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 12. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 13. EFFECTIVENESS. This Amendment shall become effective on the
date (the "AMENDMENT EFFECTIVE DATE") when the Administrative Agent shall have
received from each of the Parent, the Lenders and the Agents, a counterpart
hereof signed by such party or facsimile or other written confirmation (in form
satisfactory to the Administrative Agent) that such party has signed a
counterpart hereof.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
SUNBEAM CORPORATION
By /S/ RONALD P. RICHTER
----------------------------
Name: Ronald P. Richter
Title: Vice President and Treasurer
MORGAN STANLEY SENIOR
FUNDING, INC.,
individually and as Syndication Agent
By /S/ MICHAEL A. HART
----------------------------
Name: Michael A. Hart
Title: Principal
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
individually and as Documentation
Agent
By /S/ CHARLES S. FRANCAVILLA
----------------------------
Name: Charles S. Francavilla
Title: Senior Vice President
FIRST UNION NATIONAL BANK,
individually and as Administrative
Agent
By /S/ THOMAS M. MOLITOR
----------------------------
Name: Thomas A. Molitor
Title: Senior Vice President
EXHIBIT 10.c
Zero Coupon Convertible Senior Subordinated Debentures due 2018
Sunbeam Corporation, Issuer
and
The Bank of New York, Trustee
INDENTURE
Dated as of March 25, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS(1)
PAGE
----
ARTICLE 1
<S> <C>
DEFINITIONS AND INCORPORATION BY REFERENCE...................................................-1-
Section 1.01. Definitions................................................................-1-
Section 1.02. Other Definitions..........................................................-8-
Section 1.03. Incorporation by Reference of Trust Indenture Act..........................-9-
Section 1.04. Rules of Construction.....................................................-10-
ARTICLE 2
THE SECURITIES..............................................................................-10-
Section 2.01. Form and Dating...........................................................-10-
Section 2.02. Execution and Authentication..............................................-11-
Section 2.03. Registrar, Paying Agent and Conversion Agent..............................-11-
Section 2.04. Paying Agent to Hold Money and Securities in Trust........................-12-
Section 2.05. Securityholder Lists......................................................-12-
Section 2.06. Exchange and Registration of Transfer of Securities; Restrictions on
Transfers; Depositary.....................................................-12-
Section 2.07. Replacement Securities....................................................-20-
Section 2.08. Outstanding Securities; Determinations of Holders' Action.................-21-
Section 2.09. Temporary Securities......................................................-22-
Section 2.10. Cancellation..............................................................-22-
Section 2.11. Persons Deemed Owners.....................................................-23-
Section 2.12. CUSIP Numbers.............................................................-23-
ARTICLE 3
REDEMPTION AND PURCHASES....................................................................-23-
Section 3.01. Right to Redeem; Notices to Trustee.......................................-23-
Section 3.02. Selection of Securities to be Redeemed....................................-23-
Section 3.03. Notice of Redemption......................................................-24-
Section 3.04. Effect of Notice of Redemption............................................-25-
Section 3.05. Deposit of Redemption Price...............................................-25-
Section 3.06. Securities Redeemed in Part...............................................-26-
Section 3.07. Conversion Arrangement on Call for Redemption.............................-26-
Section 3.08. Purchase of Securities at Option of the Holder............................-27-
Section 3.09. Redemption at Option of the Holder upon a Fundamental Change..............-33-
<FN>
- --------
(1) This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
</FN>
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 3.10. Effect of Purchase Notice or Fundamental Change Redemption Notice..........-34-
Section 3.11. Deposit of Purchase Price or Fundamental Change Redemption Price...........-35-
Section 3.12. Securities Purchased in Part...............................................-35-
Section 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities........-35-
Section 3.14. Repayment to the Company...................................................-35-
ARTICLE 4
COVENANTS....................................................................................-36-
Section 4.01. Payment of Securities......................................................-36-
Section 4.02. Financial Information; SEC Reports.........................................-36-
Section 4.03. Compliance Certificate.....................................................-37-
Section 4.04. Further Instruments and Acts...............................................-38-
Section 4.05. Maintenance of Office or Agency............................................-38-
Section 4.06. Existence..................................................................-38-
Section 4.07. Maintenance of Properties..................................................-38-
Section 4.08. Payment of Taxes and Other Claims..........................................-39-
Section 4.09. Calculation of Original Issue Discount.....................................-39-
ARTICLE 5
SUCCESSOR CORPORATION........................................................................-39-
Section 5.01. When the Company May Merge or Transfer Assets..............................-39-
ARTICLE 6
DEFAULTS AND REMEDIES........................................................................-40-
Section 6.01. Events of Default..........................................................-40-
Section 6.02. Acceleration...............................................................-41-
Section 6.03. Other Remedies.............................................................-42-
Section 6.04. Waiver of Past Defaults....................................................-42-
Section 6.05. Control by Majority........................................................-42-
Section 6.06. Limitation on Suits........................................................-42-
Section 6.07. Rights of Holders to Receive Payment.......................................-43-
Section 6.08. Collection Suit by Trustee.................................................-43-
Section 6.09. Trustee May File Proofs of Claim...........................................-43-
Section 6.10. Priorities.................................................................-44-
Section 6.11. Undertaking for Costs......................................................-45-
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 6.12. Waiver of Stay, Extension or Usury Laws...................................-45-
ARTICLE 7
TRUSTEE.....................................................................................-46-
Section 7.01. Duties of Trustee.........................................................-46-
Section 7.02. Rights of Trustee.........................................................-47-
Section 7.03. Individual Rights of Trustee..............................................-48-
Section 7.04. Trustee's Disclaimer......................................................-48-
Section 7.05. Notice of Defaults........................................................-48-
Section 7.06. Reports by Trustee to Holders.............................................-48-
Section 7.07. Compensation and Indemnity................................................-49-
Section 7.08. Replacement of Trustee....................................................-49-
Section 7.09. Successor Trustee by Merger...............................................-50-
Section 7.10. Eligibility; Disqualification.............................................-50-
Section 7.11. Preferential Collection of Claims Against Company.........................-51-
ARTICLE 8
DISCHARGE OF INDENTURE......................................................................-51-
Section 8.01. Discharge of Liability on Securities......................................-51-
Section 8.02. Repayment to the Company..................................................-51-
ARTICLE 9
AMENDMENTS..................................................................................-51-
Section 9.01. Without Consent of Holders................................................-51-
Section 9.02. With Consent of Holders...................................................-52-
Section 9.03. Compliance with Trust Indenture Act.......................................-53-
Section 9.04. Revocation and Effect of Consents, Waivers and Actions....................-53-
Section 9.05. Notation on or Exchange of Securities.....................................-53-
Section 9.06. Trustee to Sign Supplemental Indentures...................................-54-
Section 9.07. Effect of Supplemental Indentures.........................................-54-
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 10
<S> <C>
SUBORDINATION...............................................................................-54-
Section 10.01. Agreement of Subordination................................................-54-
Section 10.02. Payments to Holders.......................................................-54-
Section 10.03. Subrogation of Securities.................................................-57-
Section 10.04. Authorization by Holders..................................................-58-
Section 10.05. Notice to Trustee.........................................................-59-
Section 10.06. Trustee's Relation to Senior Indebtedness.................................-60-
Section 10.07. No Impairment of Subordination............................................-60-
Section 10.08. Reliance by Holders of Senior Indebtedness on Subordination Provisions....-60-
Section 10.09. Reinstatement of Subordination............................................-61-
Section 10.10. Permitted Payments........................................................-61-
Section 10.11. Article Applicable to Paying Agents.......................................-61-
Section 10.12. Treatment of Conversion Payments..........................................-61-
Section 10.13. Reliance on Judicial Order or Certificate of Liquidating Agent............-62-
Section 10.14. Holders of Senior Indebtedness May File Proofs of Claim...................-62-
ARTICLE 11
CONVERSION..................................................................................-62-
Section 11.01. Conversion Privilege......................................................-63-
Section 11.02. Conversion Procedure......................................................-63-
Section 11.03. Fractional Shares.........................................................-64-
Section 11.04. Taxes on Conversion.......................................................-64-
Section 11.05. Company to Provide Stock..................................................-64-
Section 11.06. Adjustment for Change in Capital Stock....................................-65-
Section 11.07. Adjustment for Rights Issue...............................................-65-
Section 11.08. Adjustment for Other Distributions........................................-66-
Section 11.09. When Adjustment May be Deferred...........................................-69-
Section 11.10. When No Adjustment Required...............................................-69-
Section 11.11. Notice of Adjustment......................................................-69-
Section 11.12. Voluntary Increase........................................................-70-
Section 11.13. Notice of Certain Transactions............................................-70-
Section 11.14. Effect of Reclassification, Consolidation, Merger or Sale.................-70-
Section 11.15. Company Determination Final...............................................-71-
Section 11.16. Trustee's Adjustment Disclaimer...........................................-71-
Section 11.17. Simultaneous Adjustments..................................................-71-
Section 11.18. Successive Adjustments....................................................-72-
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 11.19. Rights Issued in Respect of Common Stock Issued Upon Conversion...........-72-
Section 11.20. General Considerations....................................................-72-
ARTICLE 12
MISCELLANEOUS...............................................................................-73-
Section 12.01. Trust Indenture Act.......................................................-73-
Section 12.02. Notices...................................................................-73-
Section 12.03. Communication by Holders with other Holders...............................-74-
Section 12.04. Certificate and Opinion as to Conditions Precedent........................-74-
Section 12.05. Statements Required in Certificate or Opinion.............................-74-
Section 12.06. Separability Clause.......................................................-75-
Section 12.07. Rules by Trustee, Paying Agent, Conversion Agent and Registrar............-75-
Section 12.08. Legal Holidays............................................................-75-
Section 12.09. Governing Law.............................................................-75-
Section 12.10. No Recourse Against Others................................................-75-
Section 12.11. Successors................................................................-75-
Section 12.12. Multiple Originals........................................................-75-
EXHIBIT A--Form of Security
EXHIBIT B--Form of Institutional Accredited Investor letter
</TABLE>
-6-
<PAGE>
INDENTURE, dated as of March 25, 1998, between Sunbeam Corporation, a
Delaware corporation (the "Company"), 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 Zero Coupon
Convertible Senior Subordinated Debentures due 2018 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person means the power to
direct or cause the direction of 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.
"Applicable Price" means (i) in the event of a Fundamental Change in which
the holders of the Common Stock receive only cash, the amount of cash received
by the holder of one share of Common Stock and (ii) in the event of any other
Fundamental Change, the average of the last reported sales price for the Common
Stock (determined as set forth in the definition of Current Market Price) during
the ten Trading Days prior to the record date for the determination of the
holders of Common Stock entitled to receive cash, securities, property or other
assets in connection with such Fundamental Change, or, if there is no such
record date, the date upon which the holders of Common Stock shall have the
right to receive such cash, securities, property or other assets in connection
with a Fundamental Change.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of such board.
"Business Day" means each day of the year on which banking institutions are
not required or authorized to close in The City of New York or the city in which
the Corporate Trust Office is located.
"Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation,
-1-
<PAGE>
dissolution or winding up of the Company and which is not subject to redemption
by the Company. Subject to the provisions of Section 11.14, however, shares
issuable upon conversion of the Securities shall include only shares of Common
Stock, par value of $.01 per share, of the Company as it exists on the date of
this Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, a Vice Chairman,
its President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Conversion Rate" shall have the meaning specified in Section 11.01.
"Corporate Trust Office" or other similar term, shall mean the principal
office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, which office is, at the date as of
which this Indenture is dated, located at 101 Barclay Street, 21st Floor West,
New York, New York 10286, Attention: Corporate Trust Trustee Administration
(Sunbeam Corporation - Zero Coupon Convertible Senior Subordinated Debentures
due 2018).
"Credit Agreement" means any credit agreement or agreements entered into by
the Company and/or one or more of its subsidiaries and one or more lending
institutions for the purpose of consummating the acquisitions of CLN Holdings
Inc. and The Coleman Company, Inc. (collectively, "Coleman"), Signature Brands
USA, Inc. ("Signature Brands") and First Alert, Inc. ("First Alert") and the
refinancing of the outstanding indebtedness of the Company, Coleman, Signature
Brands, First Alert or any of their respective subsidiaries, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Current Market Price" per share of the Common Stock on any date of
determination means the average of the daily closing prices of the Common Stock
on the NYSE for the 5 consecutive trading days ending on and including such date
of determination. The last reported sale price for each day
-2-
<PAGE>
shall be (i) if the Common Stock is listed on the NYSE or listed or admitted for
trading on any national securities exchange, the last sale price, or the closing
bid price if no sale occurred, of the Common Stock on the principal securities
exchange on which the Common Stock is listed, (ii) if the Common Stock is not
listed or admitted for trading as described in clause (i), the last reported
sale price of Common Stock on the Nasdaq National Market, or any similar system
of automated dissemination of quotations of securities prices then in common
use, if so quoted, or (iii) if not quoted as described in clause (ii), the mean
between the high bid and low asked quotations for Common Stock as reported by
the National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for the Common Stock on at least 5
of the 10 preceding Trading Days. If none of the conditions set forth above is
met, the last reported sale price of Common Stock on any day or the average of
such last reported sale prices for any period shall be the fair market value of
the Common Stock as determined by a member firm of the NYSE selected by the
Company.
"Custodian" shall mean The Bank of New York, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.06 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
The foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Designated Senior Indebtedness" means (i) Senior Indebtedness incurred
under the Credit Agreement and (ii) any other particular Senior Indebtedness in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of this Indenture; provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights of Designated
Senior Indebtedness. If any payment made to any holder of any Designated Senior
Indebtedness or its Representative with respect to such Designated Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Designated Senior Indebtedness
effective as of the date of such rescission or return.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
-3-
<PAGE>
"Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all the Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock of a company listed (or, upon consummation of or immediately following
such transaction or event, which will be listed) on a United States national
securities exchange or approved for quotation in the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" means, with respect to any Person, and without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances,
whether or not evidenced by notes or similar instruments) or evidenced by bonds,
debentures, notes or similar instruments (whether or not the recourse of the
lender is to the whole of the assets of such Person or to only a portion
thereof), (b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees,
bankers' acceptances or similar facilities, (c) all obligations and liabilities
(contingent or otherwise) in respect of leases of such Person (i) required, in
conformity with generally accepted accounting principles, to be accounted for as
capitalized lease obligations on the balance sheet of such Person, or (ii)
required, in conformity with generally accepted accounting principles, to be
accounted for as an operating lease, provided either (A) such operating lease
requires, at the end of the term thereof, that such Person make any payment
other than accrued periodic rent in the event that such Person does not acquire
the leased real property and related fixtures subject to such lease, or (B) such
Person has an option to acquire the leased real property and related fixtures,
whether such option is exercisable at any time or under specific circumstances,
(d) all obligations of such Person (contingent or otherwise) with respect to an
interest rate swap, cap or collar agreement or other similar instrument or
agreement or foreign currency hedge or exchange agreement or other similar
instrument or agreement, (e) all direct or indirect guarantees or similar
agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person, and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).
-4-
<PAGE>
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Initial Purchaser" means Morgan Stanley & Co. Incorporated.
"Institutional Accredited Investor" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is
issued as set forth on the face of the Security.
"Liquidated Damages" shall have the meaning specified in the Registration
Rights Agreement.
"Nasdaq National Market" means the electronic inter-dealer quotation system
operated by NASDAQ Stock Market, Inc., a subsidiary of the National Association
of Securities Dealers, Inc.
"NYSE" means The New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer or the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 12.04 and 12.05, signed in the name of the
Company by its Chairman of the Board, a Vice Chairman, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 12.04 and 12.05, from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of, or counsel to, the Company or
the Trustee.
"Original Issue Discount" of any Security means the difference between the
Issue Price and the Principal Amount of the Security as set forth on the face of
the Security. For purposes of this Indenture and the Securities, accrual of
Original Issue Discount shall be calculated on the basis of a 360 day year of
twelve 30-day months, compounded semi-annually.
"Payment Blockage Notice" has the meaning specified in Section 10.02.
-5-
<PAGE>
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Portal Market" means the Private Offerings, Resales and Trading through
Automated Linkages operated by the National Association of Securities Dealers,
Inc. or any successor thereto.
"Principal" or "Principal Amount" of a Security means the Principal Amount
as set forth on the face of the Security.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date" shall mean a date specified for redemption of the
Securities (other than redemption upon a Fundamental Change at the option of the
Securityholder) in accordance with the terms of the Securities and Section 3.01
of this Indenture.
"Redemption Price" shall have the meaning set forth in paragraph 5 of the
Securities.
"Reference Market Price" shall initially mean $30.2083 and in the event of
any adjustment to the Conversion Rate pursuant to Article 11, the Reference
Market Price shall be adjusted to equal the initial Reference Market Price
multiplied by a fraction the numerator of which is the Conversion Rate specified
in the form of Security attached hereto as Exhibit A (without regard to any
adjustment thereto), and the denominator of which is the Conversion Rate
following such adjustment.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, between the Company and the Initial Purchaser.
"Representative" means the (a) indenture trustee or other trustee, agent or
representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required Persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.
"Rule 144A" means Rule 144A as promulgated under the Securities Act, or any
successor rule.
"Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act, or
any successor rule.
"SEC" means the Securities and Exchange Commission.
-6-
<PAGE>
"Secured Indebtedness" means, with respect to any Person, Indebtedness of
such Person secured by any mortgage, pledge, lien or other encumbrance existing
on property or assets which is owned or held by such Person.
"Securities" shall have the meaning set forth in the second paragraph of
this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securityholder" or "Holder" means a person in whose name a Security is
registered on the Registrar's books.
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to, or which would accrue but for,
the commencement of any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowable as a claim in any such proceeding),
original issue discount, rent and end of term payments payable on or in
connection with, and, to the extent not included in the foregoing, all amounts
payable as fees, costs, expenses, liquidated damages, indemnities, repurchase
and other put obligations and other amounts to the extent accrued or due on or
in connection with, Secured Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company (including all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing). Notwithstanding the foregoing, the term Senior Indebtedness shall
not include (i) Indebtedness of the Company to any Subsidiary of the Company,
(ii) accounts payable or other indebtedness to trade creditors created or
assumed by the Company in the ordinary course of business and (iii) any
particular Indebtedness in which the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such Indebtedness
shall not be senior in right of payment to, or is pari passu with, or is
subordinated or junior to, the Securities. If any payment made to any holder of
any Senior Indebtedness or its Representative with respect to such Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Indebtedness effective as of
the date of such rescission or return.
"Stated Maturity", when used with respect to any Security, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal of such Security is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers
-7-
<PAGE>
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
managing general partner of which is such person or a Subsidiary of such Person
or (b) the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Indenture, except as provided in Section 9.03.
"Trading Day" means a day during which trading in securities generally
occurs on the NYSE or, if the applicable security is not listed on the NYSE, on
the principal other national or regional securities exchange on which the
applicable security is then listed or, if the applicable security is not listed
on a national or regional securities exchange, on the Nasdaq National Market or,
if the applicable security is not quoted on the Nasdaq National Market, on the
principal other market on which the applicable security is then traded.
"Trust Officer" means any officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Voting Stock" shall mean stock of any class or classes, however
designated, having ordinary voting power for the election of a majority of the
board of directors of a corporation, other than stock having such power only by
reason of the happening of a contingency.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
- ---------------------------------------------- ------------
"Bankruptcy Law"............................... 6.01
"Company Notice"............................... 3.08(e)
"Company Notice Date".......................... 3.08(c)
"Conversion Agent"............................. 2.03
"Expiration Time".............................. 11.08(c)
"Event of Default"............................. 6.01
"Fundamental Change Repurchase Date"........... 3.09(a)
-8-
<PAGE>
DEFINED IN
TERM SECTION
- ---------------------------------------------- ------------
"Fundamental Change Redemption Notice"........ 3.09(a)
"Fundamental Change Redemption Price"......... 3.09(a)
"Legal Holiday"............................... 12.08
"Market Price"................................ 3.08(d)
"Notice of Default"........................... 6.01
"Over-allotment Option"....................... 2.02
"Paying Agent"................................ 2.03
"Purchase Date"............................... 3.08(a)
"Purchase Notice"............................. 3.08(a)
"Purchase Price".............................. 3.08(a)
"Purchased Shares"............................ 11.08(c)
"Registrar"................................... 2.03
"Restricted Securities"....................... 2.06(d)
"Sale Price".................................. 3.08(d)
"Tender Expiration Time"...................... 11.08(d)
"Tender Purchased Shares"..................... 11.08(d)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture Securities" means the Securities.
"Indenture Security Holder" means a Securityholder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Trustee.
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 rules have the
meanings assigned to them by such definitions.
-9-
<PAGE>
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 generally accepted accounting principles
as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the plural
include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's certificate
of authentication for the Securities shall be substantially in the form of
Exhibit A, which is a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, rule or regulation of any stock
exchange or trading system on which the Securities may be listed or admitted for
trading or to conform to usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company and is not inconsistent with
the provisions of this Indenture). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.
Any Security in global form shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Security in global
form to reflect the amount of any increase or decrease in the amount of
outstanding Security represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon instructions
given by the Holder of such Security in accordance with this Indenture. Payment
of Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price or interest, if any, on any Security in global form shall be
made to the Holder of such Security.
-10-
<PAGE>
SECTION 2.02. EXECUTION AND AUTHENTICATION. The Securities shall be
executed on behalf of the Company by its Chairman of the Board, one of its Vice
Chairmen, its President or one of its Vice Presidents. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of authentication of such Securities or at the
date of execution of this Indenture.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and make available for delivery Securities
for original issue in an aggregate Principal Amount at maturity of
$2,014,000,000 upon a Company Order without any further action by the Company;
PROVIDED, HOWEVER, that if the Company sells any Securities pursuant to the
Initial Purchaser's over-allotment option (the "Over-allotment Option") granted
pursuant to the Purchase Agreement, dated March 19, 1998, between the Company
and the Initial Purchaser, then the Trustee shall also authenticate and make
available for delivery additional Securities for original issue in an aggregate
Principal Amount at maturity of up to $302,100,000 pursuant to the
Over-Allotment Option upon a Company Order without any further action by the
Company. The aggregate Principal Amount at maturity of Securities outstanding at
any time may not exceed the amount set forth in the foregoing sentence, except
as provided in Section 2.07.
SECTION 2.03. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for purchase or payment ("Paying Agent") and
an office or agency where Securities may be presented for conversion into Common
Stock ("Conversion 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, one or more additional paying agents and one or more additional
conversion agents. The term Paying Agent includes any additional paying agent.
The term Conversion Agent includes any additional conversion or agent, including
any Person named pursuant to Section 4.05.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or
an Affiliate of the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent and the relevant Security. The Company
shall notify the Trustee of the name and address of any such agent. If the
-11-
<PAGE>
Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07. The Company or an Affiliate of the Company
may act as Paying Agent, Registrar, Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Registrar, Conversion Agent
and Paying Agent in connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY AND SECURITIES IN TRUST. Except as
otherwise provided herein, prior to 10:00 a.m., New York City time on each due
date of payments in respect of any Security, the Company shall deposit with the
Paying Agent a sum of money or securities sufficient to make such payments when
such payments are 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 Holders or the Trustee all money and securities held by the
Paying Agent for the making of payments in respect of the Securities and shall
notify the Trustee of any default by the Company in making any such payment. At
any time during the continuance of any such default, the Paying Agent shall,
upon the written request of the Trustee, forthwith pay to the Trustee all money
and securities so held in trust. If the Company or an Affiliate of the Company
acts as Paying Agent, it shall segregate the money and securities 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 and securities held by it to the Trustee
and to account for any funds and securities disbursed by it. Upon doing so, the
Paying Agent shall have no further liability for the money or securities.
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 Holders. If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee at least semiannually on
March 25 and September 25 a listing of Holders dated within 15 days of the date
on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Holders.
SECTION 2.06. EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES;
RESTRICTIONS ON TRANSFERS; DEPOSITARY.
(a) Upon surrender for registration of transfer of any Security at any
office or agency of the Company designated as Registrar or co-registrar pursuant
to Section 2.03 and satisfaction of the requirements for such transfer set forth
in this Section 2.06, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
-12-
<PAGE>
Securities may be exchanged for a like aggregate principal amount of
Securities of other authorized denominations. Securities to be exchanged shall
be surrendered at any office or agency to be maintained by the Company
designated as Registrar or co-registrar pursuant to Section 2.03 and the Company
shall execute and register, and the Trustee shall authenticate and make
available for delivery in exchange therefor, the Security or Securities which
the Securityholder making the exchange shall be entitled to receive, bearing
registration numbers not contemporaneously outstanding.
All Securities presented for registration of transfer or for exchange into
like Securities, purchase, redemption or conversion into Common Stock or payment
shall (if so required by the Company, the Trustee, the Registrar or any
co-registrar) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Trustee,
duly executed by the Holder or such Holder's attorney duly authorized in
writing.
No service charge shall be charged to the Securityholder for any exchange
for like Securities or registration of transfer of Securities, but the Company,
as a condition to any exchange or transfer, may require payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection therewith.
None of the Company, the Trustee, the Registrar or any co-registrar shall
be required to exchange for like Securities or register a transfer of (a) any
Securities for a period of 15 days next preceding the mailing of a notice of
redemption of Securities to be redeemed, or (b) any Securities or portions
thereof selected or called for redemption, or (c) any Securities or portion
thereof surrendered for conversion into Common Stock, or (d) any Securities or
portion thereof surrendered for purchase or redemption (and not withdrawn)
pursuant to Sections 3.08 or 3.09, respectively.
All Securities issued upon any transfer or exchange for like Securities
shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture as the Securities surrendered
upon such exchange or transfer.
(b) So long as the Securities are eligible for book-entry settlement with
the Depositary (as defined below), or unless otherwise required by law, all
Securities to be traded on the Portal Market may be represented by a Security in
global form registered in the name of the Depositary or the nominee of the
Depositary, except as otherwise specified below. The transfer and exchange of
beneficial interests in such Security in global form shall be effected through
the Depositary in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
Securities that upon initial issuance are owned by QIBs will be represented
by one or more Securities in global form. Transfers of interests in a Security
in global form will be made in accordance with the standing instructions and
procedures of the Depositary and its participants. The
-13-
<PAGE>
Trustee shall make appropriate endorsements to reflect increases or decreases in
the Principal Amounts of such Securities in global form as set forth on the face
of the Security in global form to reflect any such transfers.
At any time at the request of the beneficial holder of an interest in a
Security in global form, such beneficial holder shall be entitled to obtain a
definitive Security upon written request to the Trustee in accordance with the
procedures of the Depositary for the issuance thereof. Upon receipt of any such
request, the Trustee will cause, in accordance with the standing instructions
and procedures of the Depositary, the aggregate principal amount at maturity of
the Security in global form to be reduced and, following such reduction, the
Company will execute and the Trustee will authenticate and make available for
delivery to such beneficial holder (or its nominee) a Security or Securities in
the appropriate aggregate principal amount at maturity of the name of such
beneficial holder (or its nominee) and bearing such restrictive legends as may
be required by this Indenture.
Any transfer of a beneficial interest in a Security in global form which
cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Security or
Securities registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee. With respect to any such transfer, the Trustee
will cause, in accordance with the standing instructions and procedures of the
Depositary, the aggregate principal amount at maturity of the Security in global
form to be reduced and, following such reduction, the Company will execute and
the Trustee will authenticate and make available for delivery to the transferee
(or such transferee's nominee, as the case may be), Security or Securities in
the appropriate aggregate principal amount at maturity in the name of such
transferee (or its nominee) and bearing such restrictive legends as may be
required by this Indenture.
(c) So long as the Securities are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Security to
a QIB in accordance with Rule 144A, unless otherwise requested by the
transferor, Securities being so transferred, together with a certification,
substantially in the form of the reverse of the Security, from the transferor
that the transfer is being made in compliance with Rule 144A (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the
Security in global form to reflect an increase in the aggregate Principal Amount
of the Securities represented by the Security in global form, the Trustee shall
cancel such definitive Security or Securities in accordance with the standing
instructions and procedures of the Depositary and the aggregate principal amount
of Securities represented by the Security in global form will be increased
accordingly; PROVIDED that no definitive Security, or portion thereof, in
respect of which the Company or an Affiliate of the Company held any beneficial
interest shall be included in such Security in global form until such definitive
Security is freely tradable in accordance with Rule 144(k); PROVIDED FURTHER
that the Trustee shall make available for delivery Securities in definitive form
upon any transfer of a beneficial interest in any Security in global form to the
Company or any Affiliate of the Company.
-14-
<PAGE>
Upon any sale or transfer of a Security to an Institutional Accredited
Investor (other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture.
Any Security in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Securities to be tradeable on the Portal Market or as may be required for the
Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange upon which the Securities may be listed or traded or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Securities are subject.
(d) Every Security that bears or is required under this Section 2.06(d) to
bear the legend set forth in this Section 2.06(d) (together with any Common
Stock issued upon conversion of the Securities and required to bear the legend
set forth in Section 2.06(e), collectively, the "Restricted Securities") shall
be subject to the restrictions on transfer set forth in this Section 2.06(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Securityholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.06(d) and 2.06(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion therefor, which shall bear the legend set forth in Section 2.06(e),
if applicable) shall bear a legend in substantially the following form, unless
such Security has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), or unless otherwise agreed by the Company in
writing, with written notice thereof to the Trustee:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY
-15-
<PAGE>
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL
NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT (A) TO SUNBEAM
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE BANK OF NEW
YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED
HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
-16-
<PAGE>
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE
TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL
BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED
HEREBY PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PRO VISION). AS USED HEREIN, THE TERMS "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Any Security (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to the conditions for removal of the foregoing legend set
forth therein have been satisfied may, upon surrender of such Securities for
exchange to the Registrar in accordance with the provisions of this Section
2.06, be exchanged for a new Security or Securities, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend required by this
Section 2.06(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.06(d)), a Security in global form may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Securities in global form. Initially, the
Security in global form shall be issued to the Depositary, registered in the
name of Cede & Co., as the nominee of the Depositary, and deposited with the
Custodian for Cede & Co.
-17-
<PAGE>
If at any time the Depositary for a Security in global form notifies the
Company that it is unwilling or unable to continue as Depositary for such
Security, the Company may appoint a successor Depositary with respect to such
Security. If a successor Depositary for the Security is not appointed by the
Company within 90 days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for
authentication and delivery of Securities, will authenticate and deliver,
Securities in certificated form, in an aggregate principal amount equal to the
principal amount of the Security in global form, in exchange for such Security
in global form.
Securities in definitive certificated form issued in exchange for all or a
part of a Security in global form pursuant to this Section 2.06 shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Upon execution and authentication, the Trustee shall
make available for delivery such Securities in certificated form to the Persons
in whose names such Securities in certificated form are so registered.
At such time as all interests in a Security in global form have been
redeemed, converted, exchanged, repurchased or canceled, such Security in global
form shall be, upon receipt thereof, canceled by the Trustee in accordance with
standing procedures and instructions existing between the Custodian and
Depositary. At any time prior to such cancellation, if any interest in a
Security in global form is exchanged for Securities in definitive certificated
form, redeemed, converted, exchanged, repurchased by the Company pursuant to
Article 3 or canceled, or transferred for part of a Security in global form, the
principal amount of such Security in global form shall, in accordance with the
standing procedures and instructions existing between the Custodian and the
Depositary, be reduced or increased, as the case may be, and an endorsement
shall be made on such Security in global form, by the Trustee or the Custodian,
at the direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of a Security
shall bear a legend in substantially the following form, unless such Common
Stock has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has been issued upon conversion of
Securities that have been transferred pursuant to a registration statement that
has been declared effective under the Securities Act, or unless otherwise agreed
by the Company in writing with written notice thereof to the transfer agent for
the Common Stock:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS, AND,
-18-
<PAGE>
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER
THE COMMON STOCK EVIDENCED HEREBY WITHIN THE UNITED STATES OR TO, OR
FOR ACCOUNT OF U.S. PERSONS, EXCEPT (A) TO SUNBEAM CORPORATION OR ANY
SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH
RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT
PRIOR TO SUCH TRANSFER FURNISHES TO THE BANK OF NEW YORK, AS TRANSFER
AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT OR
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE),
IT WILL FURNISH TO THE BANK OF NEW YORK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(E) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED
-19-
<PAGE>
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.06(e).
(f) Any Security or Common Stock issued upon the conversion or exchange of
a Security that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
(g) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
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 Depositary
participants or beneficial owners of interests 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.
SECTION 2.07. REPLACEMENT SECURITIES. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and, upon its written request,
the Trustee shall authenticate and make available for delivery, in exchange for
any such mutilated Security or in lieu
-20-
<PAGE>
of any such destroyed, lost or stolen Security, a new Security of like tenor and
Principal Amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased or redeemed
by the Company pursuant to Article 3 hereof, or is about to be converted into
Common Stock the Company in its discretion may, instead of issuing a new
Security, pay, purchase or redeem such Security or authorize the conversion of
the same, as the case may be.
Upon the issuance of any new Securities under this Section 2.07, the
Company may, as a condition to such issuance, require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security issued pursuant to this Section 2.07 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.08. OUTSTANDING SECURITIES; DETERMINATIONS OF HOLDERS' ACTION.
Securities outstanding at any time are all the 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 thereof holds the
Security; PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite Principal Amount of Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which a
Trust Officer of the Trustee actually knows to be so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
of such determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9).
If a Security is replaced or paid pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced or paid Security is held by a bona fide purchaser.
-21-
<PAGE>
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following a Purchase Date or a
Fundamental Change Redemption Date, or on Stated Maturity, money or securities,
if permitted hereunder, sufficient to pay Securities payable on that date, then
on and after that date such Securities shall cease to be outstanding and
Original Issue Discount and interest, if any, on such Securities shall cease to
accrue; provided, that if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made.
If a Security is converted in accordance with Article 11, then from and
after such conversion such Security shall cease to be outstanding and Original
Issue Discount and interest, if any, shall cease to accrue on such Security.
SECTION 2.09. TEMPORARY SECURITIES. Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order the Trustee shall
authenticate and make available for delivery, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.03,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
Principal Amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 2.10. CANCELLATION. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it, or, if surrendered to the Trustee, shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. The Company may not issue new Securities to
replace Securities it has paid for or delivered to the Trustee for cancellation
or that any Holder has converted pursuant to Article 11. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this
-22-
<PAGE>
Section 2.10, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary practice.
SECTION 2.11. PERSONS DEEMED OWNERS. Prior to due presentment of a Security
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price and interest, if any, in respect thereof, for the purpose of
conversion and for all other purposes whatsoever, whether or not such Security
be overdue, and none of the Company, the Trustee or any agent of the Company or
the Trustee shall be affected by notice to the contrary.
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
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. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01. RIGHT TO REDEEM; NOTICES TO TRUSTEE. The Company, at its
option, may redeem the Securities in accordance with the provisions of
paragraphs 5 and 7 of the Securities. 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 Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 (i) in the case of any redemption of fewer than all of the
Securities, at least 60 days before the Redemption Date and (ii) in the case of
a redemption of all of the Securities, at least 45 days before the Redemption
Date, in each case unless a shorter notice shall be satisfactory to the Trustee.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the
Securities held in definitive form are to be redeemed, the Trustee shall select
the definitive Securities to be redeemed pro rata or by lot or by a method the
Trustee considers fair and appropriate (as long as
-23-
<PAGE>
such method is not prohibited by the rules of any stock exchange on which the
Securities are then listed, if any). The Trustee shall make the selection at
least 30 days, but not more than 60 days, before the Redemption Date from
outstanding definitive 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 multiple of $1,000.
Provisions of this Indenture that apply to definitive Securities called for
redemption also apply to portions of definitive Securities called for
redemption. The Trustee shall notify the Company promptly of the definitive
Securities or portions of definitive Securities to be redeemed.
Any interest in a Security held in global form by and registered in the
name of the Depositary or its nominee to be redeemed in whole or in part will be
redeemed in accordance with the procedures of the Depositary.
If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities which have been
converted during a selection of Securities to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60
days before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and Conversion Agent;
(5) that Securities called for redemption may be converted at any time
before the close of business on the last Trading Day prior to the Redemption
Date;
(6) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
-24-
<PAGE>
(7) that Securities called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(8) if fewer than all the outstanding Securities are to be redeemed, the
certificate number and Principal Amounts of the particular Securities to be
redeemed;
(9) that Original Issue Discount on Securities called for redemption will
cease to accrue on and after the Redemption Date; and
(10) the CUSIP number or numbers for the Securities.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
given, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price stated in the notice except for Securities
which are converted in accordance with the terms of this Indenture.
Upon the later of the Redemption Date or the date such Securities are
surrendered to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m., New York
City time, on the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or an Affiliate of the Company is the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the Redemption Price
of all Securities to be redeemed on that date other than Securities or portions
of Securities called for redemption which prior thereto have been delivered by
the Company to the Trustee for cancellation or have been converted for Common
Stock, and on or after the Redemption Date (unless the Company shall default in
the payment of the Securities at the Redemption Price), Original Issue Discount
on the Securities or portion of Securities called for redemption shall cease to
accrue and such Securities shall cease after the close of business on the
Business Day immediately preceding the Redemption Date to be convertible into
Common Stock and, except as provided in this Section 3.05 and Section 8.02, to
be entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the Redemption Price thereof and unpaid interest, if any, to
-25-
<PAGE>
(but excluding) the Redemption Date. The Paying Agent shall as promptly as
practicable return to the Company any money, with interest, if any, thereon, not
required for that purpose because of conversion of Securities. If such money is
then held by the Company in trust and is not required for such purpose it shall
be discharged from such trust.
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 and deliver to the Holder a new Security in an authorized
denomination equal in Principal Amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection
with any redemption of Securities, the Company may arrange for the purchase and
conversion for Common Stock of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Paying Agent in trust for the Holders, on or
before the close of business on the Redemption Date, an amount that, together
with any amounts deposited with the Paying Agent by or on behalf of the Company
for the redemption of the Securities, is not less than the applicable Redemption
Price, including interest, if any, to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities,
including all accrued Original Issue Discount, shall be deemed to be satisfied
and discharged to the extent such amount is so paid by such purchasers. If such
an agreement is entered into, a copy of which shall be filed with the Trustee 5
days prior to the date fixed for redemption, any Securities not duly surrendered
for conversion by the Holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers from
such Holders and (notwithstanding anything to the contrary contained in Article
11) surrendered by such purchasers for conversion, all immediately prior to the
close of business on the Redemption Date, subject to payment of the above amount
as aforesaid. The Paying Agent shall hold and pay to the Holders whose
Securities are selected for redemption any such amount paid to it in the same
manner as it would money deposited with it by the Company for the redemption of
Securities. Without the Paying Agent's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of any
Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Paying Agent as set forth in this
Indenture, and the Company agrees to indemnify the Paying Agent from, and hold
it harmless against, any loss, liability or expense (including the reasonable
fees and expenses of counsel) arising out of or in connection with any such
arrangement for the purchase and conversion of any Securities between the
Company and such purchasers, including the costs and expenses incurred by the
Paying Agent in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
-26-
<PAGE>
SECTION 3.08. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER.
(a) GENERAL. Subject to Section 3.10, Securities shall be purchased by the
Company pursuant to paragraph 6 of the Securities as of March 25, 2003, March
25, 2008 and March 25, 2013 (each, a "Purchase Date"), at the purchase price
specified therein (each, a "Purchase Price") at the option of the Holder
thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written notice of
purchase (a "Purchase Notice") at any time from the opening of business on the
date that is 20 Business Days prior to a Purchase Date until the close of
business on such Purchase Date, stating:
(A) the certificate number of the Security which the Holder will
deliver to be purchased;
(B) the portion of the Principal Amount of the Security which the
Holder will deliver to be purchased, which portion must be $1,000 or a multiple
thereof;
(C) that such Security shall be purchased by the Company as of the
Purchase Date pursuant to the terms and conditions specified in paragraph 6 of
the Securities and in this Indenture; and
(D) if the Company elects, pursuant to a Company Notice, to pay the
Purchase Price to be paid as of such Purchase Date in Common Stock, in whole or
in part, but such portion of the Purchase Price shall ultimately be payable to
such Holder entirely in cash because any of the conditions to the payment of the
Purchase Price (or portion thereof) in Common Stock are not satisfied prior to
or on the Purchase Date, as set forth in Section 3.08(d), whether such Holder
elects (x) to withdraw such Purchase Notice as to some or all of the Securities
to which such Purchase Notice relates (stating the Principal Amount at maturity
and certificate numbers of the Securities as to which such withdrawal shall
relate), or (y) to receive cash in respect of the entire Purchase Price for all
Securities to which such Purchase Notice relates; and
(2) delivery of such Security to the Paying Agent prior to, on or after the
Purchase Date (together with all necessary endorsements) at the offices of the
Paying Agent, such delivery being a condition to receipt by the Holder of the
Purchase Price therefor; provided, however, that such Purchase Price shall be so
paid pursuant to this Section 3.08 only if the Security so delivered to the
Paying Agent shall conform in all respects to the description thereof in the
related Purchase Notice.
If a Holder, in such Holder's Purchase Notice (and in any written notice of
withdrawal of a portion of a Holder's Securities previously submitted for
purchase pursuant to a Purchase Notice, the portion that remains subject to the
Purchase Notice), fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 3.08(a)(1), such Holder shall be
deemed to
-27-
<PAGE>
have elected to receive cash in respect of the entire Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.08, a portion of a Security if the Principal Amount of such portion is
$1,000 or a multiple of $1,000. Provisions of this Indenture that apply to the
purchase of all of a Security also apply to the purchase of such portion of such
Security.
Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.08 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Purchase Date and the
time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Purchase Notice contemplated by this Section 3.08(a) shall
have the right at any time prior to the close of business on the Purchase Date
to withdraw such Purchase Notice by delivery of a written notice of withdrawal
to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.
(b) COMPANY'S RIGHT TO ELECT MANNER OF PAYMENT OF PURCHASE PRICE. The
Company may elect with respect to any Purchase Date to pay the Purchase Price in
respect of the Securities to be purchased pursuant to Section 3.08(a) as of such
Purchase Date, in cash or Common Stock, or in any combination of cash and Common
Stock, subject to the conditions set forth in Sections 3.08(c) and (d). The
Company shall designate, in the Company Notice delivered pursuant to Section
3.08(e), whether the Company will purchase the Securities for cash or Common
Stock, or, if a combination thereof, the percentages of the Purchase Price of
Securities in respect of which it will pay in cash and/or Common Stock; PROVIDED
that the Company will pay cash for fractional interests in Common Stock. For
purposes of determining the existence of potential fractional interests, all
Securities subject to purchase by the Company held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to this Section
3.08 shall receive the same percentage of cash and/or Common Stock in payment of
the Purchase Price for such Securities, except (i) as provided in Section
3.08(d) with regard to the payment of cash in lieu of fractional interests in
Common Stock and (ii) in the event that the Company is unable to purchase the
Securities of a Holder or Holders for Common Stock because any necessary
qualifications or registrations of the Common Stock under applicable federal or
state securities laws cannot be obtained, the Company may purchase the
Securities of such Holder or Holders for cash. Once the Company has given its
Company Notice to Holders the Company may not change its election with respect
to the consideration (or components or percentages of components thereof) to be
paid except pursuant to this Section 3.08(b) or Section 3.08(d).
-28-
<PAGE>
At least two Business Days before the Company Notice Date (as defined in
Section 3.08(c)), the Company shall deliver an Officers' Certificate to the
Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(e),
(iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 3.08(d) have been or will be complied
with, and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.08(e).
(c) PURCHASE WITH CASH. At the option of the Company, the Purchase Price of
Securities in respect of which a Purchase Notice pursuant to Section 3.08(a) has
been given, or a specified percentage thereof, may be paid by the Company with
cash equal to the aggregate Purchase Price, or such specified percentage
thereof, as the case may be, of such Securities. If the Company elects to
purchase Securities with cash, a Company Notice as provided in Section 3.08(e)
shall be sent to Holders (and to beneficial owners as required by applicable
law) not less than 20 Business Days prior to the Purchase Date (the "Company
Notice Date").
(d) PAYMENT BY ISSUANCE OF COMMON STOCK. At the option of the Company, the
Purchase Price of Securities in respect of which a Purchase Notice pursuant to
Section 3.08(a) has been given, or a specified percentage thereof, may be paid
by the Company by the issuance of a number of shares of Common Stock equal to
the quotient obtained by dividing (i) the amount of cash to which the Holders
would have been entitled had the Company elected to pay all or such specified
percentage, as the case may be, of the Purchase Price of such Securities in cash
by (ii) the Market Price of a share of Common Stock, subject to the next
succeeding paragraph.
The Company will not issue a fractional share of Common Stock in payment of
the Purchase Price. Instead the Company will pay cash for the current market
value of the fractional share. The current market value of a fraction of a share
shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent (with one-half cent being rounded
upwards). It is understood that if a Holder elects to have more than one
Security purchased, the number of shares of Common Stock shall be based on the
aggregate amount of Securities to be purchased.
If the Company elects to purchase the Securities by the issuance of shares
of Common Stock, a Company Notice as provided in Section 3.08(e) shall be sent
to the Holders (and to beneficial owners as required by applicable law) not
later than the Company Notice Date.
-29-
<PAGE>
The Company's right to exercise its election to purchase the Securities
pursuant to Section 3.08 through the issuance of shares of Common Stock shall be
conditioned upon:
(i) the Company having given timely Company Notice of election to
purchase all or a specified percentage of the Securities with Common Stock as
provided herein;
(ii) the registration of the shares of Common Stock to be issued in
respect of the payment of the specified percentage of the Purchase Price under
the Securities Act; unless the shares of Common Stock so issued can be resold by
the Securityholder receiving such shares without registration under the
Securities Act pursuant to Rule 144 under the Securities Act or otherwise
(unless such Securityholder is the Company or an Affiliate of the Company);
(iii)any necessary qualification or registration under applicable state
securities laws or the availability of an exemption from such qualification and
registration; and
(iv) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that (A) the terms of the issuance of the Common
Stock are in conformity with this Indenture and (B) the shares of Common Stock
to be issued by the Company in payment of the specified percentage of the
Purchase Price in respect of Securities have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture in payment of the
specified percentage of the Purchase Price in respect of Securities, will be
validly issued, fully paid and nonassessable, and, in the case of such Officers'
Certificate, stating that conditions (i), (ii) and (iii) above have been
satisfied and, in the case of such Opinion of Counsel, stating that conditions
(ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of Common
Stock to be issued for each $1,000 Principal Amount of Securities and the Sale
Price of a share of Common Stock on each Trading Day during the period during
which the Market Price is calculated and ending on the Purchase Date. The
Company may elect to pay the Purchase Price (or any portion thereof) in Common
Stock only if the information necessary to calculate the Market Price is
reported in a daily newspaper of national circulation. Upon determination of the
actual number of shares of Common Stock in accordance with the provisions of
this Section 3.08, the Company will publish, or cause the publication of, such
determination in a daily newspaper of national circulation. If such conditions
are not satisfied with respect to a Holder or Holders prior to or on the
Purchase Date and the Company elected to purchase the Securities to be purchased
as of such Purchase Date pursuant to this Section 3.08 through the issuance of
shares of Common Stock, the Company shall pay the entire Purchase Price in
respect of such Securities of such Holder or Holders in cash.
The "Market Price" means the average of the Sale Prices of the Common Stock
for the five Trading Day period ending on the third Business Day prior to the
applicable Purchase Date (if the third Business Day prior to the applicable
Purchase Date is a Trading Day or, if it is not a Trading
-30-
<PAGE>
Day, then on the last Trading Day prior to such third Business Day),
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of such Trading Days during such five Trading Day period
and ending on such Purchase Date, of any event described in Section 11.06, 11.07
or 11.08; subject, however, to the conditions set forth in Sections 11.09 and
11.10. The "Sale Price" of the Common Stock on any date means the closing per
share sale price (or if no closing sale price is reported, the average of the
bid and ask prices or, if more than one, in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national or regional stock exchange, as reported by the National Association of
Securities Dealers Automated Quotation System.
(e) NOTICE OF ELECTION. The Company's notices of election to purchase with
cash or Common Stock, or any combination thereof, shall be sent to the Holders
(and to beneficial owners as required by applicable law) in the manner provided
in Section 12.02 at the time specified in Section 3.08(c) or (d), as applicable
(each, a "Company Notice"). Such Company Notices shall state the manner of
payment elected and shall contain the following information:
In the event the Company has elected to pay a Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal to such
specified percentage of the Purchase Price of the Securities held by such Holder
(except any cash amount to be paid in lieu of fractional share); and
(2) set forth the method of calculating the Market Price and state that
because the Market Price of Common Stock will be determined prior to the
Purchase Date, the Holders will bear the market risk with respect to the value
of the Common Stock to be received from the date such Market Price is determined
to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase Notice to
be completed by a Securityholder and shall state:
(i) the Purchase Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion
Agent;
(iii) that Securities as to which a Purchase Notice has been given
may be converted only if the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
-31-
<PAGE>
(iv) that Securities must be surrendered to the Paying Agent to
collect payment;
(v) that the Purchase Price for any Security as to which a
Purchase Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security as
described in (iv);
(vi) the procedures the Holder must follow under Section 3.08;
(vii) briefly, the conversion rights of the Securities; and
(viii) the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal pursuant to the
terms of Section 3.08 (a) (1) (D) or Section 3.10).
At the Company's request, the Trustee shall give the Company Notice to
Holders of the Securities in the Company's name and at the Company's expense;
provided, however, that, in all cases, the text of the Company Notice shall be
prepared by the Company.
(f) COVENANTS OF THE COMPANY. All shares of Common Stock delivered upon
conversion or purchase of the Securities shall be newly issued shares or
treasury shares, shall be fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have quoted all
such shares of Common Stock on each United States national securities exchange
or over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.
(g) PROCEDURE UPON PURCHASE. On the Business Day following the Purchase
Date, the Company shall deposit with the Paying Agent cash (in respect of a cash
purchase under Section 3.08(c) or for fractional interests, as applicable), or
shares of Common Stock, or a combination thereof, as applicable, sufficient to
pay the aggregate Purchase Price of the Securities to be purchased pursuant to
this Section 3.08. As soon as practicable after the Purchase Date, the Company
shall deliver to each Holder entitled to receive Common Stock, through the
Paying Agent, a certificate for the number of full shares of Common Stock, as
applicable, issuable in payment of such Purchase Price and cash in lieu of any
fractional interests. The Person in whose name the certificate for Common Stock
is registered shall be treated as a holder of record following the Purchase
Date. Subject to Section 3.08(d), no payment or adjustment will be made for
dividends on the Common Stock the record date for which occurred on or prior to
the Purchase Date.
-32-
<PAGE>
(h) TAXES. If a Holder of a Security is paid in Common Stock, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on such
issue of shares of Common Stock. However, the Holder shall pay any such tax
which is due because the Holder requests the shares of Common Stock to be issued
in a name other than the Holder's name. The Paying Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Paying Agent receives a sum sufficient to pay any
tax which will be due because the shares of Common Stock are to be issued in a
name other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.
SECTION 3.09. REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE.
(a) If a Fundamental Change shall occur at any time prior to March 25,
2018, subject to Section 3.10, each Holder of Securities shall have the right,
at such Holder's option, to require the Company to redeem any or all of such
Holder's Securities on the date (the "Fundamental Change Repurchase Date") (or
if such date is not a Business Day, the next succeeding Business Day) that is 45
days after the date of the Company's notice of such Fundamental Change. The
Securities will be redeemable in whole multiples of $1,000 of Principal Amount
at their accreted value on the Fundamental Change Repurchase Date. The Company
shall redeem such Securities at a price (the "Fundamental Change Redemption
Price") equal to the Issue Price plus accrued Original Issue Discount to, but
excluding, the Fundamental Change Repurchase Date; provided that, with respect
to a Fundamental Change, if the Applicable Price in connection with a
Fundamental Change is less than the Reference Market Price, the Company shall
redeem such Securities at a price equal to the foregoing Fundamental Change
Redemption Price multiplied by the fraction obtained by dividing the Applicable
Price by the Reference Market Price.
(b) The Company, or at its request (which must be received by the Trustee
at least three Business Days prior to the date the Trustee is requested to give
such notice as described below) the Trustee in the name of and at the expense of
the Company, shall mail to all Holders of record of the Securities a notice (a
"Fundamental Change Redemption Notice") of the occurrence of a Fundamental
Change and of the redemption right arising as a result thereof on or before the
tenth day after the occurrence of such Fundamental Change. The Company shall
promptly furnish the Trustee a copy of such notice.
(c) For a Security to be so redeemed at the option of the Holder, the
Paying Agent must receive such Security with the form entitled "Option to Elect
Redemption Upon a Fundamental Change" on the reverse thereof duly completed,
together with such Security duly endorsed for transfer, on or before the 30th
day after the date of such notice (or if such 30th day is not a Business Day,
the immediately preceding Business Day). All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Security for
redemption shall be determined by the Company, whose determination shall be
final and binding.
-33-
<PAGE>
SECTION 3.10. EFFECT OF PURCHASE NOTICE OR FUNDAMENTAL CHANGE REDEMPTION
NOTICE. Upon receipt by the Company of the Purchase Notice or Fundamental Change
Redemption Notice specified in Section 3.08(a) or Section 3.09(b), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Fundamental Change Redemption Notice, as the case may be, was given shall
(unless such Purchase Notice or Fundamental Change Redemption Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Fundamental Change Redemption Price, as
the case may be, with respect to such Security. Such Purchase Price or
Fundamental Change Redemption Price shall be paid to such Holder promptly
following the later of (x) the Purchase Date or the Fundamental Change
Redemption Date, as the case may be, with respect to such Security (provided the
conditions in Section 3.08(a) or Section 3.09(c), as applicable, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.08(a) or Section 3.09(c),
as applicable. Securities in respect of which a Purchase Notice or Fundamental
Change Redemption Notice, as the case may be, has been given by the Holder
thereof may not be converted for shares of Common Stock on or after the date of
the delivery of such Purchase Notice (or Fundamental Change Redemption Notice,
as the case may be), unless such Purchase Notice (or Fundamental Change
Redemption Notice, as the case may be) has first been validly withdrawn as
specified in the following two paragraphs.
A Purchase Notice or Fundamental Change Redemption Notice, as the case may
be, may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent at any time prior to the close of business on the
Purchase Date or the Fundamental Change Redemption Date, as the case may be, to
which it relates specifying:
(1) the certificate number of the Security in respect of which such notice
of withdrawal is being submitted,
(2) the Principal Amount of the Security with respect to which such notice
of withdrawal is being submitted, and
(3) the Principal Amount, if any, of such Security which remains subject to
the original Purchase Notice or Fundamental Change Redemption Notice, as the
case may be, and which has been or will be delivered for purchase by the
Company.
A written notice of withdrawal of a Purchase Notice may be in the form of
(i) a conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
-34-
<PAGE>
There shall be no purchase of any Securities pursuant to Section 3.08
(other than through the issuance of Common Stock in payment of the Purchase
Price, including cash in lieu of any fractional shares) or redemption pursuant
to Section 3.09 if there has occurred (prior to, on or after, as the case may
be, the giving, by the Holders of such Securities, of the required Purchase
Notice or Fundamental Change Redemption Notice, as the case may be) and is
continuing an Event of Default (other than a default in the payment of the
Purchase Price or Fundamental Change Redemption Price, as the case may be, with
respect to such Securities).
SECTION 3.11. DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE REDEMPTION
PRICE. On or before the Business Day following a Purchase Date or a Fundamental
Change Redemption Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or an Affiliate of the
Company is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of money and/or securities, if permitted
hereunder, sufficient to pay the aggregate Purchase Price or Fundamental Change
Redemption Price, as the case may be, of all the Securities or portions thereof
which are to be purchased as of such Purchase Date or Fundamental Change
Redemption Date, as the case may be.
SECTION 3.12. SECURITIES PURCHASED IN PART. Any Security that is to be
purchased, or redeemed upon a Fundamental Change, only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate Principal
Amount equal to, and in exchange for, the portion of the Principal Amount of the
Security so surrendered which is not purchased or redeemed.
SECTION 3.13. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES. In connection with any offer to purchase or redemption of Securities
under Section 3.08 or 3.09 hereof, the Company shall (i) comply with Rule 13e-4
(which term, as used herein, includes any successor provision thereto) under the
Exchange Act, if applicable, (ii) file the related Schedule 13E-4 (or any
successor schedule, form or report) under the Exchange Act, if applicable, and
(iii) otherwise comply with all Federal and state securities laws so as to
permit the rights and obligations under Section 3.08 and 3.09 to be exercised in
the time and in the manner specified in Section 3.08 and 3.09.
SECTION 3.14. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent
shall return to the Company any cash or shares of Common Stock that remain
unclaimed as provided in paragraph 14 of the Securities, together with interest
or dividends, if any, thereon, held by them for the payment of a Purchase Price
or Fundamental Change Redemption Price, as the case may be; provided, however,
that to the extent that the aggregate amount of cash or shares of Common
-35-
<PAGE>
Stock deposited by the Company pursuant to Section 3.11 exceeds the aggregate
Purchase Price or Fundamental Change Redemption Price, as the case may be, of
the Securities or portions thereof which the Company is obligated to purchase as
of the Purchase Date or Fundamental Change Redemption Date, as the case may be,
then promptly after the Business Day following the Purchase Date or Fundamental
Change Redemption Date, as the case may be, the Trustee and the Paying Agent
shall return any such excess to the Company together with interest or dividends,
if any, thereon.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and interest, if any,
shall be considered paid on the applicable date due or, in the case of a
Purchase Price or Fundamental Change Redemption Price, on the Business Day
following the applicable Purchase Date or Fundamental Change Redemption Date, as
the case may be, if on such date the Trustee or the Paying Agent holds, in
accordance with this Indenture, money or securities, if permitted hereunder,
sufficient to pay all such amount then due.
The Company shall pay interest on overdue amounts at the rate set forth in
paragraph 1 of the Securities and it shall pay interest on overdue interest at
the same rate compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest on overdue interest shall
accrue from the date such amounts became overdue and shall be in lieu of, and
not in addition to, the continued accrual of Original Issue Discount.
SECTION 4.02. FINANCIAL INFORMATION; SEC REPORTS. The Company will deliver
to the Trustee (a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company (i) a consolidated balance sheet of
the Company and its Subsidiaries as of the end of such fiscal year and the
related consolidated statements of operations, stockholders' equity and cash
flows for such fiscal year, all reported on by an independent public accountant
of nationally recognized standing and (ii) a report containing a management's
discussion and analysis of the financial condition and results of operations and
a description of the business and properties of the Company and (b) as soon as
available and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of the Company (i) an unaudited consolidated
financial report for such quarter and (ii) a report containing a management's
discussion and analysis of the financial condition and results of operations of
the Company; PROVIDED that the foregoing shall not be required for any fiscal
year or quarter, as the case may be, with respect to which the Company
-36-
<PAGE>
files or expects to file with the Trustee an annual report or quarterly report,
as the case may be, pursuant to the third paragraph of this Section 4.02.
So long as the Securities or the Common Stock issued upon conversion of the
Securities are Restricted Securities, if the Company is not subject to either
Section 13 or 15(d) of the Exchange Act, the Company shall at the request of any
Holder of Securities (or holders of Common Stock issued upon conversion of the
Securities) provide to such Holder of Securities (or holders of such Common
Stock) and any prospective purchaser designated by such Holders (or holders of
such Common Stock), as the case may be, such information, if any, required by
Rule 144A(d)(4) under the Securities Act.
The Company shall file with the Trustee, within 15 days after it files such
annual and quarterly reports, information, documents and other reports with the
SEC, copies of its annual report and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company
(commencing with the fiscal year of the Company ending December 27, 1998), an
Officers' Certificate in which one of the two Officers signing such certificate
is either the principal executive officer, principal financial officer or
principal accounting officer of the Company, stating whether or not to the best
knowledge of the signers thereof the Company is in Default in the performance
and observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in Default, specifying all such Defaults
and the nature and status thereof of which the signers may have knowledge.
The Company will deliver to a Trust Officer of the Trustee, forthwith upon
becoming aware of any Default in the performance or observance of any covenant,
agreement or condition contained in this Indenture, or any Event of Default, an
Officers' Certificate specifying with particularity such Default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this Section 4.03 shall be delivered
to the Trustee at its Corporate Trust Office.
-37-
<PAGE>
SECTION 4.04. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee,
the respective Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.05. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer, exchange, purchase, redemption or
conversion and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The office or agency of The
Bank of New York, located at 101 Barclay Street, 21st Floor West, Corporate
Trust Trustee Administration, New York, New York 10286 (Attention: Sunbeam
Corporation, Zero Coupon Convertible Senior Subordinated Debentures due 2018)
shall be such office or agency for all of the aforesaid purposes unless the
Company shall maintain some other office or agency for such purposes and shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such other office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Trustee Administration.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes.
SECTION 4.06. EXISTENCE. Subject to Article 5, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its existence and rights (charter and statutory); PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right if the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 4.07. MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section 4.07 shall prevent
the Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary.
-38-
<PAGE>
SECTION 4.08. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property, of the Company or any Subsidiary, (ii) all claims for labor, materials
and supplies which, if unpaid, might by law become a lien or charge upon the
property of the Company or any Subsidiary, and (iii) all stamps and other
duties, if any, which may be imposed by the United States or any political
subdivision thereof or therein in connection with the issuance, transfer,
exchange or conversion of any Securities or with respect to this Indenture;
PROVIDED HOWEVER, that, in the case of clauses (i) and (ii), the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company, or (B) if the amount
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 4.09. CALCULATION OF ORIGINAL ISSUE DISCOUNT. The Company shall
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and accrual periods) accrued on outstanding Securities as of the end of such
year and (ii) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS.
The Company shall not consolidate with or merge with or into any other
Person (other than in a merger or consolidation in which the Company is the
surviving Person) or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person (if other than the Company) formed by such consolidation
or into which the Company is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or trust
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia, and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee in form satisfactory
to the Trustee, the due and punctual payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, Fundamental Change Redemption Price or
interest, if any, on the Securities, according to their tenor, and the due and
punctual performance of all of the covenants and obligations of the Company
under the Securities and this Indenture, and shall have provided for conversion
rights in accordance with the Indenture;
-39-
<PAGE>
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(iii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article 5 and that all conditions precedent herein provided for
relating to such transaction have been satisfied.
The successor Person formed by such consolidation or into which the Company
is merged or the successor Person to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor had been named as the Company herein; and thereafter, except in the
case of a lease, the Company shall be discharged from all obligations and
covenants under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. AN "EVENT OF DEFAULT" OCCURS IF:
(1) the Company defaults in the payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price or a Fundamental Change Redemption Price with
respect to any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration, when due for purchase by the
Company or otherwise (provided that in the case of a default in the payment of
Liquidated Damages, such default in payment of Liquidated Damages continues for
a period of 30 days), whether or not such payment shall be prohibited by Article
10;
(2) the Company fails to comply with any of its agreements or covenants
in the Securities or this Indenture (other than those referred to in clause (1)
above) and such failure continues for 60 days after receipt by the Company of a
Notice of Default;
(3) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the Company
under any Bankruptcy Law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 consecutive days; or a decree or
order of a court having jurisdiction in the premises of the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the
-40-
<PAGE>
winding-up or liquidation of its affairs, shall have been entered, and such
decree or order shall have remained in force undischarged and unstayed of a
period of 60 consecutive days; or
(4) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking reorganization
under any Bankruptcy Law, or shall consent to the filing of any such petition,
or shall consent to the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of its property or shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors.
A Default under clause (2) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (2) above after
actual receipt of such notice (a "Notice of Default"). Any such notice must
specify the Default, demand that it be remedied and state that such notice is a
Notice of Default.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of
Default specified in Section 6.01(3) or (4)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding by notice to the
Company and the Trustee, may declare the Issue Price and accrued Original Issue
Discount and Liquidated Damages, if any, accrued to the date of declaration on
all the Securities to be immediately due and payable. Upon such a declaration,
such Issue Price and accrued Original Issue Discount and accrued Liquidated
Damages, if any, shall be due and payable immediately. If an Event of Default
specified in Section 6.01(3) or (4) occurs and is continuing, the Issue Price
and accrued Original Issue Discount and accrued Liquidated Damages, if any, on
all the Securities shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. The Holders
of a majority in aggregate Principal Amount of the Securities at the time
outstanding, by notice to the Company and the Trustee (and without notice to any
other Securityholder), 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 the Issue Price
and accrued Original Issue Discount that have become due solely as a result of
acceleration and if all amounts due to the Trustee under Section 7.07 have been
paid. 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 the Issue Price and accrued
-41-
<PAGE>
Original Issue Discount 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 the Trustee does not possess
any of the Securities or does not produce any of the Securities 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 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
aggregate Principal Amount of the Securities at the time outstanding, by notice
to the Company and the Trustee (and without notice to any other Securityholder),
may waive an existing Default and its consequences except (1) an Event of
Default described in Section 6.01(l), (2) a Default in respect of a provision
that under Section 9.02 cannot be amended without the consent of each
Securityholder affected or (3) a Default that constitutes a failure to convert
any Security in accordance with the terms of Article 11. 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 aggregate
Principal Amount of the Securities at the time outstanding 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 that the Trustee determines in good faith is unduly prejudicial to
the rights of other Holders or would involve the Trustee in personal liability
unless the Trustee is offered indemnity satisfactory to it.
SECTION 6.06. LIMITATION ON SUITS. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Company and a Trust Officer of the Trustee
written notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by the Trustee in complying with any such
direction;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, the request and the offer of security or indemnity; and
-42-
<PAGE>
(5) the Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding 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 any
other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, but subject to Article 10, the right of any
Holder to receive payment of the Principal Amount, Issue Price, accrued Original
Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption
Price or interest, if any, in respect of the Securities held by such Holder, on
or after the respective due dates expressed in the Securities or any Redemption
Date and to convert the Securities in accordance with Article 11, or to bring
suit for the enforcement of any such payment on or after such respective dates
or the right to convert, shall not be impaired or affected adversely without the
consent of each such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default described
in Section 6.01(1) occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount owing with respect to the Securities and the amounts provided for
in Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest, if any, in respect of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of any such amount) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, if any, Redemption Price, Purchase Price, Fundamental Change Redemption
Price or interest, if any, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
-43-
<PAGE>
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
If the Trustee does not file a claim or proof of debt in the form required
in such proceedings prior to 30 days before the expiration of the time to file
such claims or proofs, then any holder or holders of Senior Indebtedness or
their representative or representatives shall have the right to demand, sue for,
collect, receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the holders of
Senior Indebtedness as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Indebtedness or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claims of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent required by Article
10;
THIRD: to Holders for amounts due and unpaid on the Securities for the
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price or interest, if any, as the case may be, ratably, without
preference or priority of any kind, according to such amounts due and payable on
the Securities; and
FOURTH: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders 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.
-44-
<PAGE>
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 (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 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 aggregate Principal Amount of the
Securities at the time outstanding.
SECTION 6.12. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued Liquidated Damages, if
any, Redemption Price, Purchase Price or Fundamental Change Redemption Price in
respect of Securities, or any interest on any such amounts, as contemplated
herein, or 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 laws and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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 its exercise as a prudent individual would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
-45-
<PAGE>
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same 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).
This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) 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.
Subparagraphs (c)(1),(2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.
(f) Money held by the Trustee in trust hereunder 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 any financial liability in the
performance of any of its duties hereunder, or
-46-
<PAGE>
in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
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 a
Company Order, 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 a Company Order, Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) Subject to the provisions of Section 7.01(c), 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.
(e) The Trustee may consult with counsel selected by it and any advice
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture, unless the Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer of the Trustee 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.
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 would
have if it were not Trustee. Any Paying
-47-
<PAGE>
Agent, Registrar, Conversion Agent or co-registrar may do the same with the like
rights. However, the Trustee must comply with Section 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for Company's use of the proceeds from the Securities, it shall not
be responsible for any statement in the offering memorandum for the Securities
or in the Indenture or the Securities (other than its certificate of
authentication), the acts of a prior Trustee hereunder, or the determination as
to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and
if it is actually known to the Trustee, the Trustee shall give to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default described in Section 6.01(1), 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 Holders. The
second sentence of this Section 7.05 shall be in lieu of the proviso to Section
315(b) of the TIA and such provision is hereby expressly excluded from this
Indenture, as permitted by the TIA. The Trustee shall not give notice of a
Default pursuant to Section 6.01(2) until at least sixty days have passed since
its occurrence.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May
1, beginning with the May 1 following the date of this Indenture, the Trustee
shall mail to each Holder a brief report dated as of such May 1 that complies
with TIA Section 313(a), if required by such 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 Holders shall be filed
with the SEC and each securities exchange on which the Securities are listed.
The Company agrees to notify the Trustee whenever the Securities become listed
on any securities exchange and of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company agrees:
(a) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expense, advances and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
-48-
<PAGE>
(c) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, liability, damage, claim or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
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, except that held in trust to pay the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, if any, Redemption Price, Purchase Price, Fundamental Change Redemption
Price or interest, if any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(3) or (4), the expenses
are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign by so
notifying the Company; provided, however, that no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant to
this Section 7.08. The Holders of a majority in aggregate Principal Amount of
the Securities at the time outstanding 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, or ceases to be eligible under,
Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by resolution of
its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. 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.
-49-
<PAGE>
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount of the Securities at the
time outstanding may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor 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 (including the trust created by this Indenture) or
assets to, another corporation, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times
satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee shall
have a combined capital and surplus of at least $50,000,000 (or if the Trustee
is a member of a bank holding company system, its bank holding company shall
have a combined capital and surplus of $50,000,000) as set forth in its most
recent published annual report of conditions. Nothing herein contained shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b). If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 7.10, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article 7.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES. When (i) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding
Securities have become due and payable and the Company deposits with the Trustee
cash and/or securities, as permitted by the terms hereof, sufficient to pay at
Stated Maturity the Principal Amount of all outstanding Securities (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 7.07, cease to be of further effect. The Trustee shall join
in the execution of a document prepared by the Company
-50-
<PAGE>
acknowledging satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and Opinion of Counsel and at
the cost and expense of the Company.
SECTION 8.02. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent
shall return to the Company upon written request any money or securities held by
them for the payment of any amount with respect to the Securities that remains
unclaimed for two years, provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, may at the expense of the
Company cause to be published once in a newspaper of general circulation in The
City of New York or mail to each such Holder notice that such money or
securities remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication or mailing, any
unclaimed money or securities then remaining will be returned to the Company.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may
amend this Indenture and the Securities without the consent of any
Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 or Section 11.14;
(3) to provide for uncertificated Securities in addition to
certificated Securities so long as such uncertificated Securities are in
registered form for purposes of the Internal Revenue Code of 1986, as amended;
(4) to make any change that does not adversely affect the right of any
Securityholder; or
(5) to make any change to comply with the TIA, or any amendment
thereto, or to comply with any requirement of the SEC in connection with the
qualification, if any, of the Indenture under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company and the Trustee, with
the written consent of the Holders of at least a majority in aggregate Principal
Amount of the Securities at the time outstanding, may amend this Indenture or
the Securities. However, without the consent of
-51-
<PAGE>
each Securityholder affected, an amendment or supplement to this Indenture or
the Securities may not:
(1) make any change to the Principal Amount of Securities whose Holders
must consent to an amendment;
(2) make any change to the manner or rate of accrual in connection with
Original Issue Discount or interest, if any, reduce the rate of interest
referred to in paragraph 1 of the Securities or extend the time for payment of
Original Issue Discount or interest, if any, on any Security;
(3) reduce the Principal Amount or the Issue Price of or extend the
Stated Maturity of any Security;
(4) reduce the Redemption Price, Purchase Price or Fundamental Change
Redemption Price of any Security;
(5) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Article 10 that adversely affects the rights of
any Securityholder in any material respect;
(7) make any change in Section 6.04, Section 6.07 or this Section 9.02,
except to increase any such percentage;
(8) make any change that adversely affects the right to convert any
Security; or
(9) make any change that adversely affects the right to require the
Company to purchase the Securities, or the right to require the Company to
redeem the Securities upon a Fundamental Change, in accordance with the terms
thereof and this Indenture.
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 or Section 9.01 may not make any
change that adversely affects the rights under Article 10 of any holder of
Senior Indebtedness then outstanding unless the requisite holders of such Senior
Indebtedness consent to such change pursuant to the terms of such Senior
Indebtedness.
-52-
<PAGE>
After an amendment under this Section 9.02 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article 9 shall comply with the TIA as then
in effect, if then required to so comply.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS. Until
an amendment, waiver or other action becomes effective, a consent to it or any
other action by a Holder of a Security is a continuing consent by the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security. However,
any such Holder or subsequent Holder may revoke the consent, waiver or action as
to such Holder's Security or portion of the Security if the Trustee receives the
notice or revocation before the date the amendment, waiver or action becomes
effective. After an amendment, waiver or action becomes effective, it shall bind
every Securityholder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 9 may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
SECTION 9.06. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Trustee shall
sign any supplemental indenture 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 such
supplemental indenture. In signing such amendment the Trustee shall be entitled
to receive, and (subject to the provisions of 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. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture under this Article 9, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
-53-
<PAGE>
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT OF SUBORDINATION. The Company covenants and agrees
for itself and its successors, and each Holder of Securities issued hereunder by
such Holder's acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article 10; and
each Person holding any such Security whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment of the Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price, interest, if any, or any other payments, in
respect of all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in right of payment to
the prior payment in full in cash or other payment satisfactory to the holders
of all Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of this Article 10 shall prevent the occurrence of any Default
or Event of Default hereunder.
SECTION 10.02. PAYMENTS TO HOLDERS. No payment shall be made with respect
to the payment of Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price, interest, if any, or any other payments, on
the Securities, except payments and distributions made by the Trustee as
permitted by Section 10.05, if:
(i) a default in any payment obligations in respect of Senior
Indebtedness occurs and is continuing, without regard to any applicable period
of grace (whether at maturity or at a date fixed for payment or by declaration
or otherwise); or
(ii) any other default occurs and is continuing with respect to
Designated Senior Indebtedness that permits the holders of such Designated
Senior Indebtedness as to which such default relates to accelerate its maturity
and the Trustee receives a notice of the default (a "Payment Blockage Notice")
from the Company or a Representative for any issue of Designated Senior
Indebtedness.
If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice. No
nonpayment default that existed or was continuing on the date of
-54-
<PAGE>
delivery of any Payment Blockage Notice to the Trustee shall be, or shall be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured or waived for a period of not less than 90 days (it being
acknowledged that (x) any action of the Company or any of its Subsidiaries
occurring subsequent to delivery of a Payment Blockage Notice that would give
rise to any event of default pursuant to any provision of Senior Indebtedness
under which an event of default previously existed (or was continuing at the
time of delivery of such Payment Blockage Notice) shall constitute a new event
of default for this purpose and (y) any breach of a financial covenant giving
rise to a nonpayment default for a period ending subsequent to the date of
delivery of the respective Payment Blockage Notice shall constitute a new event
of default for this purpose.)
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:
(1) in case of a default referred to in clause (i) above, the earlier
of the date upon which the default is cured or waived in accordance with the
terms of the governing instrument or ceases to exist, or
(2) in the case of a default referred to in clause (ii) above, the
earlier of the date upon which the default is cured, waived in accordance with
the terms of the governing instrument or ceases to exist or 179 days after the
date on which the applicable Payment Blockage Notice is received by the Trustee
if the maturity of such Designated Senior Indebtedness has not been accelerated,
unless this Article 10 otherwise prohibits the payment or distribution at the
time of such payment or distribution.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization or
bankruptcy of Company, whether voluntary or involuntary or insolvency,
reorganization, receivership or similar proceedings relating to the Company or
its property, or an assignment for the benefit of creditors or any marshaling of
the Company's assets or liabilities, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or provision is made
for such payment in cash or other payment satisfactory to the holders of Senior
Indebtedness, before any payment is made on account of the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued Liquidated Damages, if
any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or
interest, if any, in respect of the Securities or any other payment in respect
of the Securities (except payments made pursuant to Article 8 hereof from monies
deposited with the Trustee pursuant thereto prior to the happening of such
dissolution or winding-up or liquidation or reorganization or bankruptcy of
Company, whether voluntary or
-55-
<PAGE>
involuntary or insolvency, reorganization, receivership or similar proceedings
relating to the Company or its property, or an assignment of the benefit of
creditors or any marshaling of the Company's assets or liabilities), and upon
any such dissolution or winding-up or liquidation or reorganization or
bankruptcy of Company, whether voluntary or involuntary or insolvency,
reorganization, receivership or similar proceedings relating to the Company or
its property, or an assignment of the benefit of creditors or any marshaling of
the Company's assets or liabilities, any payment by the Company, or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee would be entitled, except for
the provisions of this Article 10, shall (except as aforesaid) be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee if received by them or it, directly to the holders
of Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders, as calculated by the
Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
such Senior Indebtedness may have been issued, as their respective interests may
appear to the extent necessary to pay all such Senior Indebtedness in full in
cash or other payment satisfactory to the holders of such Senior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders or to the Trustee.
In the event that any Securities are declared due and payable before their
Stated Maturity pursuant to Section 6.02, then and in such event the Company
shall promptly notify holders of its Senior Indebtedness of such acceleration.
The Company may not pay monies owed pursuant to the Securities until 120 days
have passed after such acceleration occurs and may thereafter pay the Securities
if this Article 10 permits the payment at that time.
In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing provisions in this Section 10.02, shall
be received by the Trustee or the Holders of the Securities before all Senior
Indebtedness of the Company is paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or provision is made
for such payment in cash or other payment satisfactory to the holders of such
Senior Indebtedness, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness of the Company or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any such Senior Indebtedness may have been issued, as their
respective interests may appear, as calculated by the Company, for application
to the payment of all such Senior Indebtedness remaining unpaid to the extent
necessary to pay all such Senior Indebtedness in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, after giving effect to
any concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness.
-56-
<PAGE>
For purposes of this Article 10, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article 10 with respect to
the Securities to the payment of all Senior Indebtedness of the Company which
may at the time be outstanding; provided that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of such Senior Indebtedness
(other than leases that are not assumed by the Company or the new corporation,
as the case may be) are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article 5 hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 10.02 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article 5
hereof.
Nothing in this Section 10.02 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07. This Section 10.02 shall be subject
to the further provisions of Section 10.05.
SECTION 10.03. SUBROGATION OF SECURITIES. Subject to the payment in full in
cash or other payment satisfactory to the holders of all Senior Indebtedness of
the Company, the rights of the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to such Senior
Indebtedness until the Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price and interest, if any, in respect of the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Holders or the Trustee would be
entitled except for the provisions of this Article 10, and no payment over
pursuant to the provisions of this Article 10, to or for the benefit of the
holders of such Senior Indebtedness by Holders or the Trustee, shall, as between
the Company, its creditors other than holders of its Senior Indebtedness, and
the Holders of the Securities be deemed to be a payment by the Company to or on
account of its Senior Indebtedness; and no payments or distributions of cash,
property or securities to or for the benefit of the Holders pursuant to the
subrogation provisions of this Article 10, which would otherwise have been paid
to the holders of Senior Indebtedness shall be deemed to be a payment by the
Company to or for the account of the Securities. It is understood that the
provisions of this Article 10 are and are intended solely for the purpose of
defining the relative rights of the Holders on the one hand, and the holders of
Senior Indebtedness, on the other hand.
-57-
<PAGE>
Nothing contained in this Article 10 or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of its Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price and interest, if any, in respect of the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon an Event of Default, subject to the rights, if any, under
this Article 10 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, subject to the provisions of Section 7.01, and the
Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, delivered to the Trustee,
to the Holders for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the 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.
SECTION 10.04. AUTHORIZATION BY HOLDERS. Each Holder by such Holder's
acceptance thereof authorizes and directs the Trustee in such Holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 10 and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
SECTION 10.05. NOTICE TO TRUSTEE. The Company shall give prompt written
notice in a form of an Officers' Certificate to a Trust Officer of any fact
known to the Company which would prohibit the making of any payment of monies to
or by the Trustee or any Paying Agent in respect of the Securities pursuant to
the provisions of this Article 10. Notwithstanding the provisions of this
Article 10 or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article 10, unless and until a
Trust Officer shall have received written notice thereof at the Corporate Trust
Office from the Company (in the form of an Officers' Certificate) or a holder or
holders of Senior Indebtedness or a Representative or from any trustee therefor;
and before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 7.01, shall be entitled in all respects to assume that no
such facts exist; provided that if on a date not fewer than two Business Days
prior to the date upon which by the terms hereof any such monies may become
payable for any
-58-
<PAGE>
purpose (including, without limitation, the payment of the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued Liquidated Damages, if
any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or
interest, if any, in respect of any Security) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section
10.05, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such prior
date.
Notwithstanding anything to the contrary herein set forth, nothing shall
prevent any payment by the Company or the Trustee to the Holders of monies in
connection with a redemption of Securities if (i) notice of such redemption has
been given pursuant to Article 3 hereof prior to the receipt by the Trustee of
written notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date.
The Trustee, subject to the provisions of Section 7.01, shall be entitled
to rely conclusively on the delivery to it of a written notice by a Person
representing himself to be a holder or a Representative of Designated Senior
Indebtedness or a Representative of Senior Indebtedness (or a trustee on behalf
of such holder) to establish that such notice has been given by a holder or a
Representative of Designated Senior Indebtedness or a Representative of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article 10, the Trustee may 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 any other facts pertinent to the
rights of such Person under this Article 10, and if such evidence is not
furnished the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 10.06. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in
its individual capacity shall be entitled to all the rights set forth in this
Article 10 in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of such Senior Indebtedness, and nothing or
elsewhere in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 10,
-59-
<PAGE>
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and, subject to the provisions of Section 7.01, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders, the Company or any other Person money or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article 10 or
otherwise.
SECTION 10.07. NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by (i) any
amendment of or addition or supplement to any such Senior Indebtedness or any
instrument or agreement relating thereto (unless otherwise expressly provided
therein), or (ii) any act or failure to act on the part of the Company or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of the
instrument, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.
SECTION 10.08. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS. Each Holder of Securities by such Holder's acceptance thereof,
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, 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, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holder or holders unless such
holder or holders shall have agreed in writing thereto.
SECTION 10.09. REINSTATEMENT OF SUBORDINATION. If, at any time, all or part
of any payment of any Senior Indebtedness theretofore made by the Company or any
other Person is rescinded or must otherwise be returned by the holders of such
Senior Indebtedness for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of the Company or such other
Person), these subordination provisions shall continue to be effective or be
reinstated, as the case may be, all as though such payment had not been made.
SECTION 10.10. PERMITTED PAYMENTS. Nothing contained in this Article 10 or
elsewhere in this Indenture, or in the Securities shall prevent (a) the Company
at any time, except under the conditions described in Section 10.02, from making
payments at any time of Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest, if any, in respect of the
Securities, or from depositing with the Trustee or any Paying Agent money for
such payments, or (b) the application by the Trustee or Paying Agent of any
moneys deposited with it under this
-60-
<PAGE>
Indenture to the payment of or on account of the Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price or interest, if any,
in respect of the Securities to the Holders entitled thereto to the
beneficiaries thereof, if such payment would not have been prohibited by the
provisions of Section 10.02.
SECTION 10.11. ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article 10 shall
(unless the context otherwise requires) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article 10 in addition to or
in place of the Trustee; PROVIDED, HOWEVER, that the first paragraph of Section
10.05 shall not apply to the Company or any Affiliate of the Company if it or
such Affiliate acts as Paying Agent.
SECTION 10.12. TREATMENT OF CONVERSION PAYMENTS. Notwithstanding anything
in this Indenture to the contrary, neither the issuance and delivery of junior
securities upon conversion of the Securities in accordance with Article 11 nor
the payment of cash in lieu of fractional shares of Common Stock in accordance
with Article 11 shall be deemed to constitute a payment or distribution on
account of the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Liquidated Damages, if any, Redemption Price or Fundamental Change
Purchase Price or interest, if any, in respect of the Securities. For the
purposes of this paragraph, the term "junior securities" means (a) shares of any
stock of any class of the Company, (b) securities of the Company which are
subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article 10, and (c) any securities into
which the Securities become convertible pursuant to Section 11.14 which are
securities of a Person required to enter into a supplemental indenture pursuant
to such section (or Section 5.01) and are either (x) shares of any stock of any
class of such Person, or (y) securities of such Person which are subordinated in
right of payment to all Senior Indebtedness of such Person which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
or, are so subordinated as provided in this Article 10. Nothing contained in
this Article 10 or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as among the Company, its creditors other than the holders
of Senior Indebtedness and the Holders, the right, which is absolute and
unconditional, of the Holder to convert such Security in accordance with Article
11.
SECTION 10.13. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in
-61-
<PAGE>
bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
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.
SECTION 10.14. HOLDERS OF SENIOR INDEBTEDNESS MAY FILE PROOFS OF CLAIM. If
the Trustee does not file a claim or proof of debt in the form required in any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding pursuant to Section 6.09
prior to 30 days before the expiration of the time to file such claims or
proofs, then any holder or holders of Senior Indebtedness or their
representative or representatives shall have the right to demand, sue for,
collect, receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the holders of
Senior Indebtedness as provided in this Article 10 and to file and prove all
claims therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Indebtedness or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article 10.
ARTICLE 11
CONVERSION
SECTION 11.01. CONVERSION PRIVILEGE. A Holder of a Security may convert
such Security for Common Stock at any time during the period stated in paragraph
9 of the Securities. The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount thereof (the "Conversion
Rate") shall be that set forth in paragraph 9 in the Securities, subject to
adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount of a Security if the
portion is $1,000 or a multiple of $1,000. Provisions of this Indenture that
apply to conversion of all of a Security also apply to conversion of a portion
of a Security.
SECTION 11.02. CONVERSION PROCEDURE. To convert a Security a Holder must
satisfy the requirements in paragraph 9 of the Securities. The date on which the
Holder of Securities satisfies all those requirements is the conversion date
(the "Conversion Date"). As soon as practicable after the Conversion Date the
Company shall deliver to the Holder, through the Conversion Agent, a certificate
for the number of full shares of Common Stock issuable upon the conversion and
cash in lieu of any fractional share determined pursuant to Section 11.03. The
Person in whose name the certificate is registered shall be treated as a
stockholder of record on and after the Conversion
-62-
<PAGE>
Date; PROVIDED, HOWEVER, that no surrender of a Security on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive the shares of Common Stock
upon such conversion as the record holder or holders of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of Common Stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; such conversion
shall be at the Conversion Rate in effect on the date that such Security shall
have been surrendered for conversion, as if the stock transfer books of the
Company had not been closed. Upon conversion of a Security, such Person shall no
longer be a Holder of such Security.
No payment or adjustment will be made for dividends on or other
distribution with respect to any Common Stock except as provided in this Article
11. On conversion of a Security, that portion of accrued Original Issue Discount
attributable to the period from the Issue Date of the Security to the Conversion
Date with respect to the converted Security shall not be canceled, extinguished
or forfeited, but rather shall be deemed to be paid in full to the Holder
thereof through delivery of the Common Stock (together with the cash payment, if
any, in lieu of fractional shares) in exchange for the Security being converted
pursuant to the provisions hereof.
If a Holder converts more than one Security at the same time, the number of
shares of Common Stock issuable upon the conversion shall be based on the total
Principal Amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security in an authorized denomination equal in Principal Amount to the
unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in
a place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that it is not a Legal Holiday.
SECTION 11.03. FRACTIONAL SHARES. The Company will not issue a fractional
share of Common Stock upon conversion of a Security. Instead the Company will
deliver cash for the current market value of the fractional share. The current
market value of a fractional share shall be determined to the nearest 1/10,000th
of a share by multiplying the last reported sale price (determined as set forth
in the definition of Current Market Price) on the last Trading Day prior to the
Conversion Date of a full share by the fractional amount and rounding the
product to the nearest whole cent (with one-half cent being rounded upwards).
SECTION 11.04. TAXES ON CONVERSION. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common
-63-
<PAGE>
Stock upon the conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by law
or regulations.
SECTION 11.05. COMPANY TO PROVIDE STOCK. The Company shall, prior to
issuance of any Securities hereunder, and from time to time as may be necessary,
reserve out of its authorized but unissued Common Stock a sufficient number of
shares of Common Stock to permit the conversion of the Securities.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will endeavor promptly, if permitted by
the rules of such exchange, over-the-counter market or other market, to list or
cause to have quoted such shares of Common Stock on each national securities
exchange or in the over-the-counter market or on such other market on which the
Common Stock is then listed or quoted.
SECTION 11.06. ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. In case the Company
shall (i) pay a dividend, or make a distribution, in shares of its Common Stock,
on its Common Stock, (ii) subdivide its outstanding Common Stock into a greater
number of shares, or (iii) combine its outstanding Common Stock into a smaller
number of shares, the Conversion Rate in effect immediately prior thereto shall
be adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock of
the Company which such Holder would have owned or have been entitled to receive
after the happening of any of the events described above had such Security been
converted immediately prior to the happening of such event. An adjustment made
pursuant to this Section 11.06 shall become effective immediately after the
effective date of such dividend, distribution, subdivision or combination.
SECTION 11.07. ADJUSTMENT FOR RIGHTS ISSUE. In case the Company shall issue
rights or warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price per share of Common Stock at the record date for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Rate in effect immediately prior thereto shall be adjusted so that
the same shall equal the Conversion Rate
-64-
<PAGE>
determined by multiplying the Conversion Rate in effect immediately prior to the
date of issuance of such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the denominator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price. Such adjustment shall be made successively
whenever any such rights or warrants are issued, and shall become effective
immediately after the opening of business on the day following the record date
for the determination of the stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the Conversion Rate shall be readjusted
to the Conversion Rate which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered. If such rights
or warrants are not so issued, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such record date for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
SECTION 11.08. ADJUSTMENT FOR OTHER DISTRIBUTIONS. (a) In case the Company
shall distribute to all holders of its Common Stock (excluding any distribution
in connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary) any shares of any class of capital stock of
the Company (other than Common Stock) or evidences of its indebtedness or assets
(other than cash) or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in Section 11.07 hereof) (any of the
foregoing hereinafter in this Section 11.08(a) called the "Distributed
Securities"), then, the Conversion Rate shall be adjusted so that the same shall
equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the date of such distribution by a fraction of which
the numerator shall be the Current Market Price per share of the Common Stock on
the record date mentioned below, and the denominator shall be the Current Market
Price per share of the Common Stock on such record date less the fair market
value on such record date (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a certificate
filed with the Trustee) of the Distributed Securities so distributed applicable
to one share of Common Stock. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution. Notwithstanding the foregoing, in the event the then fair
market value (as so determined) of the portion of the Distributed Securities so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the record date, in lieu of the
-65-
<PAGE>
foregoing adjustment, adequate provision shall be made so that each
Securityholder shall have the right to receive upon conversion the amount of
Distributed Securities such Holder would have received had such Holder converted
each Security on such record date. In the event that such distribution is not so
paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate
which would then be in effect if such distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution for
purposes of this Section 11.08(a) by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price of
the Common Stock.
Notwithstanding the foregoing provisions of this Section 11.08(a), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a
Security who converts such Security (or any portion thereof) after the record
date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, the amount
and kind of Distributed Securities that such Holder would have been entitled to
receive if such Holder had, immediately prior to such record date, converted
such Security for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Distributed
Securities receivable upon conversion of such Security would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such
Security.
(b) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding (x) any quarterly cash dividend on
the Common Stock to the extent the aggregate cash dividend per share of Common
Stock in any fiscal quarter does not exceed the greater of (A) the amount per
share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent such preceding quarterly dividend did not require an
adjustment of the Conversion Rate pursuant to this Section 11.08(b) (as adjusted
to reflect subdivisions or combinations of the Common Stock), and (B) 3.75% of
the average of the last reported sales prices of the Common Stock (determined as
provided in the definition of Current Market Price) during the ten Trading Days
next preceding the date of declaration of such dividend and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary), then, in such case, unless the
Company elects to reserve such cash for distribution to the holders of the
Securities upon the conversion of the Securities so that any such holder
converting Securities will receive upon such conversion in addition to the
shares of Common Stock to which such holder is entitled, the amount of cash
which such holder would have received if such holder had, immediately prior to
the record date for such distribution of cash, converted its Securities for
Common Stock, the Conversion Rate shall be adjusted so that the same shall equal
the Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the record date by a fraction of which the numerator
-66-
<PAGE>
shall be such Current Market Price of the Common Stock and the denominator shall
be the Current Market Price of the Common Stock on the record date less the
amount of cash so distributed (and not excluded as provided above) applicable to
one share of Common Stock, such adjustment to be effective immediately prior to
the opening of business on the day following the record date; PROVIDED, HOWEVER,
that in the event the portion of the cash so distributed applicable to one share
of Common Stock is equal to or greater than the Current Market Price of the
Common Stock on the record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Securityholder shall have the right to
receive upon conversion the amount of cash such Holder would have received had
such Holder converted each Security on the record date. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to be the Conversion Rate which would then be in effect if such dividend or
distribution had not been declared. If any adjustment is required to be made as
set forth in this Section 11.08(b) as a result of a distribution that is a
quarterly dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant hereto. If an adjustment is required to be made as set forth
in this Section 11.08(b) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.
(c) In case a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such Subsidiary of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of such Board of Directors)
at the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it shall have been amended) that
exceeds the last reported sale price of the Common Stock (determined as provided
in the definition of Current Market Price) on the Trading Day next succeeding
the Expiration Time, the Conversion Rate shall be adjusted so that the same
shall equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the last reported sale price of the Common Stock (determined as
provided in the definition of Current Market Price) on the Trading Day next
succeeding the Expiration Time, and the denominator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
on the Expiration Time multiplied by the last reported sale price of the Common
Stock (determined as provided in the definition of Current Market Price) on the
Trading Day next succeeding the Expiration Time, such adjustment to become
effective immediately prior to the opening of business on the day following the
-67-
<PAGE>
Expiration Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Rate shall again be adjusted to be the
Conversion Rate which would then be effect if such tender or exchange offer had
not been made.
(d) In case of a tender or exchange offer by a Person other than the
Company or any Subsidiary for an amount which increases the offerer's ownership
of Common Stock to more than 25% of the total shares of Common Stock outstanding
and shall involve the payment by such Person of consideration per share of
Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) at the last time (the "Tender Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the last reported sale price
of the Common Stock (determined as provided in the definition of Current Market
Price) on the Trading Day next succeeding the Tender Expiration Time, and in
which, as of the Tender Expiration Time the Board of Directors is not
recommending rejection of the offer, the Conversion Rate shall be adjusted so
that the same shall equal the Conversion Rate determined by multiplying the
Conversion Rate in effect immediately prior to the Tender Expiration Time by a
fraction of which the numerator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to an maximum specified in the terms of the tender
or exchanged offer) of all shares validly tendered or exchanged and not
withdrawn as of the Tender Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Tender Purchased Shares") and (y)
the product of the number of shares of Common Stock outstanding (less any Tender
Purchased Shares) on the Tender Expiration Time and the last reported sale price
of the Common Stock (determined as provided in the definition of Current Market
Price) on the Trading Day next succeeding the Tender Expiration Time and the
denominator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Tender Expiration Time multiplied by
the last reported sale price of the Common Stock (determined as provided in the
definition of Current Market Price) on the Trading Day next succeeding the
Tender Expiration Time, such adjustment to become effective immediately prior to
the opening of business on the day following the Tender Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 11.08(d)
shall not be made if, as of the Tender Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article 5.
-68-
<PAGE>
SECTION 11.09. WHEN ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article 11 shall be made to the nearest cent or
to the nearest 1/10,000th of a share, as the case may be.
SECTION 11.10. WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
To the extent the Securities become convertible into cash, assets, property
or securities (other than capital stock of the Company), no adjustment need be
made thereafter as to the cash, assets, property or such securities. Interest
will not accrue on the cash.
SECTION 11.11. NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Holders a notice of the adjustment.
The Company shall file with the Trustee and the Conversion Agent such notice.
The certificate shall, absent manifest error, be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any Holder desiring inspection thereof.
SECTION 11.12. VOLUNTARY INCREASE. The Company may make such increases in
the Conversion Rate, in addition to those required by Sections 11.06, 11.07 and
11.08, as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. To the extent
permitted by applicable law, the Company may from time to time increase the
Conversion Rate by any amount for any period of time if the period is at least
20 days, the increase is irrevocable during the period and the Board of
Directors shall have made a determination that such increase would be in the
best interests of the Company, which determination shall be conclusive. Whenever
the Conversion Rate is so increased, the Company shall mail to Holders and file
with the Trustee and the Conversion Agent a notice of such increase. Such
Company shall mail the notice at least 15 days before the date the increased
Conversion Rate takes effect. The notice shall state the increased Conversion
Rate and the period it will be in effect.
-69-
<PAGE>
SECTION 11.13. NOTICE OF CERTAIN TRANSACTIONS. If:
(1) the Company makes any distribution or dividend that would require
an adjustment in the Conversion Rate pursuant to Section 11.06, 11.07 or 11.08;
or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.14; or
(3) there is a liquidation, dissolution or winding-up of the Company;
then the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.
SECTION 11.14. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification or change
of outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation, merger or combination of
the Company with another corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or (iii)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture,
providing that each Security shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Securities immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance
assuming that a holder of Securities would not have exercised any rights of
election as to the stock, securities or other property or assets (including
cash) receivable in connection therewith. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Securities, at such Holder's address
appearing on the Security register provided for in Section 2.03 of this
Indenture.
-70-
<PAGE>
The above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, combinations, and sales.
If this Section applies, neither Section 11.06, 11.07 nor 11.08 applies.
SECTION 11.15. COMPANY DETERMINATION FINAL. Any determination that the
Company or the Board of Directors must make pursuant to Section 11.03, 11.06,
11.07, 11.08, 11.09, 11.10, 11.14 or 11.17 is conclusive absent manifest error.
SECTION 11.16. TRUSTEE'S ADJUSTMENT DISCLAIMER. The Trustee has no duty to
determine when an adjustment under this Article 11 should be made, how it should
be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 11.14 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for the Company's failure to comply with this Article 11, and
shall not be deemed to have any knowledge whatsoever of any adjustment unless
and until it shall have received a notice of adjustment pursuant to Section
11.11. Each Conversion Agent shall have the same protection under this Section
11.16 as the Trustee.
SECTION 11.17. SIMULTANEOUS ADJUSTMENTS. In the event that this Article 11
requires adjustments to the Conversion Rate under more than one of Sections
11.06, 11.07, 11.08(a) or 11.08(b), and the record dates for the distributions
giving rise to such adjustments shall occur on the same date, then such
adjustments shall be made by applying, first, the provisions of Section
11.08(a), second, the provisions of Section 11.08(b), third the provisions of
Section 11.06 and, fourth, the provisions of Section 11.07.
SECTION 11.18. SUCCESSIVE ADJUSTMENTS. After an adjustment to the
Conversion Rate under this Article 11, any subsequent event requiring an
adjustment under this Article 11 shall cause an adjustment to the Conversion
Rate as so adjusted.
SECTION 11.19. RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON
CONVERSION. Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"):
(i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable, and
-71-
<PAGE>
(iii) are also issued in respect of future issuances of Common
Stock,
shall not be deemed distributed for purposes of Section 11.08(a) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under Section
11.08(a), (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of any such rights or warrants all of which shall have expired
without exercise by any holder thereof, the Conversion Rate shall be readjusted
as if such issuance had not occurred.
SECTION 11.20. GENERAL CONSIDERATIONS. Whenever successive adjustments to
the Conversion Rate are called for pursuant to this Article 11, such adjustments
shall be made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Article 11 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the TIA required to be part of
and to govern indentures qualified under the TIA; PROVIDED, HOWEVER that this
Section 12.01 shall not require this Indenture or the Trustee to be qualified
under the TIA prior to the time such qualification is in fact required under the
terms of the TIA, nor shall it constitute any admission or acknowledgment by any
party that any such qualification is required prior to the time such
qualification is in fact required under the terms of the TIA. If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in an indenture qualified under the TIA, such required
provision shall control.
SECTION 12.02. NOTICES. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in Person or mailed
by first class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by overnight courier) to the following
facsimile numbers:
-72-
<PAGE>
if to the Company:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33445
Attn: Associate General Counsel
Telephone Number: (561) 243-2100
Facsimile Number: (561) 243-2218
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
(Attention: Sunbeam Corporation, Zero Coupon Convertible Senior
Subordinated Debentures due 2018)
Facsimile Number: (212) 815-5915/5917
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication given to a Securityholder shall be mailed to
the Securityholder, by first class mail, postage prepaid, 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 Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or
co-registrar.
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may
communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have
the protection of TIA Section 312(c).
-73-
<PAGE>
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate 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 stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each individual making such Officers' Certificate
or Opinion of Counsel 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 Officers'
Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement that, in the opinion of such individual, such covenant
or condition has been complied with.
SECTION 12.06. SEPARABILITY CLAUSE. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 12.07. RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND
REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
SECTION 12.08. LEGAL HOLIDAYS. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and to the extent applicable no Original Issue Discount or
interest, if any, shall accrue for the intervening period.
-74-
<PAGE>
SECTION 12.09. GOVERNING LAW. The laws of the State of New York shall
govern this Indenture and the Securities, without regard to the principles of
conflicts of laws.
SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities 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 12.11. SUCCESSORS. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 12.12. 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.
-75-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this Indenture on behalf of the respective parties hereto as of the date first
written above.
SUNBEAM CORPORATION
By /s/ Russell A. Kersh
-----------------------
Title:Executice Vice President &
Chief Financial Officer
THE BANK OF NEW YORK, as Trustee
By /s/ MaryBeth A. Lewicki
--------------------------
Authorized Signatory
-76-
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, THIS SECURITY BEARS ORIGINAL
ISSUE DISCOUNT. THE ISSUE PRICE WITH RESPECT TO EACH $1,000 PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY IS $372.43, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT WITH
RESPECT TO EACH $1,000 PRINCIPAL AMOUNT AT MATURITY OF THIS SECURITY IS $627.57,
THE ISSUE DATE IS MARCH 25, 1998 AND THE YIELD TO MATURITY BASED ON SEMIANNUAL
COMPOUNDING IS 5.0% PER ANNUM.
[FORM OF LEGEND FOR GLOBAL SECURITY:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) , ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITY WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT (A) TO SUNBEAM CORPORATION OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
A-1
<PAGE>
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR
TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER
WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
A-2
<PAGE>
SUNBEAM CORPORATION
ZERO COUPON CONVERTIBLE SENIOR SUBORDINATED DEBENTURE DUE 2018
No.__
Issue Date: March 25, 1998 Original Issue Discount: $627.57
Issue Price: $372.43 (for each $1,000 Principal Amount)
(for each $1,000 Principal Amount)
CUSIP: ________
Sunbeam Corporation, a Delaware corporation, promises
to pay to registered assigns, on March 25, 2018 or
[the Principal Amount of Dollars ($ )].(1)]
This Security shall not bear interest except as specified on the other side
of this Security. Original Issue Discount will accrue as specified on the other
side of this Security. This Security is convertible as specified on the other
side of this Security.
Additional provisions of this Security are set forth on the other side of
this Security.
IN WITNESS WHEREOF, Sunbeam Corporation has caused this instrument to be
duly executed.
SUNBEAM CORPORATION
By: ___________________________
Title:
By: ___________________________
Title:
Dated: ________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.
By ________________________________
Authorized Signatory
- --------
(1) The global Security will read instead: "the Principal Amount then shown on
Schedule A hereto."
A-3
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
SUNBEAM CORPORATION
ZERO COUPON CONVERTIBLE SENIOR SUBORDINATED DEBENTURE DUE 2018
1. INTEREST
This Security shall not bear interest, except that if the Principal hereof
or any portion of such Principal is not paid when due (whether upon acceleration
pursuant to Section 6.02 of the Indenture, upon the date set for payment of the
Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment
of a Purchase Price or Fundamental Change Redemption Price pursuant to paragraph
6 hereof or upon the Stated Maturity of this Security), then in each such case
the overdue amount shall bear interest at the rate of 5.0% per annum, compounded
semiannually (to the extent that the payment of such interest shall be legally
enforceable), which interest shall accrue from the date such overdue amount was
due to the date payment of such amount, including interest thereon, has been
made or duly provided for. All such interest shall be payable on demand. The
accrual of such interest on overdue amounts shall be in lieu of, and not in
addition to, the continued accrual of Original Issue Discount.
The Original Issue Discount (the difference between the Issue Price and the
Principal Amount at maturity of the Security) in the period during which a
Security remains outstanding, shall accrue at 5.0% per annum, on a semiannual
bond equivalent basis using a 360-day year composed of twelve 30- day months,
commencing on the Issue Date of this Security.
2. METHOD OF PAYMENT
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of the Securities to the Persons who are registered Holders
of Securities at the close of business on the Business Day preceding the
Redemption Date or Stated Maturity, as the case may be, or at the close of
business on a Purchase Date or Fundamental Change Redemption Date, as the case
may be. Holders must surrender Securities to a Paying Agent to collect such
payments in respect of the Securities. The Company will pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may make such cash
payments by check payable in such money.
3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The
Company may appoint and change any Paying Agent, Conversion Agent, Registrar or
co-registrar without notice, other than notice to the Trustee. The Company or
any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Conversion Agent, Registrar or co-registrar.
A-4
<PAGE>
4. INDENTURE
The Company issued the Securities under an Indenture (the "Indenture"),
dated as of March 25, 1998, between the Company and the Trustee. Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture for a statement of those terms.
The Securities are general unsecured obligations of the Company limited to
$2,014,000,000 aggregate Principal Amount (subject to Section 2.07 of the
Indenture), provided that the aggregate Principal Amount may be increased by up
to $302,100,000 as provided in Section 2.02 of the Indenture. The Indenture does
not limit other indebtedness of the Company, secured or unsecured, including
Senior Indebtedness of the Company.
5. REDEMPTION AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to March 25, 2003.
The table below shows Redemption Prices of a Security per $1,000 Principal
Amount at maturity on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates would include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table to the actual Redemption Date.
ACCRUED
ORIGINAL
ISSUE
DISCOUNT REDEMPTION
SECURITY AT 5.0% PRICE
REDEMPTION DATE ISSUE PRICE PER-ANNUM (1) + (2)
- ------------------------- ----------- --------- ----------
March 25, 2003........... $ 372.43 $ 104.32 $ 476.75
March 25, 2004........... 372.43 128.45 500.88
March 25, 2005........... 372.43 153.81 526.24
March 25, 2006........... 372.43 180.45 552.88
March 25, 2007........... 372.43 208.44 580.87
March 25, 2008........... 372.43 237.84 610.27
March 25, 2009........... 372.43 268.74 641.17
March 25, 2010........... 372.43 301.20 673.63
March 25, 2011........... 372.43 335.30 707.73
March 25, 2012........... 372.43 371.13 743.56
March 25, 2013........... 372.43 408.77 781.20
March 25, 2014........... 372.43 448.32 820.75
March 25, 2015........... 372.43 489.87 862.30
A-5
<PAGE>
March 25, 2016........... 372.43 533.52 905.95
March 25, 2017........... 372.43 579.39 951.82
At maturity.............. 372.43 627.57 1,000.00
6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; REDEMPTION AT THE
OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
(a) Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount, upon delivery of a Purchase Notice
containing the information set forth in the Indenture, from the opening of
business on the date that is 20 Business Days prior to such Purchase Date until
the close of business on such Purchase Date and upon delivery of the Securities
to the Paying Agent by the Holder as set forth in the Indenture. Such Purchase
Prices may be paid, at the option of the Company, in cash or by the issuance and
delivery of shares of Common Stock of the Company, or in any combination
thereof.
PURCHASE DATE PURCHASE PRICE
- ------------- --------------
March 25, 2003................... $476.75
March 25, 2008................... 610.27
March 25, 2013................... 781.20
Securities in denominations larger than $1,000 of Principal Amount may be
purchased in part, but only in multiples of $1,000 of Principal Amount.
(b) At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to redeem the Securities held
by such Holder 45 days after the date of the Company's notice of a Fundamental
Change occurring on or prior to March 25, 2018 for a Fundamental Change
Redemption Price equal to the Issue Price plus accrued Original Issue Discount
to the Fundamental Change Redemption Date; provided that, with respect to a
Fundamental Change, if the Applicable Price is less than the Reference Market
Price, the Company shall redeem such Securities at a price equal to the
foregoing Redemption Price multiplied by a fraction obtained by dividing the
Applicable Price by the Reference Market Price, which Fundamental Change
Redemption Price shall be paid in cash. Securities in denominations larger than
$1,000 of Principal Amount may be redeemed in part in connection with a
Fundamental Change, but only in multiples of $1,000 of Principal Amount.
(c) Holders have the right to withdraw any Purchase Notice or Fundamental
Change Redemption Notice, as the case may be, by delivering to the Paying Agent
a written notice of withdrawal in accordance with the provisions of the
Indenture.
(d) If cash (and/or securities if permitted under the Indenture) sufficient
to pay a Purchase Price or Fundamental Change Redemption Price, as the case may
be, of all Securities or portions
A-6
<PAGE>
thereof to be purchased as of the Purchase Date or the Fundamental Change
Redemption Date, as the case may be, is deposited with the Paying Agent on the
Business Day following the Purchase Date or the Fundamental Change Redemption
Date, as the case may be, Original Issue Discount ceases to accrue on such
Securities (or portions thereof) on and after such date, and the Holder thereof
shall have no other rights as such (other than the right to receive the Purchase
Price or Fundamental Change Redemption Price, as the case may be, upon surrender
of such Security).
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company 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 the Holder's registered address. If money
sufficient to pay the Redemption Price of all Securities (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after such date Original Issue Discount
ceases to accrue on such Securities or portions thereof. Securities in
denominations larger than $1,000 of Principal Amount may be redeemed in part but
only in multiples of $1,000 of Principal Amount.
8. SUBORDINATION
The Securities are subordinated to all existing and future Senior
Indebtedness of the Company. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be paid. The
Indenture does not limit the present or future amount of Senior Indebtedness
that the Company may have. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination and authorizes the Trustee to
give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. CONVERSION
Subject to the next two succeeding sentences, a Holder of a Security may
convert this Security for Common Stock of the Company at any time after 90 days
following the last date of original issuance of the Securities and before the
close of business on March 25, 2018. If this Security is called for redemption,
the Holder may convert it at any time before the close of the last Trading Day
prior to the Redemption Date. A Security in respect of which a Holder has
delivered a notice of exercise of the option to require the Company to purchase
such Security or to redeem such Security in the event of a Fundamental Change
may be converted only if the notice of exercise is withdrawn in accordance with
the terms of the Indenture.
The initial Conversion Rate is 6.575 shares of Common Stock per $1,000
Principal Amount at maturity, subject to adjustment in certain events described
in the Indenture. The Company will deliver cash or a check in lieu of any
fractional share of Common Stock.
To convert this Security a Holder must (1) complete and manually sign the
conversion notice on the back of this Security (or complete and manually sign a
facsimile of such notice) and deliver such
A-7
<PAGE>
notice to the Conversion Agent, (2) surrender this Security to the Conversion
Agent, (3) furnish appropriate endorsements and transfer documents if required
by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or
similar tax, if required.
A Holder may convert a portion of this Security if the Principal Amount of
such portion is $1,000 or a multiple of $1,000. No payment or adjustment will be
made for dividends on the Common Stock except as provided in the Indenture. On
conversion of this Security, that portion of accrued Original Issue Discount
attributable to the period from the Issue Date to the Conversion Date with
respect to the converted portion of this Security shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through the delivery of the Common Stock (together with any cash
payment in lieu of fractional shares) in exchange for the portion of this
Security being converted pursuant to the terms hereof.
10. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the last Trading Day prior to the Redemption
Date, may be deemed to be purchased from the Holders of such Securities at an
amount not less than the Redemption Price, by one or more investment bankers or
other purchasers who may agree with the Company to purchase such Securities from
the Holders, to convert them for Common Stock of the Company and to make payment
for such Securities to the Trustee in trust for such Holders.
11. REGISTRATION RIGHTS
The Holder of this Security and the Common Stock issuable upon conversion
thereof is entitled to the benefits of a Registration Rights Agreement, dated as
of March 25, 1998, between the Company and the Initial Purchaser.
12. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form, without coupons, in denominations of
$1,000 of Principal Amount and multiples of $1,000. A Holder may transfer or
convert Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer 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 in respect of
which a Purchase Notice or Fundamental Change Redemption Notice has been given
and not withdrawn (except, in the case of a Security to be purchased in part,
the portion of the Security not to be purchased) or any Securities for a period
of 15 days before the mailing of a notice of redemption of Securities to be
redeemed.
A-8
<PAGE>
13. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of this
Security for all purposes.
14. UNCLAIMED MONEY OR SECURITIES
The Trustee and the Paying Agent shall return to the Company upon written
request any money or securities held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years, provided that
the Trustee or such Paying Agent, before being required to make any such return,
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each such Holder notice
that such money or securities remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication
or mailing, any unclaimed money or securities then remaining will be returned to
the Company. After return to the Company, Holders entitled to the money or
securities must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.
15. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in aggregate Principal Amount of the Securities at the time
outstanding and (ii) certain defaults or noncompliance with certain provisions
may be waived with the written consent of the Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, or to comply with
Article 5 or Section 11.14 of the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities or to make any
change that does not adversely affect the rights of any Securityholder or to
comply with any requirement of the SEC in connection with the qualification of
the Indenture under the TIA.
16. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default in payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price or Fundamental
Change Redemption Price, as the case may be, in respect of the Securities when
the same becomes due and payable, provided that in the case of any failure to
pay Liquidated Damages, such failure to pay continues for a period of 30 days;
(ii) failure by the Company to comply with other agreements in the Indenture or
the Securities, subject to notice and lapse of time; and (iii) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable immediately. Certain events of
A-9
<PAGE>
bankruptcy or insolvency are Events of Default which will result in the
Securities being declared due and payable immediately upon the occurrence of
such Events of Default.
Holders 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 reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
Default (except a Default in payment of amounts specified in clause (i) above)
if it determines that withholding notice is in their interests.
17. TRUSTEE DEALINGS WITH THE COMPANY
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.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the 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.
19. AUTHENTICATION
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
20. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. GOVERNING LAW
The laws of the State of New York shall govern the Indenture and this
Security, without regard to the principles of conflicts of laws.
A-10
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Sunbeam Corporation
The undersigned registered holder of this Security hereby irrevocably
exercises the option to convert this Security, or portion hereof (which is
$1,000 principal amount or a multiple thereof) below designated, for shares of
Common Stock of Sunbeam Corporation in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not converted are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Dated:
________________________________
________________________________
Signature (s)
Fill in for registration of shares if to be delivered,
and Securities if to be issued other than to and in
the name of the registered holder:
___________________________________
(Name)
____________________________________
(Street Address)
____________________________________
(City, state and zip code)
Please print name and address
Principal amount to be
converted (if less than
all):
$___,000
_________________________________
Social Security or Other Taxpayer
Identification Number
A-11
<PAGE>
____________________________
Signature Guarantee
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.
A-12
<PAGE>
[FORM OF OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE]
To: Sunbeam Corporation
The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Sunbeam Corporation (the "Company") as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to redeem this Security, or the portion hereof (which is
$1,000 Principal Amount or a multiple thereof) below designated, in accordance
with the terms of the Indenture referred to in this Security.
Dated: __________________________
_______________________________________
_______________________________________
Signature(s)
Principal amount to be redeemed
( if less than all):
$________________
________________________________________
Social Security or Other Taxpayer
Identification Number
_______________________________
Signature Guarantee
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.
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Security in every particular without
alteration or enlargement or any change whatever.
A-13
<PAGE>
ASSIGNMENT
For value received ________________________ hereby sell(s), assign(s) and
transfer(s) unto _____________________ (Please insert social security or other
Taxpayer Identification Number of assignee) the within Security, and hereby
irrevocably constitutes and appoints ________________ attorney to transfer the
said Security on the books of the Company, with full power of substitution in
the premises.
In connection with any transfer of the Security within the United States or
to, or for the account or benefit of, U.S. Persons within the period prior to
the expiration of the holding period applicable to sales thereof under Rule
144(k) (other than any transfer pursuant to a registration statement that has
been declared effective under the Securities Act), under the Securities Act (or
any successor provision), the undersigned confirms that such Security is being
transferred:
[ ] To Sunbeam Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that to its
knowledge such Security is not being transferred to an "affiliate" of the
Company as defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated: ________________________
___________________________________
___________________________________
Signature(s)
___________________________________
Signature Guarantee
Signature(s) 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.
A-14
<PAGE>
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Security in every particular without
alteration or enlargement or any change whatever.
A-15
<PAGE>
<TABLE>
<CAPTION>
[FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY
TO REFLECT CHANGES IN PRINCIPAL AMOUNT]
SCHEDULE A
CHANGES TO PRINCIPAL AMOUNT OF GLOBAL SECURITY
====================================================================================================
PRINCIPAL AMOUNT OF
SECURITIES BY WHICH THIS
GLOBAL SECURITY IS TO BE
REDUCED OR INCREASED, AND
REASON FOR REMAINING PRINCIPAL AMOUNT NOTATION
DATE REDUCTION OR INCREASE OF THIS GLOBAL SECURITY MADE BY
<S> <C> <C> <C>
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
- ----------- --------------------------- -------------------------- ---------
</TABLE>
A-16
<PAGE>
EXHIBIT B
[FORM OF INSTITUTIONAL ACCREDITED INVESTOR LETTER]
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33445
Gentlemen:
We are delivering this letter in connection with an offering of Zero Coupon
Convertible Senior Subordinated Debentures due 2018 (the "Debentures) which are
convertible into shares of Common Stock, $.01 par value (the "Common Stock"), of
Sunbeam Corporation (the "Company").
We hereby confirm that:
1. we are an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act") or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act (an "Institutional Accredited Investor") able to
bear the economic risk of an investment in the Debentures;
2. (A) any purchase of Debentures by us will be for our own account or
for the account of one or more other Institutional Accredited Investors for
each of which we exercise sole investment discretion (and have authority to
make, and do make, the statements contained in this letter) or as fiduciary
for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and
for each of which we exercise sole investment discretion or (B) we are a
"bank," within the meaning of Section 3(a)(2) of the Securities Act, or a
"savings and loan association" or other institution described in Section
3(a)(5)(A) of the Securities Act that is acquiring Debentures as fiduciary
for the account of one or more institutions for which we exercise sole
investment discretion;
3. in the event that we purchase any Debentures, we will acquire
Debentures having a minimum purchase price of not less than $100,000 for
our own account or for any separate account for which we are acting;
4. we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing the Debentures; and
5. we are not acquiring Debentures with a view to distribution thereof
or with any present intention of offering or selling Debentures or the
Common Stock issuable upon conversion thereof, except as permitted below;
provided that the disposition of our property and property of any accounts
for which we are acting as fiduciary shall remain at all times within our
control.
B-1
<PAGE>
We understand that the Debentures are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Debentures and the shares of Common Stock issuable upon conversion thereof
have not been registered under the Securities Act, and we agree, on our own
behalf and on behalf of each account for which we acquire any Debentures, that
if in the future we decide to resell or otherwise transfer such Debentures or
the Common Stock issuable upon conversion thereof, such Debentures or Common
Stock may be resold or otherwise transferred within the United States, or for
the account or benefit of, U.S. persons only (i) to the Company or any
subsidiary thereof, or (ii) to a person who is a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, or (iii) to an Institutional Accredited Investor
that, prior to such transfer, furnishes to the Trustee for the Debentures (or in
the case of Common Stock, the transfer agent therefor) a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of such securities (the form of which letter can be obtained from
such Trustee or transfer agent, as the case may be), or (iv) pursuant to the
exemption from registration provided by Rule 144 under the Securities Art (if
applicable), or (v) pursuant to a registration statement which has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), and in each case, in accordance with any applicable
securities laws of any State of the United States or any other applicable
jurisdiction and in accordance with the legends set forth on the Debentures or
the Common Stock issuable upon conversion thereof, as the case may be. We
further agree to provide any person purchasing any of the Debentures or the
Common Stock issuable upon conversion thereof (other than pursuant to clause (v)
above) from us a notice advising such purchaser that resales of such securities
are restricted as stated herein. We understand that the Trustee or transfer
agent for the Debentures and the Common Stock will not be required to accept for
registration of transfer any Debentures or any shares of Common Stock issued
upon conversion of the Debentures except upon presentation of evidence
satisfactory to the Company that the foregoing restrictions on transfer have
been complied with. We further understand that any Debentures and any
certificates representing Common Stock will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph other than pursuant to clause (v) above.
We acknowledge that the Company, the Trustee or transfer agent (as
applicable) others will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
__________________________________
(Name of Purchaser)
By: _____________________________
Name:
Title:
Address:
B-2
EXHIBIT 10.d
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of March 25,
1998 by and among Sunbeam Corporation, a Delaware corporation (the "COMPANY"),
and Morgan Stanley & Co. Incorporated (the "INITIAL PURCHASER") pursuant to the
Purchase Agreement dated as of March 19, 1998 (the "PURCHASE AGREEMENT") among
the Company and the Initial Purchaser. In order to induce the Initial Purchaser
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Debentures (as defined herein)
and the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Debentures (as defined herein)
(each of the foregoing, a "HOLDER" and together the "HOLDERS"), as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
AFFILIATE means with respect to any specified person, an "affiliate" of
such person as defined in Rule 144.
AMENDMENT EFFECTIVENESS DEADLINE DATE has the meaning set forth in Section
2(d) hereof.
APPLICABLE CONVERSION PRICE means as of any date the Issue Price of $1,000
principal amount at maturity of Debentures plus the Original Issue Discount
accrued thereon to such date divided by the Conversion Rate on such date.
BUSINESS DAY means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
COMMON EQUIVALENTS represented by any Registrable Securities means the sum
of, without duplication, (i) the number of shares of Underlying Common Stock
included in the Registrable Securities and (ii) the number of shares of
Underlying Common Stock issuable upon conversion of the Debentures included in
the Registrable Securities.
<PAGE>
COMMON STOCK means the shares of common stock, $.01 par value per share, of
the Company.
CONVERSION RATE has the meaning assigned such term in the Indenture.
DAMAGES ACCRUAL PERIOD has the meaning set forth in Section 2(e) hereof.
DAMAGES PAYMENT DATE means each March 25 and September 25.
DEBENTURES means the Zero Coupon Convertible Senior Subordinated Debentures
due 2018 of the Company to be purchased by the Initial Purchaser pursuant to the
Purchase Agreement.
DEFERRAL NOTICE has the meaning set forth in Section 3(i) hereof.
DEFERRAL PERIOD has the meaning set forth in Section 3(i) hereof.
EFFECTIVENESS DEADLINE DATE has the meaning set forth in Section 2(a)
hereof.
EFFECTIVENESS PERIOD means the period commencing with the date hereof and
ending on the date that all Registrable Securities have ceased to be Registrable
Securities.
EVENT has the meaning set forth in Section 2(e) hereof.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
FILING DEADLINE DATE has the meaning set forth in Section 2(a) hereof.
HOLDER has the meaning set forth in the second paragraph of this Agreement.
INDENTURE means the Indenture dated as of the date hereof between the
Company and The Bank of New York, as trustee, pursuant to which the Debentures
are being issued.
INITIAL PURCHASER means Morgan Stanley & Co. Incorporated.
INITIAL SHELF REGISTRATION STATEMENT has the meaning set forth in Section
2(a) hereof.
ISSUE PRICE means $372.43, the original issue price of each $1,000
principal amount at maturity of the Debentures.
2
<PAGE>
LIQUIDATED DAMAGES AMOUNT has the meaning set forth in Section 2(e) hereof.
MATERIAL EVENT has the meaning set forth in Section 3(i) hereof.
NOTICE AND QUESTIONNAIRE means a written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Appendix B to the Company's
Offering Memorandum dated March 19, 1998 relating to the Debentures.
NOTICE HOLDER means on any date any Holder that has delivered a Notice and
Questionnaire and such other information as the Company may reasonably request
to the Company on or prior to such date.
ORIGINAL ISSUE DISCOUNT means 62.757%, the original issue discount from the
principal amount of the Debentures payable at maturity at which the Debentures
were initially offered to Initial Purchasers, expressed as a percentage of the
principal amount of the Debentures payable at maturity.
PROSPECTUS means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.
PURCHASE AGREEMENT has the meaning set forth in the first paragraph of this
Agreement.
RECORD HOLDER means with respect to any Damages Payment Date relating to
any Debenture or Underlying Common Stock as to which any Liquidated Damages
Amount has accrued, the registered holder of such Debenture or Underlying Common
Stock, as the case may be, 15 days prior to the next succeeding Damages Payment
Date.
REGISTRABLE SECURITIES means the Debentures and the Underlying Common
Stock, until the Underlying Common Stock has been converted or exchanged, and,
at all times subsequent to any such conversion or exchange of the Underlying
Common Stock, any securities into or for which such securities have been
converted or exchanged, and any security issued with respect thereto upon any
stock dividend, split or similar event until, in the case of any such security,
(A) the earliest of (i) its sale under an effective Registration Statement, (ii)
expiration of the holding period that would be applicable thereto under Rule
144(k) were it not held by an Affiliate of the Company or (iii) its sale
pursuant to Rule 144, and (B) as a result of the event or circumstance described
in any of the foregoing clauses (A)(i) through (A)(iii), the legends with
respect to transfer
3
<PAGE>
restrictions required under the Indenture are removed or removable in accordance
with the terms of the Indenture.
REGISTRATION EXPENSES has the meaning set forth in Section 5 hereof.
REGISTRATION STATEMENT means any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such registration statement.
RULE 144 means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
RULE 144A means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC means the Securities and Exchange Commission.
SECURITIES ACT means the Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF REGISTRATION STATEMENT means the Initial Shelf Registration Statement
or a Subsequent Shelf Registration Statement.
SUBSEQUENT SHELF REGISTRATION STATEMENT has the meaning set forth in
Section 2(b) hereof.
TRUSTEE means the Bank of New York (or any successor entity), as the
Trustee under the Indenture.
UNDERLYING COMMON STOCK means the Common Stock into which the Debentures
are convertible or issued upon any such conversion.
SECTION 2. SHELF REGISTRATION. (a) The Company shall prepare and file with
the SEC, as soon as practicable but in any event by the date (the "FILING
DEADLINE DATE") 90 days after the date hereof, a registration statement for an
offering to be made on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act registering the resale from time to time by Holders thereof of
all of the Registrable Securities (the "INITIAL SHELF REGISTRATION STATEMENT").
The Initial Shelf Registration Statement shall be on Form S-3 or another
appropriate form permitting registration of such Registrable Securities for
resale by such Holders in accordance with the methods of distribution elected by
the
4
<PAGE>
Holders and set forth in the Initial Shelf Registration Statement. The Company
shall use its best efforts to cause the Initial Shelf Registration Statement to
become effective under the Securities Act as promptly as is practicable but in
any event by the date (the "EFFECTIVENESS DEADLINE DATE") 180 days after the
date hereof, and to keep the Initial Shelf Registration Statement continuously
effective under the Securities Act until the expiration of the Effectiveness
Period. At the time the Initial Shelf Registration Statement becomes effective,
each Holder that became a Notice Holder on or prior to the date ten Business
Days prior to such time of effectiveness shall be named as a selling
securityholder in the Initial Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of Registrable Securities in accordance with applicable law.
(b) If a Shelf Registration Statement ceases to be effective for any
reason at any time during the Effectiveness Period, the Company shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration Statement covering all of the
securities that as of the date of such filing are Registrable Securities (a
"SUBSEQUENT SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf Registration
Statement is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration Statement to become effective as promptly as is
practicable after such filing and to keep the Subsequent Registration Statement
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the Securities Act and, if the Company does not
reasonably object, as reasonably requested by the Initial Purchaser or by the
Trustee on behalf of the Holders.
(d) Each Holder wishing to sell Registrable Securities pursuant to a
Shelf Registration Statement and related Prospectus agrees to deliver a Notice
and Questionnaire to the Company and such other information as the Company may
reasonably request at least three Business Days prior to any intended
distribution of Registrable Securities under the Shelf Registration Statement.
From and after the date the Initial Shelf Registration Statement becomes
effective, the Company shall, as promptly as is practicable after the date a
Notice and Questionnaire is delivered, and in any event within five Business
Days after such date:
(i) if required by applicable law, file with the SEC a
post-effective amendment to the Shelf Registration Statement or prepare
and, if required by applicable law, file a supplement to the related
Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that the
Holder delivering such Notice and Questionnaire is
5
<PAGE>
named as a selling securityholder in the Shelf Registration
Statement and the related Prospectus in such a manner as to permit such
Holder to deliver such Prospectus to purchasers of the Registrable
Securities in accordance with applicable law and, if the Company shall
file a post-effective amendment to the Shelf Registration Statement,
use its best efforts to cause such post-effective amendment to become
effective under the Securities Act as promptly as is practicable, but
in any event by the date (the "AMENDMENT EFFECTIVENESS DEADLINE DATE")
45 days after the date such post-effective amendment is required by
this clause to be filed;
(ii) provide such Holder copies of any documents filed pursuant to
Section 2(d)(i); and
(iii) notify such Holder as promptly as practicable after the
effectiveness under the Securities Act of any post-effective amendment
filed pursuant to Section 2(d)(i);
PROVIDED that if such Notice and Questionnaire is delivered during a Deferral
Period, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with Section
3(i). The Company shall be under no obligation to name any Holder that is not a
Notice Holder as a selling securityholder in any Shelf Registration Statement or
related Prospectus.
(e) The parties hereto agree that the Holders will suffer damages, and
that it would not be feasible to ascertain the extent of such damages with
precision, if:
(i) the Initial Shelf Registration Statement has not been filed on
or prior to the Filing Deadline Date,
(ii) the Initial Shelf Registration Statement has not become
effective under the Securities Act on or prior to the Effectiveness
Deadline Date,
(iii) the Company has failed to perform its obligations set forth
in Section 2(d) within the time period required,
(iv) any post-effective amendment to a Shelf Registration
Statement filed pursuant to Section 2(d)(i) has not become effective
under the Securities Act on or prior to the Amendment Effectiveness
Deadline Date,
(v) the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted in respect of such period pursuant
to Section 3(i) hereof or
6
<PAGE>
(vi) the number of Deferral Periods in any period exceeds the
number permitted in respect of such period pursuant to Section 3(i).
Each event described in any of the foregoing clauses (i) through (vi) is
individually referred to herein as an "EVENT." For purposes of this Agreement,
each Event set forth above shall begin and end on the dates set forth in the
table set forth below:
TYPE OF
EVENT BY BEGINNING ENDING
CLAUSE DATE DATE
(i) Filing Deadline Date the date the Initial Shelf
Registration Statement is
filed
(ii) Effectiveness Deadline the date the Initial Shelf
Date Registration Statement
becomes effective under
the Securities Act
(iii) the date by which the the date the Company
Company is required to performs its obligations set
perform its obligations forth in Section 2(d)
under Section 2(d)
(iv) the Amendment the date the applicable
Effectiveness Deadline post-effective amendment
Date to a Shelf Registration
Statement becomes
effective under the
Securities Act
(v) the date on which the termination of the Deferral
aggregate duration of Period that caused the limit
Deferral Periods in any on the aggregate duration
period exceeds the number of Deferral Periods to be of
days permitted by exceeded
Section 3(i)
7
<PAGE>
TYPE OF
EVENT BY BEGINNING ENDING
CLAUSE DATE DATE
(vi) the date of commencement termination of the Deferral
of a Deferral Period that Period that caused the
causes the number of number of Deferral Periods
Deferral Periods to excee to exceed the number
the number permitted by permitted by Section 3(i)
Section 3(i)
For purposes of this Agreement, Events shall begin on the dates set forth in the
table above and shall continue until the ending dates set forth in the table
above.
Commencing on (and including) any date that an Event has begun and ending
on (but excluding) the next date on which there are no Events that have occurred
and are continuing (a "DAMAGES ACCRUAL PERIOD"), the Company shall pay, as
liquidated damages and not as a penalty, to Record Holders of Registrable
Securities an amount (the "LIQUIDATED DAMAGES AMOUNT") accruing, for each day in
the Damages Accrual Period, (i) in respect of any Debenture, at a rate per annum
equal to .25% during the first 90 days of a Damages Accrual Period and
thereafter at a rate per annum equal to .5% on the sum of (A) the Issue Price of
the Debenture plus (B) accrued Original Issue Discount thereon on such day and,
(ii) in respect of each share of Underlying Common Stock at a rate per annum
equal to .25% for the first 90 days of a Damages Accrual Period and .5%
thereafter on the Applicable Conversion Price on such date; PROVIDED that in the
case of a Damages Accrual Period that is in effect solely as a result of an
Event of the type described in clause (iii) or (iv) of the preceding paragraph,
such Liquidated Damages Amount shall be paid only to the Holders (as set forth
in the succeeding paragraph) that have delivered Notices and Questionnaires and
such other information as the Company may reasonably request that caused the
Company to incur the obligations set forth in Section 2(d) the non-performance
of which is the basis of such Event. In calculating the Liquidated Damages
Amount for on any date on which no Debentures are outstanding, the accrued
Original Issue Discount, the Applicable Conversion Price and the Liquidated
Damages Amount shall be calculated as if the Debentures were still outstanding.
Notwithstanding the foregoing, no Liquidated Damages Amount shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events.
8
<PAGE>
The Liquidated Damages Amount shall accrue from the first day of the
applicable Damages Accrual Period, and shall be payable on each Damages Payment
Date during the Damage Accrual Period (and on the Damages Payment Date next
succeeding the end of the Damages Accrual Period if the Damage Accrual Period
does not end on a Damages Payment Date) to the Record Holders of the Registrable
Securities entitled thereto; PROVIDED that any Liquidated Damages Amount accrued
with respect to any Debenture or portion thereof redeemed by the Company on a
redemption date or converted into Underlying Common Stock on a conversion date
prior to the Damages Payment Date, shall, in any such event, be paid instead to
the Holder who submitted such Debenture or portion thereof for redemption or
conversion on the applicable redemption date or conversion date, as the case may
be, on such date (or promptly following the conversion date, in the case of
conversion); PROVIDED FURTHER, that, in the case of an Event of the type
described in clause (iii) or (iv) of the first paragraph of this Section 2(e),
such Liquidated Damages Amount shall be paid only to the Holders entitled
thereto pursuant to such first paragraph by check mailed to the address set
forth in the Notice and Questionnaire delivered by such Holder. The Trustee
shall be entitled, on behalf of registered holders of Debentures or Underlying
Common Stock, to seek any available remedy for the enforcement of this
Agreement, including for the payment of such Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude any Holder from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
notwithstanding termination of this Agreement pursuant to Section 8(k).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of a
Shelf Registration Statement to be filed or declared effective or available
(absolutely or as a practical matter) for effecting resales of Registrable
Securities in accordance with the provisions hereof.
SECTION 3. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Initial Purchaser
copies of all such documents proposed to be filed and use its best efforts to
reflect in each such document when so filed with the SEC such comments as the
Initial Purchaser reasonably shall
9
<PAGE>
propose and to which the Company does not reasonably object within two Business
Days of the delivery of such copies to the Initial Purchaser.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective from the Effectiveness Deadline
Date to the expiration of the Effectiveness Period; cause the related Prospectus
to be supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; use its best efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement until the expiration of the
Effectiveness Period in accordance with the intended methods of disposition by
the sellers thereof set forth in such Registration Statement as so amended or
such Prospectus as so supplemented; cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "TIA") not later than the
effective date of any Shelf Registration Statement; and in connection therewith,
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner.
(c) As promptly as practicable, give notice to the Notice Holders and the
Initial Purchaser (i) when any Prospectus, prospectus supplement, Registration
Statement or post-effective amendment to a Registration Statement has been filed
with the SEC and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request, following
the effectiveness of the Initial Shelf Registration Statement under the
Securities Act, by the SEC or any other federal or state governmental authority
for amendments or supplements to any Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation or threatening
of any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of a Material Event and (vi) of the determination
by the Company that a post-effective amendment to a Registration Statement would
be appropriate, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Deferral Notice,
in which event the provisions of Section 3(i) shall apply.
(d) Use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement or the lifting of any suspension
of the
10
<PAGE>
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction in which they have been qualified for
sale, in either case at the earliest possible moment.
(e) If reasonably requested by the Initial Purchaser or any Notice Holder,
as promptly as practicable incorporate in a prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchaser or such Notice Holder shall, on the basis of an opinion of
nationally-recognized counsel experienced in such matters, determine to be
required to be included therein by applicable law and make any required filings
of such prospectus supplement or such post-effective amendment; PROVIDED that
the Company shall not be required to take any actions under this Section 3(e)
that are not, in the reasonable opinion of counsel for the Company, in
compliance with applicable law.
(f) As promptly as practicable furnish to each Notice Holder and the
Initial Purchaser, without charge, at least one conformed copy of any
Registration Statement and any amendment thereto, including exhibits, and all
documents incorporated or deemed to be incorporated therein by reference.
(g) Deliver to each Notice Holder in connection with any sale of
Registrable Securities pursuant to a Registration Statement, without charge, as
many copies of the Prospectus relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
Notice Holder may reasonably request; and the Company hereby consents to the use
of the Prospectus and each amendment or supplement thereto by each Notice Holder
in connection with any offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto in the manner set
forth therein.
(h) Prior to any public offering of the Registrable Securities, register or
qualify or cooperate with the Notice Holders in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Notice Holder reasonably
requests in writing (which request may be included in the Notice and
Questionnaire); keep each such registration or qualification (or exemption
therefrom) effective during the period that a Shelf Registration Statement is
required to be effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of such Registrable
Securities in the manner set forth in the applicable Registration Statement and
the related Prospectus; PROVIDED that in no event shall the Company be obligated
to (i) qualify as a foreign corporation in any jurisdiction in which it would
not otherwise be so required to qualify but for this Section 3(h) or (ii) file
any general consent to service of process in any jurisdiction where it is not as
of the date hereof not so subject.
11
<PAGE>
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "MATERIAL EVENT") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development or public filing with the Commission that,
in the sole discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration Statement and the related Prospectus:
(i) in the case of clause (B) above, subject to the next sentence,
as promptly as practicable prepare and file, if necessary pursuant to
applicable law, a post-effective amendment to such Registration
Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document
that would be incorporated by reference into such Registration
Statement and Prospectus so that such Registration Statement does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading (except for an untrue statement of a
material fact or omission of a material fact made in reliance on and in
conformity with written information furnished to the Company by or on
behalf of Notice Holders specifically for use therein), and such
Prospectus does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except for an
untrue statement of a material fact or omission of a material fact made
in reliance on and in conformity with written information furnished to
the Company by or on behalf of Notice Holders specifically for use
therein), as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective
amendment to a Registration Statement, subject to the next sentence,
use their best efforts to cause it to become effective as promptly as
is practicable, and
(ii) give notice to the Notice Holders that the availability of
the Shelf Registration Statement is suspended (a "DEFERRAL NOTICE")
and, upon receipt of any Deferral Notice, each Notice Holder shall not
sell any Registrable Securities pursuant to the Registration Statement
until such Notice Holder's receipt of copies of the supplemented or
amended Prospectus provided for in clause (i) above, or until it is
advised in writing by the Company that the Prospectus may be used, and
12
<PAGE>
has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such
Prospectus.
The Company will use its best efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as is
practicable, (y) in the case of clause (B) above, as soon as, in the sole
judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to
avoid unreasonable burden or expense, as soon as practicable thereafter and (z)
in the case of clause (C) above, as soon as, in the sole discretion of the
Company, such suspension is no longer appropriate. The Company shall be entitled
to exercise its right under this Section 3(i) to suspend the availability of the
Shelf Registration Statement or any Prospectus, without incurring any obligation
to pay liquidated damages pursuant to Section 2(e), no more than one time in any
three month period or three times in any twelve month period, and the period
during which the availability of the Registration Statement and any Prospectus
is suspended (the "DEFERRAL PERIOD") shall, without incurring any obligation to
pay liquidated damages pursuant to Section 2(e), not exceed thirty days;
PROVIDED that in the case of a Material Event relating to (I) an acquisition or
a probable acquisition meeting the significance test of Rule 3-05(b)(2)(iv) of
Regulation S-X under the Securities Act, (II) a financing or (III) a similar
transaction, the Company may, without incurring any obligation to pay liquidated
damages pursuant to Section 2(e), deliver to Notice Holders a second certificate
to the effect set forth above, which shall have the effect of extending the
Deferral Period by up to an additional 30 days, or such shorter period of time
as is specified in such second notice; PROVIDED that the aggregate duration of
any Deferral Periods shall not, without incurring any obligation to pay
liquidated damages pursuant to Section 2(e), exceed 60 days in any three month
period or 90 days in any 12 month period.
(j) If requested in connection with a disposition of Registrable Securities
pursuant to a Registration Statement, make reasonably available for inspection
by the Notice Holders of such Registrable Securities and any broker-dealers,
attorneys and accountants retained by such Notice Holders, all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the executive officers, directors and
designated employees of the Company and its subsidiaries to make reasonably
available for inspection all relevant information reasonably requested by such
Notice Holders or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for similar "due
diligence" examinations; PROVIDED, that any information that is designated by
the Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by such Notice Holders or any such
broker-dealer, attorney or accountant, unless such disclosure is made in
connection with a court proceeding or is required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; PROVIDED, FURTHER, that the
foregoing inspection and information gathering shall, to the greatest extent
13
<PAGE>
possible, be coordinated on behalf of the Notice Holders and the other parties
entitled thereto by one counsel designated by and on behalf of such Notice
Holders and such other parties reasonably acceptable to the Company.
(k) Comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earning statements (which need not be
audited) satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) commencing on the
first day of the first fiscal quarter of the Company commencing after the
effective date of a Registration Statement, which statements shall cover said
12-month periods.
(l) Cooperate with each Notice Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to a Registration Statement, which certificates shall not bear any
restrictive legends, and cause such Registrable Securities to be in such
denominations and registered in such names as such Notice Holder may request.
(m) Provide a CUSIP number for all Registrable Securities not later than
the effective date of the Initial Shelf Registration Statement and provide the
Trustee and the transfer agent for the Common Stock with printed certificates
for the Registrable Securities that are in a form eligible for deposit with the
Depository Trust Company.
(n) Provide such information as is required for any filings required to be
made with the National Association of Securities Dealers, Inc.
(o) Upon (i) the filing of the Initial Shelf Registration Statement and
(ii) the effectiveness of the Initial Shelf Registration Statement, announce the
same, in each case by release to Reuters Economic Services and Bloomberg
Business News.
SECTION 4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder shall promptly furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as the Company may from time to time reasonably request. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by
14
<PAGE>
such Holder that the information relating to such Holder and its plan of
distribution is as set forth in the Prospectus delivered by such Holder in
connection with such disposition, that such Prospectus does not as of the time
of such sale contain any untrue statement of a material fact relating to or
provided by such Holder or its plan of distribution and that such Prospectus
does not as of the time of such sale omit to state any material fact relating to
or provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.
SECTION 5. REGISTRATION EXPENSES. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 whether or not any Registration Statement
becomes effective. Such fees and expenses shall include, without limitation, (i)
all registration and filing fees (including, without limitation, fees and
expenses (x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (y) to comply with federal and state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of the counsel specified in the next sentence in connection with
Blue Sky qualifications of the Registrable Securities under the laws of such
jurisdictions as the Notice Holders may designate pursuant to Section 3(h)),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company, (iii) duplication expenses relating to copies of any
Registration Statement or Prospectus delivered to any Holders hereunder, (iv)
fees and disbursements of counsel for the Company in connection with the Shelf
Registration Statement, (v) reasonable fees and disbursements of the Trustee and
of the registrar and transfer agent for the Common Stock and (vi) Securities Act
liability insurance obtained by the Company in its sole discretion. In addition,
the Company shall bear or reimburse the Notice Holders for the reasonable fees
and disbursements of one firm of legal counsel for the Holders, which shall
initially be Davis Polk & Wardwell, but which may, with the written consent of
the Initial Purchaser (which shall not be unreasonably withheld), be another
nationally recognized law firm experienced in securities law matters designated
by the Company. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company. Notwithstanding the provisions of this
Section 5, each seller of Registrable Securities shall pay all registration
expenses to the extent the Company is prohibited by applicable Blue Sky laws
from paying for or on behalf of such seller of Registrable Securities.
SECTION 6. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Notice Holder and each person, if any, who controls any
Notice
15
<PAGE>
Holder within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Holder furnished to the Company in writing by
such Holder expressly for use therein; PROVIDED, HOWEVER, that the foregoing
indemnity agreement with respect to any preliminary prospectus or Prospectus
shall not inure to the benefit of any Notice Holder from whom the person
asserting any such losses, claims, damages or liabilities purchased Registrable
Securities, or any person controlling such Notice Holder, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Notice Holder to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Registrable
Securities to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to losses, claims, damages or
liabilities, unless such failure is the result of noncompliance by the Company
with Section 3(b), 3(e) and 3(i).
(b) Each Holder agrees severally, and not jointly, to indemnify and hold
harmless the Company, its directors and its officers and each person, if any,
who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to such Holder, but only with reference to
information relating to such Holder furnished in writing by such Holder to the
Company expressly for use in such Registration Statement or Prospectus; PROVIDED
that with respect to any amount due to an indemnified person under this
paragraph (b), each Holder shall be liable only to the extent of the net
proceeds received by such Holder upon the sale of the Registrable Securities
pursuant to the Registration Statement giving rise to such indemnification
obligation.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 6(a) or 6(b), such person (the "INDEMNIFIED PARTY") shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing. If an indemnifying party so elects within a
reasonable time after receipt of such notice, an indemnifying party, severally
or jointly with any other indemnifying parties receiving such notice, may assume
the defense of such proceeding with counsel chosen by it and reasonably
acceptable to the indemnified parties, PROVIDED that if (i) representation of
such indemnified party by the same counsel would present a conflict
16
<PAGE>
of interest or (ii) the actual or potential parties (including impleaded
parties) to, or targets of, any such proceeding included both the indemnified
party and the indemnifying party and any such indemnified party reasonably
determines that there may be legal defenses available to such indemnified party
which are different from or in addition to those available to such indemnifying
party, then the indemnifying parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
proceeding as a result of the proviso to the preceding sentence, the indemnified
party or parties shall be entitled to conduct the defense of such indemnified
party or parties with counsel of its choice. If an indemnifying party assumes
the defense of such action, in accordance with and as permitted by the
provisions of this Section 6(c), such indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by, in the case
of parties indemnified pursuant to Section 6(a), the Holders of a majority of
the Common Equivalents represented by the Registrable Securities that were sold
under the Registration Statement and gave rise to the indemnity claim pursuant
to Section 6(a) and, in the case of parties indemnified pursuant to Section
6(b), the Company. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by this Section 6(c)
effected without its consent if such
17
<PAGE>
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) To the extent that the indemnification provided for under Section 6(a)
or 6(b) hereof is unavailable to an indemnified party or is insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company shall be deemed to
be equal to the total net proceeds from the initial placement pursuant to the
Purchase Agreement (before deducting expenses) of the Registrable Securities to
which such losses, claims, damages or liabilities relate. The relative benefits
received by any Holder shall be deemed to be equal to the value of receiving
Registrable Securities that are registered under the Securities Act. The
relative fault of the Holders on the one hand and the Company on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Holders or by
the Company and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this paragraph are several in
proportion to the respective number of Registrable Securities they have sold
pursuant to a Registration Statement giving rise to the loss, claim, damage or
liability, and not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by PRO RATA
allocation or by any other method or allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the
18
<PAGE>
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding this Section 6(d), an indemnifying party that
is a Holder selling Registrable Securities shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities sold by such indemnifying party and distributed to the
public were offered to the public exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 6 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or equity, including those available under the Purchase
Agreement or otherwise.
(f) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 7. INFORMATION REQUIREMENTS. If at any time before the end of the
Effectiveness Period the Company is not subject to the reporting requirements of
the Exchange Act, it will cooperate with any Holder of Registrable Securities
and take such further reasonable action as any Holder of Registrable Securities
may reasonably request (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A under the Securities Act. Nothing
in this Section 7 shall be deemed to require the Company to register any of its
securities under the Exchange Act.
SECTION 8. MISCELLANEOUS.
(a) NO CONFLICTING AGREEMENTS. The Company is not, as of the date hereof,
nor shall it, on or after the date of this Agreement, enter into any agreement
with respect to its securities that conflicts with the rights granted to the
Holders in this Agreement. The Company represents and warrants that the rights
granted to the Holders hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.
19
<PAGE>
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of a majority of
the Common Equivalents represented by the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement;
PROVIDED that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(c) NOTICES. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, by telecopier, by courier
guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(x) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in a Notice and
Questionnaire or any amendment thereto;
(y) if to the Company, to:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, Florida 33445
Attention: Associate General Counsel
Telecopy No.: 561-243-2263
and
(z) if to the Initial Purchaser, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Syndicate Department Convertibles Desk
Telecopy No: 212-761-0538
20
<PAGE>
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) APPROVAL OF HOLDERS. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchaser
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(e) SUCCESSORS AND ASSIGNS. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles thereof.
(i) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction, it
being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and the registration rights granted by the
Company with respect to the Registrable Securities. Except as provided in the
Purchase Agreement, there are no
21
<PAGE>
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and undertakings among the parties with respect to such
registration rights. No party hereto shall have any rights, duties or
obligations other than those specifically set forth in this Agreement.
(k) TERMINATION. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
their terms.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SUNBEAM CORPORATION
By: /s/ David C. Fannin
---------------------------
Name: /s/ David C. Fannin
Title: Executive Vice President
Accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
(for its benefit and for the benefit of the Holders)
By: /s/ Andre Savarie
- --------------------------
Name: /s/ Andre Savarie
Title: Vice President
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SUNBEAM CORPORATION FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-31-1998
<CASH> 193,543
<SECURITIES> 0
<RECEIVABLES> 562,294
<ALLOWANCES> 0
<INVENTORY> 575,109
<CURRENT-ASSETS> 1,438,638
<PP&E> 507,267
<DEPRECIATION> 104,088
<TOTAL-ASSETS> 3,443,422
<CURRENT-LIABILITIES> 446,729
<BONDS> 1,637,820
0
0
<COMMON> 1,008
<OTHER-SE> 1,033,340
<TOTAL-LIABILITY-AND-EQUITY> 3,443,422
<SALES> 244,296
<TOTAL-REVENUES> 244,296
<CGS> 211,459
<TOTAL-COSTS> 211,459
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,072
<INCOME-PRETAX> (43,443)
<INCOME-TAX> (4,458)
<INCOME-CONTINUING> (38,985)
<DISCONTINUED> 0
<EXTRAORDINARY> (5,608)
<CHANGES> 0
<NET-INCOME> (44,593)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> (.52)
</TABLE>
Contacts: INVESTMENT COMMUNITY MEDIA
Ronald Richter Maureen Bailey
Sunbeam Corporation Sard Verbinnen & Co.
(561) 243-2142 (212) 687-8080
SUNBEAM REPORTS 1ST QUARTER RESULTS;
EXPECTS 1998 EPS IN $1.00 RANGE BEFORE CHARGES, 1999 EPS IN $2.00 RANGE
OUTLINES COMPREHENSIVE GROWTH PLAN BUILDING ON SIX #1 BRANDS
WILL INCREASE INTERNATIONAL SALES, ACCELERATE NEW PRODUCTS, CREATE TEAMS FOR
SIX LARGEST CUSTOMERS, USE SINGLE GLOBAL AD AGENCY TO LEVERAGE $160 MILLION
MARKETING BUDGET
EXPECTS $265 MILLION IN NEW REVENUES FROM INTEGRATION PLAN AND NEW
PRODUCTS; SETS GOALS FOR TOP LINE GROWTH OF 10-12%, MARGINS OF 15-18%, EPS
GROWTH OF 15-20%
EXPECTS COST SAVINGS OF $250 MILLION FROM INTEGRATION PLAN AND OUTSOURCING;
PLANS TO DIVEST COLEMAN'S EAST PAK UNIT, COMPRESSOR AND HOT TUB BUSINESSES
--------------------------------------------------------------------------
DELRAY BEACH, FL, MAY 11, 1998 - Sunbeam Corporation (NYSE: SOC) today
reported results for the first quarter ended March 31, 1998, and announced a
comprehensive growth plan designed to take full advantage of Sunbeam's strategic
opportunities.
FIRST QUARTER RESULTS
Revenues for the first quarter of 1998 were $244.3 million, compared
with $253.5 million in the first quarter of 1997. Before one-time charges of
$36.8 million for early retirement of debt and compensation expense relating to
new three-year employment agreements with Sunbeam's top three executives, there
was a net loss from continuing operations of $7.8 million in the 1998 quarter
versus net income from continuing operations of $20.6 million in the year-ago
quarter. After the one-time charges of $.43 per share, the loss per share was
$0.52 in the 1998 quarter compared with earnings per share of $0.08 in the 1997
period.
Domestic sales, representing 74% of total revenues (excluding Coleman)
in the 1998 quarter, declined 15.4% from the 1997 quarter due to lower price
realization and unit volume declines. Most of the domestic sales decline was in
outdoor cooking products due to lower than anticipated retail sell- through of
these products. International sales, representing 26% of total revenues during
the first quarter, grew 14.0% over the first quarter of 1997. This sales growth
was driven primarily by improved distribution and new product sales in Latin
America, partially offset by lower sales of outdoor cooking products in Europe
and Canada. The gross margin for the first quarter of 1998 decreased 13.3
percentage points to 13.4%, primarily due to margin erosion in the appliance,
health at home and
<PAGE>
2
outdoor cooking categories.
<PAGE>
3
EARNINGS EXPECTATIONS
Based on the growth and restructuring initiatives being announced
today, including the anticipated synergies and associated cost savings, Sunbeam
currently expects full-year 1998 earnings in the range of approximately $1.00
per share, excluding one-time costs to integrate Coleman, First Alert and
Signature Brands into Sunbeam and to close two of Sunbeam's Mexican facilities.
These one-time costs are expected to total approximately $280 million pre-tax,
including cash costs of approximately $150 million pre-tax. Sunbeam also expects
to take an extraordinary cash charge of approximately $100 million pre-tax in
the second quarter of 1998 for early retirement of existing Coleman debt. Based
on the growth and restructuring initiatives, including the anticipated synergies
and associated cost savings, Sunbeam currently expects 1999 earnings in the
range of approximately $2.00 per share. From this 1999 base, Sunbeam's goal for
earnings per share growth in future years is now in the range of 15-20%.
GROWTH PLANS
Based on the growth and restructuring initiatives, Sunbeam has set new
long-term goals for annual revenue growth of 10-12% and operating margins of
15-18%. Top-line growth is expected to be driven by global expansion of six
power brands --Sunbeam/registered/, Oster/registered/, Coleman/registered/, Mr.
Coffee/registered/, First Alert/registered/, and Grillmaster/registered/, all of
which are already #1 in market share in their respective primary product
categories. Sunbeam expects the integration of its three recent acquisitions and
planned new products to generate at least $265 million in incremental annual
revenues. These new revenues are expected to come from leveraging complementary
international distribution strengths, domestic sales synergies and accelerated
new product development.
For example, Coleman has a strong existing distribution system in
Europe and Asia which can increase sales of Sunbeam/registered/, Mr.
Coffee/registered/, and First Alert/registered/ products, while Sunbeam has a
strong existing distribution system in Latin America which can increase sales of
Coleman/registered/, Mr. Coffee/registered/, and First Alert/registered/
products. Sunbeam is also establishing dedicated, multifunctional teams to serve
each of its six largest customers, which together currently represent a total of
approximately $1 billion in annual revenues to Sunbeam. Sunbeam also plans to
use a single global advertising agency for all of its products to maximize the
effectiveness of its $160 million in current annual marketing support spending
in driving the growth of its power brands on a worldwide basis, and will
immediately solicit proposals from qualified agencies.
<PAGE>
4
COST SAVINGS
Sunbeam also expects incremental annual cost savings of approximately
$250 million from integrating the three acquisitions, closing two Sunbeam
factories in Mexico (which have 2,800 employees), and outsourcing production of
certain components and finished goods. These cost savings, which are expected to
be fully realized by mid-1999, will come from combining four companies into a
single streamlined organization and adoption of Sunbeam's outsourcing strategy.
Specific actions include reducing headcount by approximately 2,300 in
addition to the Mexican factory closings; combining 10 existing headquarters in
the four companies into one new headquarters in Boca Raton, Florida;
consolidating 23 multi-purpose factories into 15 plants focused on related
products; and consolidating from 47 to 14 warehouses and from 35 to 15 sales
offices. Sunbeam also plans to divest three Coleman businesses with a total of
1,300 employees that do not fit its strategic focus: the East Pak(R) backpack
division and the compressor and hot tub businesses. Morgan Stanley Dean Witter &
Co. has been retained for the divestitures, which are expected to generate
aggregate pre-tax proceeds of $250-350 million based on preliminary estimates.
Upon completion of these divestitures, integration of the three recent
acquisitions, and planned hiring, Sunbeam expects to have a total work force of
approximately 9,500 people.
The eight factories expected to be closed, either through consolidation into
other factories or outsourcing, are:
LOCATION COMPANY PRODUCTS MADE
-------- ------- -------------
Acuna, Mexico Sunbeam Appliances
Mexico City, Mexico Sunbeam Appliances
Costa Rica Coleman Components
Maize, Kansas Coleman Machine shop
Pocola, Oklahoma Coleman Furniture
Cedar City, Utah Coleman Sleeping bags
Aurora, Illinois First Alert Fire extinguishers
Cleveland, Ohio Signature Brands Coffee makers
CHAIRMAN'S OUTLOOK
"Sunbeam has taken aggressive steps to address the issues that led to
unacceptable financial performance in the first quarter of 1998 after strong
growth in 1997. The Sunbeam turnaround is real, and we now have the right
organizational structure in place to take full advantage of our power brands and
unique strategic position in durable household and outdoor leisure products,"
said Al Dunlap, Chairman and Chief Executive Officer. "Sunbeam's new
organization is largely complete. So far in 1998, we have made 47 senior hires
from the outside, added 8 executives from the three acquired companies to our
management team as Vice Presidents or Directors and many more in other key
positions. We plan two dozen more senior recruits this year as we complete the
infrastructure to
<PAGE>
5
support long-term growth and industry consolidation. Our commitment to create
shareholder value is undiminished, but 1998 will be a transitional year as we
complete the simultaneous integration of Coleman, First Alert and Signature
Brands into Sunbeam while strengthening our marketing, customer service and new
product development capabilities. We see enormous opportunities for sustained
growth in the U.S. and overseas and a return to strong financial performance in
1999 and beyond that will reward our shareholders."
Sunbeam Corporation is a leading consumer products company that
designs, manufactures and markets, nationally and internationally, a diverse
portfolio of brand-name consumer products through its Sunbeam, Coleman, First
Alert and Signature Brands subsidiaries under the following world-class brands:
Sunbeam(R), Oster(R), Grillmaster(R), Coleman(R), Mr. Coffee(R) ,First Alert(R),
Powermate(R), Health o meter(R), and Camping Gaz(R).
CAUTIONARY STATEMENTS
---------------------
Certain statements in this press release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance, or achievements
of Sunbeam to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. When used
in this press release, the words "estimate," "project," "intend," "expect" and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous important assumptions and other factors that could cause
actual results to differ materially from those in the forward-looking
statements. These important assumptions and factors include, but are not limited
to: (i) risks associated with leverage, including cost increases due to rising
interest rates; (ii) risks associated with Sunbeam's ability to continue its
strategy of growth through acquisitions; (iii) risks associated with Sunbeam's
ability to successfully integrate all of its recent acquisitions; (iv) risks
associated with Sunbeam's ability to increase revenues by leveraging sales of
Sunbeam, Signature Brands and First Alert products through Coleman's existing
distribution channels, and by leveraging sales of Coleman, Signature Brands and
First Alert products through Sunbeam's existing distribution channels,
particularly in foreign markets; (v) risks associated with Sunbeam's ability to
realize the anticipated cost savings of its restructuring program, including the
timing thereof; (vi) risks associated with Sunbeam's ability to implement its
planned divestitures, including the amount of the net proceeds to be realized
and the timing thereof; (vii) Sunbeam's ability to make effective acquisitions
in the future and to successfully integrate newly acquired businesses into
existing operations and the risks associated with such newly acquired
businesses; (viii) Sunbeam's ability to maintain and increase market share for
its products at anticipated margins; (ix) Sunbeam's ability to successfully
introduce new products and to provide on-time delivery and a high level of
customer service; (x) changes in laws and regulations, including changes in tax
rates, accounting standards, environmental laws, occupational, health and safety
laws; (xi) access to foreign markets together with foreign economic conditions,
including currency fluctuations; (xii) uncertainty as to the effect of
competition in existing and potential future lines of business; (xiii)
fluctuations in the cost and availability of raw materials and/or products in
relation to historical levels; (xiv) changes in the availability and relative
costs of labor; (xv) effectiveness of advertising and marketing programs; (xvi)
the effect of, or changes in, general economic conditions; (xvii) economic
uncertainty in Japan, Korea and other Asian countries, as well as Mexico,
Venezuela and other Latin American countries; (xviii) weather conditions that
are adverse to the specific businesses of Sunbeam; and (xix) risks related to
product quality, including excess warranty costs, product liability expense, and
costs of possible product recall . Other factors and assumptions not identified
above, including those contained in the cautionary statements in Sunbeam's
report on Form 10-K filed in March, 1998, and its report on Form 10-Q to be
filed not later than May 15, 1998, were also involved in the derivation of these
forward-looking statements, and the failure of such other assumptions to be
realized as well as other factors may also cause actual results to differ
materially from those projected. Sunbeam assumes no obligation to update these
forward-looking statements to reflect actual results, changes in assumptions or
changes in other factors affecting such forward-looking statements.
# # #
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except EPS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------
MARCH 31, MARCH 30,
1998 1997
--------------- ---------------
<S> <C> <C>
Net sales $244.3 $253.5
Cost of goods sold 211.5 185.7
--------------- ---------------
Gross profit 32.8 67.8
Selling, general & administrative expense 68.8(a) 33.0
--------------- ---------------
Operating earnings (loss) (36.0) 34.8
Interest expense and other, net 7.4 2.1
--------------- ---------------
Earnings (loss) from continuing operations before income taxes (43.4) 32.7
Income taxes (benefit) (4.4) 12.1
--------------- ---------------
Earnings (loss) from continuing operations (39.0) 20.6
Extraordinary charge for early retirement of debt, net of taxes (5.6) -
Loss from discontinued operations, net of taxes - (13.7)
--------------- ---------------
Net earnings (loss) ($44.6) $6.9
=============== ===============
Basic and diluted earnings (loss) per share from continuing operations: ($0.45) $0.24
=============== ===============
Basic and diluted earnings (loss) per share: ($0.52) $0.08
=============== ===============
Basic and diluted weighted average common shares outstanding: 86.4 87.0
</TABLE>
(a) Includes special compensation charge of $31.2 or $.36 per share
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
MARCH 31, MARCH 30,
1998 1997
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) ($44.6) $6.9
Depreciation and amortization 11.4 10.5
Deferred income taxes (4.8) 13.1
Extraordinary charge on early extinguishment of debt, net of taxes 5.6 -
Loss on sale of discontinued operations, net of taxes - 13.7
Non-cash special compensation charges 24.3 -
Changes in working capital and other, including
restructuring spending (135.8) (66.9)
-------------- --------------
(143.9) (22.7)
INVESTING ACTIVITIES
Acquisition of CLN Holdings, net of cash acquired (160.6) -
Proceeds from sale of divested operations and other assets - 70.4
Capital expenditures (10.5) (10.8)
-------------- --------------
(171.1) 59.6
FINANCING ACTIVITIES
Issuance of convertible subordinated debentures, net of financing fees 729.6 -
Payment of debt obligations, including prepayment penalties (266.7) (26.3)
Other debt financing fees (25.1) -
Proceeds from exercise of stock options 19.0 8.9
Other (0.7) (0.6)
-------------- --------------
456.1 (18.0)
-------------- --------------
Net increase in cash and cash equivalents 141.1 18.9
Cash and cash equivalents, beginning of period 52.4 11.5
-------------- --------------
Cash and cash equivalents, end of period $193.5 $30.4
============== ==============
</TABLE>
<PAGE>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
March 31, December 28,
1998 1997
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $193.5 $52.4
Receivables, net 562.3 295.5
Inventories 575.1 256.2
Deferred income taxes 70.7 36.7
Prepaid expenses and other current assets 37.0 17.2
--------------- ---------------
Total current assets 1,438.6 658.0
Property, plant and equipment, net 403.2 240.9
Trademarks and trade names, net 192.9 194.3
Goodwill 1,324.9 24.8
Other assets, including deferred financing costs 83.8 2.2
--------------- ---------------
$3,443.4 $1,120.2
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt 62.1 0.7
Accounts payable 205.2 105.6
Other current liabilities 179.4 91.8
--------------- ---------------
Total current liabilities 446.7 198.1
Long-term debt 1,637.8 194.5
Deferred income taxes 79.7 54.6
Other long-term liabilities 189.7 141.1
Minority interest 55.2 -
Shareholders' equity 1,034.3 531.9
--------------- ---------------
$3,443.4 $1,120.2
=============== ===============
</TABLE>
